The Great Depression: “Holy Grail of Macroeconomics”• J.K. Galbraith (1955) The Great Crash: 1929

• Friedman and Schwartz (1963) Friedman and Schwartz (1963) The Great ContractionThe Great Contraction• Murray Rothbard (1963) America’s Great Depression• Charles Kindleberger (1973) The World in Depression: 1929 -

1939• Robert Lucas and Edward Prescott (1970s) • Peter Temin (1978) Did Monetary Forces Cause the Great

Depression?• Hyman Minsky (1982) Can “It” Happen Again?• Ben Bernanke (1983) Nonmonetary Effects of the Financial

Crisis in Propagation of the Great Depression • Peter Temin (1989) Lessons from The Great Depression• Barry Eichengreen (1992) Golden Fetters: The Gold Standard

and the Great Depression, 1919-1939 • Edward Prescott (1999) Some observations on the Great

Depression

Monetarism in Theory and Practice

• Theory: M P and Y in short – run

M P in long - run• Friedman’s restated quantity theory• Expectations augmented Phillips Curve

Vertical long – run Phillips Curve

“Monetary mischief”

• Practice: oppose Keynesian activism• Monetary vs. fiscal policy: what matters?• Inherent stability vs. instability of enterprise economy• Policy: Long – run vs. short – run focus

Varying policy lags … “too much too late”» Steady money growth as automatic stabilizer

Monetarism: Spreading the Word

Karl Brunner1916 – 1989

Allan Meltzer1928 -

Early Joint Works: Meltzer with Brunner"Predicting Velocity: Implications for theory and policy", with K. Brunner, 1963, J of Finance The Federal Reserve's Attachment to the Free Reserves Concept, with K. Brunner, 1964. An Alternative Approach to the Monetary Mechanism, with K. Brunner, 1964. "Some Further Investigations of Demand and Supply Functions for Money", with K. Brunner, 1964, J of Finance"The Meaning of Monetary Indicators", with K. Brunner, 1967, in Horwich, editor, Monetary Process and Policy. "Economies of Scale in Cash Balances Reconsidered", with K. Brunner, 1967, QJE. "Liquidity Traps for Money, Bank Credit, and Interest Rates", with K. Brunner, 1968, JPE "The Nature of the Policy Problem" with K. Brunner, 1969, in K. Brunner, editor, Targets and Indicators of Monetary Policy. "The Uses of Money: Money in the Theory of an Exchange Economy" with K. Brunner, 1971, AER "Friedman's Monetary Theory" with K. Brunner, 1972, JPE "Money, Debt and Economic Activity" with K. Brunner, 1972, JPE "A Monetarist Framework for Aggregative Analysis" with K. Brunner, 1972, Kredit und Kapital

Later Joint Works"Strategies and Tactics for Monetary Control", with K. Brunner, 1983, CROCH "Money and Credit in the Monetary Transmission Process", with K. Brunner, 1988, AER Money and the Economy: Issues in monetary analysis, with K. Brunner, 1989. Monetary Economics, with K. Brunner, 1989. Keynes's Monetary Theory: A different interpretation, 1989. "Money Supply", with K. Brunner, 1990, in Friedman and Hahn, editors, Handbook of Monetary Economics

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Shadow Open Market CommitteeShadow Open Market Committee

Journal of Money, Banking and Credit

Carnegie-Rochester Conference Series on Public Policy

Journal of Monetary Economics

Major Works by Meltzer•Keynes’ Monetary Theory: A Different Interpretation, 1988.•A History of the Federal Reserve, volume 1, 1913-1951,2002.

Meltzer: I was very much a left-wing activist as a student.