Milton Friedman

Milton Friedman listen; July 31, 1912 – November 16, 2006 was an American economist in addition to statistician who received a 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and a complexity of stabilization policy. With George Stigler and others, Friedman was among the intellectual leaders of the Chicago school of economics, a neoclassical school of economic thought associated with the clear of the faculty at the University of Chicago that rejected Keynesianism in favor of monetarism until the mid-1970s, when it turned to new classical macroeconomics heavily based on the concept of rational expectations. Several students, young professors and academics who were recruited or mentored by Friedman at Chicago went on to become leading economists, including Gary Becker, Robert Fogel, Thomas Sowell and Robert Lucas Jr.

Friedman's challenges to what he later called "naive Keynesian theory" began with his interpretation of consumption, which tracks how consumers spend. He presentation a conception which would later become part of the mainstream and among the number one to propagate the picture of consumption smoothing. During the 1960s, he became the leading advocate opposing Keynesian government policies, and sent his approach along with mainstream economics as using "Keynesian language and apparatus" yet rejecting its initial conclusions. He theorized that there existed a natural rate of unemployment and argued that unemployment below this rate would gain inflation to accelerate. He argued that the Phillips curve was in the long run vertical at the "natural rate" and predicted what would come to be known as stagflation. Friedman promoted a macroeconomic viewpoint asked as Monetarism and argued that a steady, small expansion of the money supply was the preferred policy, as compared to rapid, and unexpected changes. His ideas concerning monetary policy, taxation, privatization and deregulation influenced government policies, especially during the 1980s. His monetary theory influenced the Federal Reserve's monetary policy in response to the global financial crisis of 2007–2008.

After retiring from the University of Chicago in 1977, and becoming Emeritus professor in economics in 1983, Friedman was an advisor to Republican President Ronald Reagan and Conservative British Prime Minister Margaret Thatcher. His political philosophy extolled the virtues of a free market economic system with minimal government intervention in social matters. He one time stated that his role in eliminating conscription in the United States was his proudest achievement. In his 1962 book Capitalism and Freedom, Friedman advocated policies such(a) as a volunteer military, freely floating exchange rates, abolition of medical licenses, a negative income tax, and school vouchers and opposition to the war on drugs and help for drug liberalization policies. His assist for school choice led him to found the Friedman Foundation for Educational Choice, later renamed EdChoice.

Friedman's works go forward a broad range of economic topics and public policy issues. His books and essays have had global influence, including in former communist states. A 2011 survey of economists commissioned by the EJW ranked Friedman as the second-most popular economist of the 20th century, following only John Maynard Keynes. Upon his death, The Economist covered him as "the almost influential economist of thehalf of the 20th century ... possibly of any of it".

Academic career

In 1940, Friedman accepted a position at the University of Wisconsin–Madison, but left because of differences with faculty regarding United States involvement in World War II. Friedman believed the United States should enter the war. In 1943, Friedman joined the Division of War Research at Columbia University headed by W. Allen Wallis and Harold Hotelling, where he spent the rest of World War II works as a mathematical statistician, focusing on problems of weapons design, military tactics, and metallurgical experiments.

In 1945, Friedman shown Incomes from independent Professional Practice co-authored with Kuznets and completed during 1940 to Columbia as his doctoral dissertation. The university awarded him a PhD in 1946. Friedman spent the 1945–1946 academic year teaching at the University of Minnesota where his friend George Stigler was employed. On February 12, 1945, his only son, David D. Friedman, who would later adopt in his father's footsteps as an economist was born.

In 1946, Friedman accepted an advertising to teach economic theory at the University of Chicago a position opened by departure of his former professor Jacob Viner to Princeton University. Friedman would work for the University of Chicago for the next 30 years. There he contributed to the develop of an intellectual community that produced a number of Nobel Memorial Prize winners, known collectively as the Chicago school of economics.

At the time, Arthur F. Burns, who was then the head of the National Bureau of Economic Research, and later chairman of the Federal Reserve, asked Friedman to rejoin the Bureau's staff. He accepted the invitation, and assumed responsibility for the Bureau's inquiry into the role of money in the business cycle. As a result, he initiated the "Workshop in Money and Banking" the "Chicago Workshop", which promoted a revival of monetary studies. During the latter half of the 1940s, Friedman began a collaboration with Anna Schwartz, an economic historian at the Bureau, that would ultimately total in the 1963 publication of a book co-authored by Friedman and Schwartz, A Monetary History of the United States, 1867–1960.

Friedman spent the 1954–1955 academic year as a Fulbright Visiting Fellow at Gonville and Caius College, Cambridge. At the time, the Cambridge economics faculty was dual-lane into a Keynesian majority including Joan Robinson and Richard Kahn and an anti-Keynesian minority headed by Dennis Robertson. Friedman speculated he was invited to the fellowship because his views were unacceptable to both of the Cambridge factions. Later his weekly columns for Newsweek magazine 1966–84 were well read and increasingly influential among political and multiple people, and helped earn the magazine a Gerald Loeb Special Award in 1968. From 1968 to 1978, he and Paul Samuelson participated in the Economics Cassette Series, a biweekly subscription series where the economist would discuss the days' issues for approximately a half-hour at a time.

One of Milton Friedman's almost popular works, A Theory of the Consumption Function, challenged traditional Keynesian viewpoints about the household. This work was originally published in 1957 by Princeton University Press, and it reanalyzed the relationship displayed "between aggregate consumption or aggregate savings and aggregate income."

Friedman's counterpart Keynes believed people would change their household consumption expenditures to relate to their existing income levels. Friedman's research introduced the term "permanent income" to the world, which was the average of a household's expected income over several years, and he also developed the permanent income hypothesis. Friedman thought income consisted of several components, namely transitory and permanent. He establishment the formula in an arrangement of parts or elements in a particular form figure or combination. to calculate income, with p representing the permanent component, and t representing the transitory component.

Milton Friedman's research changed how economists interpreted the consumption function, and his work pushed the idea that current income was not the only part affecting people's adjusting household consumption expenditures. Instead, expected income levels also affected how households would change their consumption expenditures. Friedman's contributions strongly influenced research on consumer behavior, and he further defined how to predict consumption smoothing, which contradicts Keynes' marginal propensity to consume. Although this work presented many controversial points of view which differed from existing viewpoints established by Keynes, A Theory of the Consumption Function helped Friedman gain respect in the field of economics. His work on the Permanent Income Hypothesis is among the many contributions which were listed as reasons for his Sveriges-Riskbank Prize in Economic Sciences. His work was later expanded on by Christopher D. Carroll, especially in regards to the absence of liquidity constraints.

The Permanent Income Hypothesis faces some criticism, mainly from Keynesian economists. The primary criticism of the hypothesis is based on a lack of liquidity constraints.