Economic Theory of Milton Friedman

Milton Friedman



Milton Friedman is best known for his compelling commitments to monetary macroeconomics and for his substantial support of the part of free markets in taking care of social issues. Friedman won the Nobel Memorial Prize in Economic Sciences, the sole beneficiary for 1976, for his accomplishments in the fields of consumption analysis, monetary history and hypothesis and for his exhibition of the unpredictability of stabilization policy. This essay demonstrates the role Milton Friedman played in analysing and bringing together economic theories in explaining how they mirror themselves in today’s economic environment. Through him, several tools and techniques of economic theory analysis were introduced and their application illustrated in economic analysis.


Friedman's speculation that total permanent consumption   is a component of permanent   (in the feeling of long-term expected) income was an answer for Kuznets' empirical discoveries that, as opposed to winning Keynesian models at the time, the typical desire to consume does not decay with the rise in income. The permanent income theory has had a significant effect on experimental deal with the consumption function and different fields, regardless of its understood treatment of lifetime as limitless, which makes it inadmissible to manage streamlining over the ordinary existence of the monetary specialists. It was an urgent component of Friedman's general assault on Keynesian fiscal aspects because it suggested

(1) A sharp critique of Keynes-Hansen natural stagnation proposition (which relies on upon the presumption of a rising income proportion);

(2) Dismissal of Keynesian unemployment equilibrium, on the premise of the presentation of wealth into the consumption function and by that of the beneficial outcome of value lessening on consumers' expenditure; and

(3) Rejection of the...