The Role of Financial Policy

Roger Farmer

No 491, National Institute of Economic and Social Research (NIESR) Discussion Papers from National Institute of Economic and Social Research

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. My interpretation implies that government should intervene actively in financial markets to stabilize economic activity.

Keywords: Keynesian economics; monetarism; natural rate of unemployment (search for similar items in EconPapers)
JEL-codes: E3 E4 (search for similar items in EconPapers)
Date: 2018-03
New Economics Papers: this item is included in nep-his, nep-hme, nep-hpe, nep-mac and nep-mon
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Related works:
Journal Article: The role of financial policy (2018)
Working Paper: The Role of Financial Policy (2018)
Working Paper: The Role of Financial Policy (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:nsr:niesrd:491

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