Friedman, Milton (1912–2006)
Milton Friedman is widely regarded as one of the most important economists of the 20th century. He is famous for his rehabilitation of money as a major determinant of macroeconomic outcomes. For many academic economists, A Theory of the Consumption Function (1957) is his greatest work. Friedman showed that the Keynesian concept of household behaviour was fundamentally flawed, arguing that people adjusted their consumption to variations in their long-term expected (‘permanent’) income. As such, his theory foreshadows the approach to microfoundations that is the cornerstone of modern macroeconomics. His advocacy of economic freedom and market solutions to various socio-economic problems made him a leading policy thinker.
KeywordsAssumptions controversy Bernoulli, D. Choice under uncertainty Consumption function Econometrics Economic freedom Excise taxes Expected utility hypothesis Flexible exchange rates Friedman, M. Hotelling, H. Inflation Keynesianism Knight, F. H. Monetarism Monetary approach to the balance of payments Monetary transmission mechanism Money Money supply Natural rate of unemployment Nominal income Non-accelerating inflation rate of unemployment (NAIRU) Permanent income hypothesis Phillips curve Prediction Price theory Quantity theory of money Robbins, L. C. Sequential sampling Unemployment Variance
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