What Remains of Milton Friedman's Monetarism?

Posted: 24 Jul 2017 Last revised: 24 Oct 2017

See all articles by Robert L. Hetzel

Robert L. Hetzel

Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: 2017-07-21

Abstract

From the early 1960s until the early 1970s with the emergence of rational expectations, under the rubric of monetarism, Milton Friedman defined macroeconomic debate. Although the Keynesian consensus that he challenged has disappeared, the current academic literature makes little reference to monetarist ideas. What happened to them? The argument here is that those ideas remain relevant but require translation into terms expressible in modern macroeconomic models and in the monetary policies of central banks, neither of which contain any obvious references to money. Moreover, the Friedman and Schwartz methodology for identifying shocks retains relevance.

Keywords: monetary policy, Milton Friedman

JEL Classification: B22

Suggested Citation

Hetzel, Robert L., What Remains of Milton Friedman's Monetarism? (2017-07-21). FRB Richmond Working Paper No. 17-9, Available at SSRN: https://ssrn.com/abstract=3007034

Robert L. Hetzel (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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