Janet Yellen on the influence of Milton Friedman on contemporary monetary policy
25 Nov 2014 Leave a comment
Was this Milton Friedman’s monetary policy dashboard?
19 Aug 2014 1 Comment
in macroeconomics, Milton Friedman, monetarism, monetary economics Tags: Milton Friedman, monetarism, rules versus discretion
I am not so sure the above would be mimicking Milton Friedman’s monetary policy dashboard as claimed.
Milton Friedman advocated a fixed monetary policy growth where the monetary supply would grow at 4% year in, year out no matter what happened in the economy. Towards the end of his career, he advocated replacing the Fed with a computer.
New Keynesian macroeconomics as the triumph of monetarism
25 Jul 2014 Leave a comment
in macroeconomics, Milton Friedman, monetarism, monetary economics Tags: Brad Delong, Milton Friedman, monetarism, New Keynesian macroeconomics
In The triumph of monetarism, Brad De Long wrote in the Journal of Economic Perspectives—Volume 14, Number 1—Winter 2000—Pages 83–94 that today’s new Keynesian" macroeconomists would include in any list of their key ideas and premises the five following propositions that:
- The key to understanding real fluctuations in employment and output is to understand the process by which business cycle-frequency shocks to nominal income and spending are divided into changes in real spending and changes in the price level.
- Under normal circumstances, monetary policy is a more potent and useful tool for stabilization than is fiscal policy.
- Business cycle fluctuations in production are best analysed from a starting point that sees them as fluctuations around the sustainable long-run trend (rather than as declines below some sustainable potential output level).
- The right way to analyse macroeconomic policy is to consider the implications for the economy of a policy rule, not to analyse each one- or two-year episode in isolation as requiring a unique and idiosyncratic policy response.
- Any sound approach to stabilization policy must recognize the limits of stabilization policy—the long lags and low multipliers associated with fiscal policy; the long and variable lags and uncertain magnitude of the effects of monetary policy.
De Long then went on to argue that the above research programme is the macroeconomic research programme of Milton Friedman in the mid-20th century.
Are you now or have you ever been a monetarist?
26 Jun 2014 Leave a comment
in macroeconomics, Milton Friedman, monetarism Tags: Milton Friedman, monetarism, The Fed
Milton Friedman argued that no member of the Fed would have ever answered yes to that question.
The Shadow Fed – documenting the road not take since 1973
03 Jun 2014 Leave a comment
in macroeconomics, monetarism Tags: monetarism, rules versus discretion, The Fed
The Shadow Open Market Committee was founded in 1973 by Karl Brunner and Allan Meltzer.
The Committee was founded because many monetarist economists believed the Federal Reserve (The Fed) caused a recession by failing to keep money supply growth steady. Its members were academics and from private organisations.
The original objective was to evaluate the policy choices and actions of the Fed’s Open Market Committee, the arm of the Fed which ran monetary policy in the USA.
The Shadow Open Market Committee meets semi-annually. A number of papers are prepared by Shadow Open Market Committee members on macroeconomic and public policy topics.
Based on these papers and the Committee’s deliberations, a policy statement summarises the policy recommendations of the Committee.
These papers are organised by year and downloadable at ShadowFed | Official Site of the Shadow Open Market Committee.
Utopia, you are standing in it! 
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