Milton Friedman and the road to monetarism: a review essay

Abstract

The objective of Ed Nelson’s two-volume book, Milton Friedman and Economic Debate in the United States, 1932-1972, is to provide an account of Friedman’s views in major monetary-policy debates during the period identified in the book’s title. Nelson tells the story of the development of Friedman’s monetary framework, from its Keynesian origins in the early-1940s, to its gradual absorption of monetary factors in the late-1940s, and, finally, to its monetarist character of the 1950s and after, through the windows of a selection debates that engaged Friedman. At the same time, Nelson places Friedman’s monetary contributions within the context of the modern macroeconomics literature. In this essay, I consider doctrinal issues related to Nelson’s account of the development of Friedman’s monetarist framework.

Keywords: Milton Friedman, monetarism, Keynesian economics, New Keynesian model

JEL Classification: B31, E51, E52