The Role of Monetary Policy

Descriere

Milton Friedman was one of the most influential economists of all time - and his ideas had a huge impact on the economic policies of governments across the world. Friedman's 1968 essay `The Role of Monetary Policy' is a key example of how Friedman's critical thinking skills helped to cement his influence and reputation. The paper addressed the question of how a government's monetary policy affects the economy - from employment levels to inflation and so on. At its heart lies an evaluation and critique of the most widely accepted conception of monetary policy at the time - the `Phillips Curve' - which argued that increased inflation leads naturally to increased employment. Systematically noting the flaws and weaknesses of the Phillips Curve theory, Friedman showed why this is not, in fact, the case. He then drew up a systematic alternative argument for what governmental monetary policy could and should aim to do.