The Impact of Milton Friedman on Modern Monetary Economics: Setting the Record Straight on Paul Krugman's 'Who Was Milton Friedman?'

FRB of St. Louis Working Paper No. 2007-048D

45 Pages Posted: 31 Oct 2007

See all articles by Edward Nelson

Edward Nelson

Board of Governors of the Federal Reserve System

Anna J. Schwartz

City University of New York (CUNY); National Bureau of Economic Research (NBER) - NY Office

Multiple version iconThere are 2 versions of this paper

Date Written: January 9, 2008

Abstract

Paul Krugman's essay "Who Was Milton Friedman?" seriously mischaracterizes Friedman's economics and his legacy. In this paper we provide a rejoinder to Krugman on these issues. In the course of setting the record straight, we provide a self-contained guide to Milton Friedman's impact on modern monetary economics and on today's central banks. We also refute the conclusions that Krugman draws about monetary policy from the experiences of the United States in the 1930s and of Japan in the 1990s.

Keywords: monetarism, New Keynesian economics, inflation, price controls, Great Depression

JEL Classification: E31, E51, E58

Suggested Citation

Nelson, Edward and Schwartz, Anna J., The Impact of Milton Friedman on Modern Monetary Economics: Setting the Record Straight on Paul Krugman's 'Who Was Milton Friedman?' (January 9, 2008). FRB of St. Louis Working Paper No. 2007-048D. Available at SSRN: https://ssrn.com/abstract=1025465 or http://dx.doi.org/10.2139/ssrn.1025465

Edward Nelson (Contact Author)

Board of Governors of the Federal Reserve System ( email )

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Anna J. Schwartz

City University of New York (CUNY) ( email )

17 Lexington Avenue
New York, NY 10010
United States

National Bureau of Economic Research (NBER) - NY Office

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New York, NY 10016-4309
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