Economic policy as expectations management: Keynes’ and Friedman's complementary approaches

Sylvie Rivot ()
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Sylvie Rivot: BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique

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Abstract: We investigate how Keynes and Friedman, respectively, address the issue of the disequilibria at stake in a monetary economy through a shared concern for the formation of expectations. We show that Keynes was interested in the coordination of long-term expectations regarding non-monetary assets prospective yields, while Friedman focused on the adaptation of short-term nominal expectations. Regarding the remedies to these disequilibria, both economists called for devices that aim to stabilise market expectations. As a direct outcome, Keynes designed policies that aim to stabilise the long-term state of expectations while Friedman basically aimed at the acceleration of the competitive adjustment process.

Keywords: Keynes; Friedman; Economic policy; Expectations; Stabilisation (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

Published in European Journal of the History of Economic Thought, 2017, 24 (5), pp.1053-1084. ⟨10.1080/09672567.2017.1323939⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04014346

DOI: 10.1080/09672567.2017.1323939

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