Milton Friedman and the Austrian school

A question from Yahoo! Answers:

How were Friedman’s ideas different from the Austrian school?

Most of Friedman’s ideas cannot even be compared to those of Austrians. Austrians were a decidedly non-quantitative bunch, Friedman wasn’t. Austrians by and large were into the big picture; Friedman did a lot of work on short-term stabilization policy.

For example, Friedman found that consumption is by and large determined by income that individuals view as permanent; income that is viewed as transitory is largely saved. Friedman extensively studied policy lags (in fact, he even introduced the terms “observation lag”, “decision lag”, and “effect lag”). He was one of the first to show that inflationary expectations are an important factor in inflation determination.

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