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The Role of Financial Policy

Roger Farmer

NBER Working Paper No. 24498
Issued in April 2018
NBER Program(s):Economic Fluctuations and Growth Program, The Monetary Economics Program

I review the contribution and influence of Milton Friedman’s 1968 presidential address to the American Economic Association. I argue that Friedman’s influence on the practice of central banking was profound and that his argument in favour of monetary rules was responsible for thirty years of low and stable inflation in the period from 1979 through 2009. I present a critique of Friedman’s position that market-economies are self-stabilizing, and I describe an alternative reconciliation of Keynesian economics with Walrasian general equilibrium theory from that which is widely accepted today by most neo-classical economists.

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Document Object Identifier (DOI): 10.3386/w24498

Published: Roger E.A. Farmer, 2018. "The role of financial policy," Review of Keynesian Economics, vol 6(4), pages 446-460. citation courtesy of

 
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