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Milton Friedman argued that a natural rate of inflation followed from the Phillips curve.This showed wages tend to rise when unemployment is low. Friedman argued that inflation was the same as wage rises, and built his argument upon a widely believed idea, that a stable negative relation between inflation and unemployment existed. [11]
The permanent income hypothesis (PIH) is a model in the field of economics to explain the formation of consumption patterns. It suggests consumption patterns are formed from future expectations and consumption smoothing. [α] The theory was developed by Milton Friedman and published in his A Theory of the Consumption Function, published in 1957 ...
Friedman rule. The Friedman rule is a monetary policy rule proposed by Milton Friedman. [1] Friedman advocated monetary policy that would result in the nominal interest rate being at or very near zero. His rationale was that the opportunity cost of holding money faced by private agents should equal the social cost of creating additional fiat money.
The Phillips curve is an economic model, named after Bill Phillips, that correlates reduced unemployment with increasing wages in an economy. [1] While Phillips did not directly link employment and inflation, this was a trivial deduction from his statistical findings.
Capitalism and Freedom. Capitalism and Freedom is a book by Milton Friedman originally published in 1962 by the University of Chicago Press which discusses the role of economic capitalism in liberal society. It has sold more than half a million copies since 1962 and has been translated into eighteen languages.
Positive and normative economics. In the philosophy of economics, a descriptive or positive statement is an assertion about facts of the world, while prescriptive or normative statements express value judgments. The former describe the world as it is, while the latter talk about the world as it should be. [1]
Rational expectations is an economic theory that seeks to infer the macroeconomic consequences of individuals' decisions based on all available knowledge. It assumes that individuals' actions are based on the best available economic theory and information, and concludes that government policies cannot succeed by assuming widespread systematic ...
In economics, a negative income tax (NIT) is a system which reverses the direction in which tax is paid for incomes below a certain level; in other words, earners above that level pay money to the state while earners below it receive money, as shown by the blue arrows in the diagram. NIT was proposed by Juliet Rhys-Williams while working on the ...