This chapter uses the Great Depression as a case study to investigate Keynes' and Friedman's respective appraisals of this severe episode. We analyse first Friedman's explanation of the Great Depression as phenomenon driven by monetary mismatches. We show that the late Friedman eventually put at...

Even when all past and present information is known, individuals usually remain uncertain about the permanence of observed variables. After reviewing the history and role of adaptive expectations and its statistical foundations in modeling this permanent-transitory confusion, the paper...