Friedman: The emphasis of that talk [in Chile] was that free markets would undermine political centralization and political control.
This has been his speech for most of his life. I may not be libertarian, but there's no reason to think otherwise.
His greatest academic contributions were his restatement of the permanent income hypothesis and the quantitative theory of money. Both are benchmarks of Economics 101 that provide a framework to build upon, despite not being applicable results.
Originally posted by DoctorScribblesGreatest contribution = the PIH
Now that Milton Friedman has gone home to Jesus, what do you suppose will be his greatest legacies, say, 50 years from now?
Greatest legacy = the "Chicago school" of economics
The Q theory of M isn't so relevant for quantitative work anymore, but it is good for intutition.
That's about it. I can't stand to read his books.
Originally posted by PalynkaConsumption smoothing over the lifecycle is in the data. Anyone constructing a model of lifetime household behavior has to take this behavior into account.
Same goes for the PIH, innit?
This is why so many supposed libertarians seem to have gotten stuck in Economics 101. It only works if you keep it simple and unrealistic.
The QT of M has lost it's relevance beyond intution because it's so damn hard to measure money anymore.
Supposed libertarians (at least the rabid American kind) get stuck because they have a faith-based approach to economics. Free markets always work best, and when a free market fails another free market grows up to rescue it. It's pure bollox, but some people just seem to like the idea.
As a first principle, I'm for government not directly manipulating the price or quantities in a market. Nevertheless, you and I both know that there are classic cases where the free market outcome is not socially optimal (even given the Coase theorem). Informational problems and commitment problems, as well as public good provision and some cases of externalities are all cases where some government intervention may be warranted.
Originally posted by telerionConsumption smoothing over lifecycle is in the data, but not in the form of permanent income. Fluctuations with current revenue can also be observed but that also doesn't mean old-school Keynesians were right.
Consumption smoothing over the lifecycle is in the data. Anyone constructing a model of lifetime household behavior has to take this behavior into account.
The QT of M has lost it's relevance beyond intution because it's so damn hard to measure money anymore.
Supposed libertarians (at least the rabid American kind) get stuck because they have a f ...[text shortened]... me cases of externalities are all cases where some government intervention may be warranted.
I always viewed the Coase theorem as evidence for the possibility of positive intervention by the state.
Basically, since the hypothesis are necessary and sufficient and they NEVER exist, the theorem is always false. 🙂
Originally posted by PalynkaIt's true that there is not as much smoothing as a complete markets model would imply. Examining models of market incompleteness is, IMO, the appropriate way to investigate this problem.
Consumption smoothing over lifecycle is in the data, but not in the form of permanent income. Fluctuations with current revenue can also be observed but that also doesn't mean old-school Keynesians were right.
I always viewed the Coase theorem as evidence for the possibility of positive intervention by the state.
Basically, since the hypothesis are necessary and sufficient and they NEVER exist, the theorem is always false. 🙂