Wednesday, March 14, 2012

Great thoughts from Krugman on Friedman


"The truth, although nobody on the right will ever admit it, is that Friedman was basically a Keynesian — or, if you like, a Hicksian. His framework was just IS-LM coupled with an assertion that the LM curve was close enough to vertical — and money demand sufficiently stable — that steady growth in the money supply would do the job of economic stabilization. These were empirical propositions, not basic differences in analysis; and if they turn out to be wrong (as they have), monetarism dissolves back into Keynesianism."

1 comment:

  1. Couldn't Milton Friedman be said to be Marshallian in method, just like John Maynard Keynes was? I remember reading somewhere that Friedman read Alfred Marshall's Principles of Economics...


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