The format of the following seminar proposal matches exactly the template also used for the National Income and Product Accounting course taught by Milton Friedman at the University of Minnesota, 1946. The folder the proposal is found in was incorrectly labelled “University of Chicago. Seminar on Business Cycles” in Milton Friedman’s papers at the Hoover Institution Archives. I still need to check whether this seminar was approved and actually taught.
One can hear in this proposal the rumblings of the future debate to be initiated by Tjalling Koopmans in his 1947 paper, “Measurement without Theory” One can speculate where Friedman stood with respect to the opposite extremes in empirical business cycle research at this time.
Also of interest is his paragraph on the importance of lags in the implementation of stabilisation policy.
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Description of Proposed Course: “Seminar on Business Cycles”
- Purpose: To supplement the existing one-quarter course in business cycles, thereby enabling graduate students to get a fuller training in current work on cyclical fluctuations.
- Content: The course would deal primarily with empirical work on cyclical fluctuations and with proposals for the control of cycles. A cursory acquaintance with the leading theories of cyclical fluctuations would be assumed. Analysis of the bearing of empirical findings on the validity of the various theories, and consideration of the theoretical assumptions implicit in proposed measures for mitigating cyclical fluctuations would provide an opportunity for more intensive discussion of the various theories. The following three paragraphs indicate in somewhat more detail the range of topics to be covered:
- Description of cyclical fluctuations
The students would study actual time series covering a variety of economic activities; they would attempt to isolate and to date cyclical fluctuations in these series. The aim would be to give a realistic picture of the temporal behavior of economic activity; to bring home the diversity of movement; to exorcise the naïve notion that cyclical movements consist of clearly delineated synchronous, and uninterrupted upward and downward movements in practically all sectors of economic activity; and to leave with the student a knowledge of the character and timing of the business cycles in this country during the past few decades.
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- Empirical studies of cyclical fluctuations
The emphasis under this topic would be on both techniques of studying cyclical fluctuations and the substantive findings of various investigators. At least two techniques would be considered: (1) the National Bureau technique; (2) the technique of constructing a system of simultaneous difference equations from statistical data (e.g. Tinbergen’s work). The reason for choosing these is that they represent techniques at opposite extremes; the guiding principle of the Bureau technique is to describe the facts compactly and exactly without departing from them, at least in the initial stages of the work; the guiding principle of the simultaneous equations technique is to replace the facts by a mathematical model as early in the analysis as possible.
- Measures for controlling cyclical fluctuations
A variety of proposals would be considered. The discussion of each would include analysis of the theoretical assumptions underlying it, the practical problems involved, and the empirical evidence, if any, on its possible success. The success of most of the measures depends critically on (1) the lag between the need for action and the recognition of the need (2) the lag between the action and its results. Some attention will therefore be given to the possibility of forecasting and to possible lags between action and effect.
- Title: “Seminar on Business Cycles”
- Prerequisites: B.A. 112, Econ. 149, B.A. 101-102.
- Duration: Two quarters
Source: Hoover Institution Archives. Milton Friedman Papers. Box 76, Folder 3 “University of Chicago [sic]. ‘Seminar on Business Cycles’”.
Image Source: Milton Friedman in 1947 at the founding meeting of the Mt. Pelerin Society. Collected Works of Milton Friedman website at the Hoover Institution Library & Archives.