Monetarism II: Monetarism, Keynes and the ‘Keynesians’
Though the real challenge to Keynes lay in the ‘invisible’ elements of Friedman’s counter-revolution, the subsequent monetarist-Keynesian’ debate has been conducted entirely in terms of the ‘visible’ elements, which are alternative formulations of empirical relationships that have their counterpart in the ‘Keynesian’ model.
KeywordsInterest Rate Monetary Policy Budget Deficit Money Stock Nominal Income
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Notes and References
- 5.M. Friedman, The Counter Revolution in Monetary Theory (London: IEA, 1970) p. 24.Google Scholar
- 6.‘Since we regarded prices as flexible, though not “perfectly” flexible, it was natural for us to interpret the transmission mechanism in terms of relative price adjustments over a broad area rather than in terms of narrowly defined interest rates’. M. Friedman, A Theoretical Framework for Monetary Analysis, Occasional Paper 112 (New York: NBER, 1971) pp. 27–9.Google Scholar
- 15.A Friedman, ‘Comments on The Critics’, p. 944. The reference is to J. M. Keynes, A Tract on Monetary Reform (London: Macmillan, 1923) p. 51.Google Scholar
- 22.N. Kaldor, The Scourge of Monetarism (Oxford: Oxford University Press, 1982). See the penetrating review by R. L. Harrington: ‘Monetar-isms’: Real and Imaginary — A Review Article’, Manchester School (March 1983) pp. 63–71.Google Scholar