Merton Miller believed in markets; markets that can close down due to government regulations. Student in economy at Harvard, Miller was never influenced by the Keynesianism. Indeed, during his studies at the University of Chicago, he was more interested in Fritz Machlup’s theory, a great Austrian economist. The virtues of the free market and the dangers of state control were the main subjects of his lectures.
Miller became famous in 1958 thanks to his collaboration with Modigliani in the Modigliani-Miller paper.
Unlike Miller, Fischer believed in equilibrium. Thus, he brought a new approach to the theory of money, when he arrived at Chicago, stating that income was a prime determinant of money. Moreover, it should be pointed out that the battle between the two theories is not truly relevant as the central bank is mainly irrelevant.
B for Jamon - for grammatical errors.
ReplyDeleteI think you mean "can be closed down to government regulations".
What does it mean that Miller believed in markets and Black believed in equilibrium?
For Miller, it means that markets reveal important information about how much buyers and sellers want something.
For Black, it means that buyers and sellers are always in equilibrium, and the information we need it already there if we just look for it.
And, to clarify, Black took the position that the differences between Keynesians and monetarists were irrelevant because they relied on the idea of central banking. That idea in turn was irrelevant if income was causing money (and rates) rather than the other way around.