Introduction

Despite the large influence of Milton Friedman on economists', public officials', and the public's understanding of the role of money in business cycles, his analysis has always been considered suspect on theoretical grounds. At least it has been so considered by economists outside the ambit of the University of Chicago. The Cowles Commission “measurement without theory” charge against National Bureau analysis dogged Friedman through the 1960s in persistent requests by critics that he write down his theoretical model. “Money and Business Cycles” (1963a) and the Monetary History (1963b) were widely regarded as important contributions to the empirical record of evidence on money and income and to historical analysis, but they were regarded as incomplete and suspect because of the absence of a satisfactory theoretical model. Eventually Friedman responded with two models in Journal of Political Economy (JPE) articles “A Theoretical Framework for Monetary Analysis” (1970b) and “A Monetary Theory of Nominal Income” (1971b). Four critiques of these models were assembled in a 1972 JPE symposium on “Milton Friedman's Monetary Framework” (reprinted in Gordon, ed., 1974). The critics (Karl Brunner and Allan Meltzer, James Tobin, Paul Davidson, and Don Patinkin) were unanimous in judging that Friedman's model(s) was not sufficient to account for his empirical results and for received monetary theory.

A decade later Friedman and Schwartz published the final volume from their National Bureau monetary factors in business cycles project, the long-awaited Monetary Trends in the United States and the United Kingdom (1982).