For example, Hayek’s analysis has proved valuable in the development of standard microeconomics, since his contribution deepened economists’ understanding of the working of the price system and promoted further investigation of the question of how decentralized information is transmitted by markets. 18 Hayek’s emphasis on prices as processors of information has also had applications to international trade theory.
19 And in macroeconomics and monetary theory, Milton Friedman’s Nobel lecture, published in 1977, cited Hayek’s 1945 paper when arguing that, because it disrupted the signals arising from relative-price movements, inflation both lowered the efficiency of the economy and led output to deviate from its natural (or full-employment) level.