Short-Run and Long-Run Effects of Milton Friedman's Presidential Address

Robert Hall () and Thomas Sargent

No 24148, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The immediate effect of Friedman's 1968 AEA presidential address on the economics profession was the introduction of an adaptive term in the Phillips curve that shifted the curve, as Friedman proposed, based on expected inflation. Initial formulations suggested that the shift was less than point-for-point, but later thinking, based on the emerging idea of rational expectations, together with the experience of the 1970s, came to agree with Friedman that the shift was by the full amount. The profession also recognized that Friedman's point was deeper---real outcomes are invariant to the monetary policy rule, not just to the trend in inflation. The presidential address made an important contribution to the conduct of monetary policy around the world. It ushered in low and stable inflation rates in all advanced countries, and in many less advanced ones.

JEL-codes: E31 E52 E61 (search for similar items in EconPapers)
Date: 2017-12
New Economics Papers: this item is included in nep-his, nep-hpe, nep-mac and nep-mon
Note: EFG ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published as Robert E. Hall & Thomas J. Sargent, 2018. "Short-Run and Long-Run Effects of Milton Friedman's Presidential Address," Journal of Economic Perspectives, vol 32(1), pages 121-134.

Downloads: (external link)
http://www.nber.org/papers/w24148.pdf (application/pdf)

Related works:
Journal Article: Short-Run and Long-Run Effects of Milton Friedman's Presidential Address (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:24148

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w24148

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().