The Friedman-Meiselman CMC Paper: New Evidence on an Old Controversy.

In 1963 economists Milton Friedman and David Meiselman published a paper for the Commission on "Money and Credit," in which they attempt to test the relative predictive power of Keynesian and monetary theories of business fluctuations. Their methods and conclusions were sharply disputed in papers by scholars Donald Hester, Albert Ando and Franco Modigliani, and Michael DePrano and Thomas Mayer. The purpose is to review this controversy. The method is the simple one of first replicating the studies over the original sample periods and then examining the postsample performance of the competing equations. On a sociological level there can be little doubt that this controversy was and continues to be, enormously valuable. Many economists have been stimulated to work on the questions disputed by the monetarist and Keynesian combatants and it is probably correct to argue that two models of the U.S. economy are a direct outgrowth of the controversy. What has been missing from this continuing controversy, however, is an ex post evaluation of the earlier empirical work.