As Friedman and Schwartz noted (p.

At the time, Keynesian policy-makers felt that shifts in aggregate spending drove changes in the money stock, monetary policy was often ineffective as a policy tool and neutral even in the short run, and that therefore activist fiscal policy should be the predominant tool to use in "managing" the market economy through slumps. Indeed, this view was precursory to the core paradigm of Keynes' instability thesis regarding the market economy: wild shifts in business investment, driven by changing whims as manifested in investor sentiment, caused the boom-bust business cycle that seemed to be an inherent feature of a modern capitalist economy. Keynesian theory of course borrows the capitalist instability hypothesis directly from Marx, and prior to Friedman there had been no effective post-war rebuttal of its logic.

Most interesting, as Friedman and Schwartz noted (p.

Friedman and Schwartz also introduced

The example cited by Friedman and Schwartz was China.

The Writings series is arranged chronologically and consists of Schwartz's lectures and publications (some of which are co-authored) as well as drafts of both published and unpublished pieces. Materials related to Schwartz's publications, such as book reviews and edits, are also included under the title of that publication. A significant part of the series consists of drafts of A History of Official Foreign Exchange Market Intervention, a manuscript on which Schwartz was collaborating with Michael Bordo and Owen Humpage. Small amounts of correspondence directly related to the publication of various works is filed with those works. Projects on which Schwartz collaborated with Milton Friedman are in the "Milton Friedman" series; research for various writing projects can be found in the "Subject Files and Research" series.

As Friedman and Schwartz observed (p.

Friedman’s hypothesis was that many of the puzzling and inconsistent results regarding savings and consumption were simply a result of “inappropriate concepts of income and consumption.” In the example of staggered paydays, individual savings rise and the ratio of consumption to income declines with rising income only because we are measuring daily income. If we used an appropriate measure of income, weekly income in the simple example, then there would be no rise in savings with income, and consumption (the ratio of consumption to income) would not change with income.

Friedman and Schwartz noted (p.

Friedman and Schwartz on James Tobin | Uneasy Money

In short, according to Friedman and Schwartz, because of institutional changes and misguided doctrines, the banking panics of the Great Contraction were much more severe and widespread than would have normally occurred during a downturn.

Friedman and Schwartz's institutional arguments persuade me that this is unlikely.

Friedman, M. and Schwartz, A.J.: A Monetary History of …

Friedman and Schwartz's insight was that, if monetary contraction was in fact the source of economic depression, then countries tightly constrained by the gold standard to follow the United States into deflation should have suffered relatively more severe economic downturns.

I would like to say to Milton and Anna: Regarding the Great Depression.

Not Just the Great Contraction: Friedman and Schwartz…

A Monetary History of the United States 1867 to 1960 published in 1963 was written as part of an extensive NBER research project on Money and Business Cycles started in the 1950s. The project resulted in three more books and many important articles. A Monetary History was designed to provide historical evidence for the modern quantity theory of money. The principal lessons of the modern quantity theory of the long-run neutrality of money, the transitory effects of monetary policy on real economic activity, and the importance of stable money and of monetary rules have all been absorbed in modern macro models. A Monetary History , unlike the other books, has endured the test of time and has become a classic whose reputation has grown with age. It succeeded because it was based on narrative and not an explicit model. The narrative methodology pioneered by Friedman and Schwartz and the beautifully written story still captures the imaginations of new generations of economists.

Hamilton, James D.,

1963 publication of a book co-authored by Friedman and Schwartz, ..

Friedman and Schwartz concluded that Canada's economy declined because of its enforced monetary contraction--whether that monetary contraction took place through bank failures or was enforced by the exchange-rate regime was immaterial.