RIP Milton Friedman

Milton Friedman (July 31, 1912 – November 16, 2006) died today at the age of 94, a US Nobel prize-winning economist. He won the 1976 Nobel Laureate in Economics for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilisation policy. Other awards he received are the John Bates Clark Medal in 1951, National Medal of Science in 1988 and the Presidential Medal of Freedom in 1988. Friedman was best known for reviving interest in the money supply as a determinant of the nominal value of output, that is, the quantity theory of money. Monetarism is the set of views associated with modern quantity theory, as largely formulated or influenced by Friedman. He co-authored, with Anna Schwartz, A Monetary History of the United States (1963), which sought to examine the role of the money supply and economic activity in U.S. history. A striking conclusion of their research was one regarding the role of money supply fluctuations as contributing to economic fluctuations. Or, as a representative of the Federal Reserve (one Ben Bernanke) pithily expressed it on the occasion of Friedman's 90th birthday in 2002: "Regarding the Great Depression. You're right, we did it. We're very sorry." Several regression studies with David Meiselman in the 1960s suggested the primacy of the money supply over investment and government spending in determining consumption and output. These challenged a prevailing but largely untested view on their relative importance. Friedman's empirical research and some theory supported the conclusion that the short-run effect of a change in the money supply was primarily on output but that the longer-run effect was primarily on the price level.

"Milton Friedman was widely regarded as the leader of the Chicago School of monetary economics, which stresses the importance of the quantity of money as an instrument of government policy and as a determinant of business cycles and inflation. In addition to his scientific work, Friedman also wrote extensively on public policy, always with a primary emphasis on the preservation and extension of individual freedom. His most important books in this field are (with Rose D. Friedman) Capitalism and Freedom (University of Chicago Press, 1962); Bright Promises, Dismal Performance (Thomas Horton and Daughters, 1983), which consists mostly of reprints of columns he wrote for Newsweek from 1966 to 1983; (with Rose D. Friedman) Free to Choose (Harcourt Brace Jovanovich, 1980), which complements a ten-part television series of the same name shown over the Public Broadcasting Service (PBS) network in early 1980; and (with Rose D. Friedman) Tyranny of the Status Quo (Harcourt Brace Jovanovich, 1984), which complements a three-part television series of the same name, shown over PBS in early 1984." -- from Hoover Institution