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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]
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.
Milton Friedman (/ ˈfriːdmən / ⓘ; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the complexity of stabilization policy. [4] With George Stigler, Friedman was among the ...
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 ...
v. t. e. 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.
The Great Depression in a monetary view. In their 1963 book A Monetary History of the United States, 1867–1960, Milton Friedman and Anna Schwartz laid out their case for a different explanation of the Great Depression. Essentially, the Great Depression, in their view, was caused by the fall of the money supply.
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 ...