This course reading list from the Spring quarter of 1950 at the University of Minnesota was enclosed with a thank-you letter dated April 27, 1950 from Walter W. Heller to Milton Friedman thanking him for having sent three reprints of “A Monetary and Fiscal Framework for Economic Stability” (AER, 1948) that Heller had included in the required readings for his Minnesota course.
A brief biography of Walter Heller is provided in the Finding Aid for his papers at the University of Minnesota Archives and here a memoir of a former student.
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University of Minnesota
School of Business Administration
Economics 195 — Fiscal Policy
(Spring, 1950)
| Abbreviations | Textbooks |
| KKK | K.K. Kurihara, Monetary Theory and Public Policy, New York, W. W. Norton, 1940. |
| IEPP | Metzler, et al, Income, Employment, and Public Policy, New York, W. W. Norton, 1948. |
| Douglas Report | Subcommittee on Monetary, Credit and Fiscal Policies of the Joint Congressional Committee on the Economic Report, Monetary, Credit, and Fiscal Policies (Sen. Doc. No. 129, 81st Cong., 2nd Session) |
| PFFE | Musgrave et al, Public Finance and Full Employment, Fed. Res. Bd. Postwar Economic Studies, No. 3, December 1945. |
|
Additional References |
|
| BCT | American Economic Association, Readings in Business Cycle Theory. |
| SCE | American Economic Association, A Survey of Contemporary Economics. |
| B&B | Bowman and Bach, Economic Analysis and Public Policy. |
| H-1 | Hansen, Fiscal Policy and Business Cycles. |
| H-2 | Hansen, Monetary Theory and Fiscal Policy |
| NE | Harris et al, The New Economics. |
| Hart | Hart, Money, Debt, and Economic Activity. |
| “Green Book” | Joint Committee on Economic Report, Monetary, Credit and Fiscal Policies. [Possibly this set of hearings is intended] |
| EC | Lerner, Economics of Control. |
| Murphy | Murphy, The National Debt in War and Transition. |
| S-1 | Simons, Federal Tax Reform. |
| S-2 | Simons, Economic Policy for a Free Society. |
| FAP | Twentieth Century Fund, Financing American Prosperity. |
| AER | American Economic Review |
| CED | Committee for Economic Development. |
Assignments (Do not expect the assignments to fit perfectly into the course outline; you will find that many fit only partially or obliquely and that there is much overlap)
Asterisk (*) means assigned; others are suggested.
I. BACKGROUND AND REVIEW
A. Monetary Policy and Concepts
1.* B&B, Ch. 11 (Ch. 40 also suggested)
2.* KKK, pp. 3-39
B. Public Finance
1.* B&B, Book VI (for quick review)
2. H-1, Part Two
C. Theory of Employment, Income, and Interest
1.* KKK, Part II (But beware of the dogma!)
D. Business Cycles
1.* B&B, Ch. 14 (for review, as needed)
2. Hart, Part III
II. NATURE AND OBJECTIVES OF FISCAL POLICY
1*. Gerhard Colm, “Fiscal Policy” (NE, Ch. 34)
2.* Alvin Hansen, “Keynes on Economic Policy” (NE, Ch. 16)
3.* Hart, Ch. 19
4.* Everett Hagen, “Direct v. Fiscal-Monetary Controls: A Critique” (Mimeograph- to be published in A. E.A. Proceedings, May, 1950)
5.* Smithies, “Federal Budgeting and Fiscal Policy”, (SCE, pp. 174-192)
6.* Wright, “Income Redistribution Reconsidered”, IEPP
7. Vickrey, “Limitations to Keynesian Economics”, Social Research, December, 1948
8. United Nations, National and International Measures for Full Employment, 1949
9. Meade, Planning and the Price Mechanism, The MacMillan Co., 1948
10. “The Problem of Full Employment”, by Hart, Sweezy, et al, AER, Proceedings issue, May, 1946, pp. 280-335.
III. ECONOMIC REQUISITES FOR FULL–EMPLOYMENT EQUILIBRIUM
A. Introduction
1. G. L. Bach, “Economic Requisites for Economic Stability” (to be published in AEA Proceedings, May, 1950)
B. The Income Claims Requirement (and cost-price problems)
1. Walter Morton, “Trade Unionism, Full Employment, and Inflation”, A.E.R., March, 1950
2.* FAP: Ellis, pp. 176-198; Hansen, pp. 256-260; Machlup, pp. 426-440; 460-466 (Suggested also: Clark, pp. 97-125; Williams, pp. 367-373)
C. The Adequate Money Demand Requirement
1. The general problem
a. Samuelson, “The Simple Mathematics of Income Determination”, IEPP
b. Smithies, “Effective Demand and Employment”, NE
c.* Review Kurihara assignment
2. The consumption function
a.* Duesenberry, “Income-Consumption Relations”, IEPP
b. Lubell, “Effects of Redistribution of Income on Consumers’ Expenditures”, AER, December, 1947
3. Investment
a.* Domar, “Investment, Losses, and Monopolies”, IEPP
b.* Higgins, “Concepts and Criteria of Secular Stagnation”, IEPP
c.* Sweezy, “Declining Investment Opportunity”, Ch. 32, NE
d. Higgins, “The Concept of Secular Stagnation”, AER, March, 1950
e. Hansen, H-1, Chs. 16 and 17
f. Wright, “The Great Guessing Game”, Review Econ. Statistics, February, 1946
IV. LONG–RUN FISCAL POLICY
A. General
1. Bishop, “Alternative Expansionist Fiscal Policies: A Diagrammatic Analysis”, IEPP
2.* Smithies, SCE, pp. 192-195
3.* Hansen, H-2, Ch. 13
4.* Williams, “Deficit Spending”, BCT, Ch. 13
5.* Musgrave, “Fiscal Policy, Stability and Full Employment”, PFFE
B. Taxation
1.* Smithies, SCE, pp. 195-200
2.* Musgrave, “Federal Tax Reform”, PFFE
3.* Simons, S-1, Ch. 2
4. Hansen, H-1, Ch. 19
C. Expenditure Policy
1. Higgins, Ch. 35, NE
2.* Smithies, SCE, pp. 200-204
V. DEBT MANAGEMENT
1.* Domar, “Public Debt and National Income”, PFFE
2.* Wallich, “Public Debt and Income Flow”, PFFE
3. Lerner, “The Burden of the National Debt”, IEPP
4.* Simons, “On Debt Policy”, S-2
VI. ANTI–CYCLICAL FISCAL POLICY
A. Political and Administrative Requisites for (and Barriers to) Effective Fiscal Policy
1. Roy Blough, “Political and Administrative Requisites for Achieving Economic Stability”, to be published in Proceedings issue of AER, May, 1950
2.* Alexander, “Opposition to Deficit Spending”, IEPP
B. General
1. Fellner, “Employment Theory and Business Cycles”, SCE
2.* Smithies, SCE, pp. 204-209
3.* Lerner, EC, Ch. 24
C. Automatic Devices
1.* Hart, Chs. 21 and 22
2.* Friedman, “A Monetary and Fiscal Framework for Greater Economic Stability,” AER, Je., 1948
2a. “Comment” on above, and “Rejoinder”, AER, Sept., 1949
3. CED Taxes and the Budget (Policy Statement), 1947, pp. 10-34
D. Discretionary Policy
1.* Hart, Chs. 23 and 24
2.* Hansen, H-2, Ch. 12
3.* Margolis, “Public Works and Economic Instability”, JPE, August, 1949
E. State and Local Finance
1. Mitchell, Litterer, and Domar, “State and Local Finance”, PFFE
VII. SPECIFIC APPLICATIONS OF FISCAL POLICY
A. The Wartime Case
1.* Murphy, Chs. 5, 6, 7, 18, 19
2. Keynes, How to Pay for the War, Macmillan, London, 1940
B. A War–Devastated Economy
1.* Heller, “The Role of Fiscal-Monetary Policy in German Economic Recovery”, AER, Proceedings issue, May, 1950 (also mimeographs on reserve)
C. The U.S. Economy in Peacetime (?)
1.* Douglas Report, pp. 1-32
2.* The Green Book, pp. 395-424 (skim and scan)
3. CED. Monetary and Fiscal Policy for Greater Economic Stability, (Policy Statement), 1948
Source: Hoover Institution Archives, Milton Friedman Papers, Box 28, Folder 5 (Correspondence: Heller, Walter W.).