A recent symposium in the Journal of Political Economy was devoted to two papers in which Professor Friedman had developed more explicitly than previously the theoretical framework underlying his monetary analysis. In the view of the present authors — and, to judge from his reply to his critics, in Friedman's view as well — the symposium was disappointing in its concentration on secondary and polemical questions to the neglect of the basic issues that Friedman had raised. The present paper therefore returns to a consideration of what we conceive to be the fundamental questions posed by Friedman's two papers. The most important of these is, we shall argue, an issue that was never raised in the symposium at all: namely, whether it is appropriate to construct a theory which seeks first to predict changes in nominal income and then to determine the price‐output breakdown, rather than to predict price and output changes separately and to obtain changes in nominal income by aggregating the two. But discussion of this question requires a brief survey of one of Friedman's models, and two related models specified at the same level of generality.
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