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How Friedman and Schwartz Became Monetarists

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  • JAMES R. LOTHIAN
  • GEORGE S. TAVLAS

Abstract

During the early‐1940s, both Milton Friedman and Anna Schwartz downplayed the role of money in the economy. By the mid‐1950s, they had not only become what later were called monetarists, but the findings from their joint work defined monetarism. The key factor underlying the change in their views was what they learned from their study of U.S. historical experience, especially their empirical confirmation of the Fed's role in the Great Depression. Here, the influence of Clark Warburton on Friedman's thinking loomed large. We document Friedman's advocacy of the constant‐money‐growth rule as an outgrowth of his and Schwartz's empirical research.

Suggested Citation

  • James R. Lothian & George S. Tavlas, 2018. "How Friedman and Schwartz Became Monetarists," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 50(4), pages 757-787, June.
    • Handle: RePEc:wly:jmoncb:v:50:y:2018:i:4:p:757-787
    DOI: 10.1111/jmcb.12481
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    1. repec:bog:econbl:y:2016:i:43:p:55-75 is not listed on IDEAS
    2. Tavlas, George S., 2021. "A Reconsideration Of The Doctrinal Foundations Of Monetary Policy Rules: Fisher Versus Chicago," Journal of the History of Economic Thought, Cambridge University Press, vol. 43(1), pages 55-82, March.
    3. Sophia Lazaretou, 2016. "The Greek brain drain: the new pattern of Greek emigration during the recent crisis," Economic Bulletin, Bank of Greece, issue 43, pages 31-53, July.
    4. George S. Tavlas, 2022. "Milton Friedman and the road to monetarism: a review essay," Working Papers 307, Bank of Greece.
    5. Faidon Kalfaoglou, 2016. "Bank recapitalisation: a necessary but not sufficient condition for resuming lending," Economic Bulletin, Bank of Greece, issue 43, pages 55-75, July.
    6. Styliani Belli & Constantina Backinezos, 2016. "The transition to the new methodology for the compilation of balance of payments statistics – BPM6," Economic Bulletin, Bank of Greece, issue 43, pages 19-29, July.
    7. repec:bog:econbl:y:2016:i:43:p:19-29 is not listed on IDEAS
    8. Nikos Vettas & Ioannis Giotopoulos & Evangelia Valavanioti & Svetoslav Danchev, 2016. "The determinants of new firms’ export performance," Economic Bulletin, Bank of Greece, issue 43, pages 7-17, July.
    9. Sylvie Rivot, 2020. "Information and Expectations in Policy-Making: Friedman's Changing Approaches to Macroeconomic Dynamics," GREDEG Working Papers 2020-39, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    10. repec:bog:econbl:y:2016:i:43:p:31-53 is not listed on IDEAS
    11. repec:bog:econbl:y:2016:i:43:p:7-17 is not listed on IDEAS
    12. George S. Tavlas, 2024. "On the Controversy over the Origins of the Chicago Plan for 100% Reserves: Sorry, Frederick Soddy, it was Knight and (Most Probably) Simons!," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 56(6), pages 1573-1594, September.
    13. George S. Tavlas, 2020. "On the controversy over the origins of the Chicago Plan for 100 percent reserves," Working Papers 279, Bank of Greece.

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    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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