Archive for July 27th, 2016

Economists giving pp on Milton Friedman’s biggest idea – Permanent Income Hypothesis

July 27, 2016

Today is perhaps a Friedman day on Mostly Economics.

Noah Smith the usually good economist turned columnist has a piece. He says how more and more empirical evidence is coming against Friedman’s biggest idea – Permanent Income Hypothesis:

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How will digital currency shape the future of banking and monetary policy?

July 27, 2016

Marilyne Tolle of BoE discusses the several issues with respect to digital currency in Bank of England’s blog.

There is little doubt that these currencies as they gain ground could pull the carpet under the central banks monopolist chair. Central bankers who are habitual to tell the politicians and businesses about allowing disruptive innovations are going to get a bit on their game as well. More than anything else, it will be interesting whether central banks try and preserve their monopolies or let it go.

Tolle says digitial currencies will create problems for both banks and central banks. One key reason is the payment bit is going to get divorced from the deposits:

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Did Milton Friedman influence the Thatcher policy of 1980s?

July 27, 2016

It is fashionable in the financial media to project certain economists as superheroes. How certain economist came and changed the country/world is a common theme. In this story creation, lots of myths are hyped and facts ignored. Much of economic changes in any country are a combination of many factors and persons. It is hardly about a few people here and there.

Even given this limitation, it is for certain believed that and Hayek and Friedman played a central role in Thatcher and Reagan regimes in early 1980s. It would be a huge shock if anyone disagreed with this now well accepted fact.

Prof James Forder of University of Oxford does just that. He says there is hardly any evidence of Friedman playing any big role in Thatcher era.

Using a range of sources, it is argued that, contrary to common belief, Milton Friedman had no special influence on British policy in the 1970s and 1980s. The opposing impression appears to be derived in part from the work of Friedman’s admirers, but principally from the allegations of Margaret Thatcher’s opponents who believed they could taint her with his name.

Extracting from the PDF is difficult so can’t discuss the paper. Prof Forder digs through plenty of sources to question this well accepted fact as a piece of fiction. Infact he points to a similar paper which questioned influence of Friedman in Israel economic policy in 1977 as well.

Interesting bit..

 


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