The Role of Financial Policy

17 Pages Posted: 12 Apr 2018

See all articles by Roger E. A. Farmer

Roger E. A. Farmer

University of California, Los Angeles (UCLA) - Department of Economics; University of Warwick; National Institute of Economic and Social Research (NIESR); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

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Date Written: April 2018

Abstract

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.

Suggested Citation

Farmer, Roger E.A., The Role of Financial Policy (April 2018). NBER Working Paper No. w24498, Available at SSRN: https://ssrn.com/abstract=3158972

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