MILTON

FRIEDMAN

Contributions to

and Public Policy

Edited by

ROBERT A. CORD

and

J. DANIEL HAMMOND

OXFORD UNIVERSITY PRESS CONTENTS

List ofFigures List of Tables Notes on Contributors

Introduction ROBERT A. CORD AND J. DANIEL HAMMOND

PART I REFLECTIONS ON FRIEDMAN

1. as Teacher and Scholar ROBERT E. LUCAS, JR.

2. Milton Friedman: An Appreciation ARNOLD C. HARBERGER

3. Remembering Milton Friedman GREGORY C. CHOW

4. The Place of Milton Friedman in the History of Economic Thought BENNETT T. MCCALLUM

5. Milton Friedman's Public Life after Retirement, 1976-88 ALLAN H. MELTZER

PART II MONETARY THEORY AND POLICY

6. Milton Friedman as an Empirical Modeler NEIL R. ERICSSON, DAVID F. HENDRY, AND STEDMAN B. HOOD

7. Milton Friedman and US Monetary History MICHAEL D. BORDO

8. Reflections on Friedmans Macroeconomics RICHARD SELDEN VÜi CONTENTS

9. Reflections on Milton Friedman, the South during the Civil War, and Current Events EUGENE LERNER

10. Milton Friedman's Monetary Economics: Theory and Empirics 178 JAMES R. LOTHIAN

11. Friedman, Chicago, and Monetary Rules 198 HARRIS DF.T.I.AS AND GEORGE S. TAVIAS

12. Why and How Should a Monetary Economy be Stabilized? The Forgotten Lessens of Milton Friedman 217 SYLVIE RIVOT

13. Friedman's Characterization of the Natural Rate of Unemployment 236 K. VELA VELUPILLAI

14. What Would Milton Friedman Have Thought of Market Monetarism? 246 SCOTT B. SUMNER

15. Friedman and Divisia Monetary Measures 265 WILLIAM A. BARNETT

16. Arthur Burns and Milton Friedman: Why did the Master (Bums) and the Disciple (Friedman) Understand Inflation in a Diametrically Opposed Way? 292 ROBERT L. HETZEL

17. Milton Friedman and the Federal Reserve Chairs in the 1970s 313 EDWARD NELSON

18. Monetary Targeting in Australia: Problems of Control and Prediction 334 SELWYN CORNISH

19. Milton Friedman, the Quantity Theory, and Hyperinflation in Russia 356 VINCENT BARNETT CONTENTS ix

PART III CONSUMPTION THEORY, FISCAL POLICY, AND PUBLIC POLICY

20. Friedman's Theory of Income and Consumption, Then and Now 377 JOHN J. SEATER

21. Milton Friedman's Contributions to Fiscal Economics 401 MICHAEL J. BOSKIN

22. Friedman and the Income Effects of Financing Government Deficits 417 ROBERT D. AUERBACH

23. Milton Friedman and the Finance of Higher Education 436 NICHOLAS BARR

24. Milton Friedman, Drug Legalization, and Public Policy 464 MARK THORNTON

25. Milton Friedman and Occupational Licensing 480 MORRIS M. KLEINER

26. Slaves or Mercenaries? Milton Friedman and the Institution of the All-Volunteer Military 499 JOHN D. SINGLETON

27. Straining the Social Bond: Government Policy versus Social Custom in Capitalism and Freedom 523 PAUL TURPIN

PART IV METHODOLOGY

28. Reading and Misreading Friedman's 1953 Methodology Essay 541 LAWRENCE A. BOLAND

29. Milton Friedman's Methodology, Macroeconomics, and the Great Recession 561 PATRICK MINFORD

30. Milton Friedman: A Bayesian? 575 GERALD P. DWYER

31. Friedman and the Cowles Commission 585 MARCEL BOUMANS X CONTENTS

PART V FRIEDMAN AND OTHER

32. How Friedman Became the Anti-Keynes 607 CRAIG FREEDMAN, G. C. HARCOURT, PETER KRIESLER, AND J. W. NEVILE

33. The Economics and of Milton Friedman: An Old Keynesian Critique 631 THOMAS I. PALLEY

34. Friedman and his Collegial Detractors 657 RUSSELL S. BOYER

35. Milton Friedman and George J. Stigler: Early Interactions and Connections 680 J. DANIEL HAMMOND

36. Friedman and the Austrians 703 ROGER W. GARRISON

37. Milton Friedman, James Buchanan, and Constitutional Political Economy 727 PETER J. BOETTKE AND ROSOLINO CANDELA

38. Friedman and Robbins 741 SUSAN HOWSON

39. Friedman and Viner 757 DOUGLAS A. IRWIN

40. Economists as Forecasters: Milton Friedman and Paul Samuelson, 1970-4 774 ROBERT A. CORD

Index 799