The America-born Nobel Laureate economist and popular intellectual, Milton Friedman (1912-2006) was the exponent of the concepts of economic liberty and individual independence. Milton Friedman is known for his contributions in the spheres of macro and micro economics, statistics and economic history. He bagged the 1976 Nobel Prize in Economics for outstanding contributions in the field of monetary history and theory of consumption analysis, as well as for demonstrating the complexity involved with the stabilization policy.
Personal life and academic career:
Friedman was born on 31st July 1912 to Jewish parents in New York's Brooklyn. His higher studies and true academic career began in 1932, after he graduated in Arts from New Jersey's Rutgers University with a competitive scholarship.
His specialization in Applied Mathematics was soon followed by a career and specialization in Economics under the influence of the two economists Homer Jones and Arthur F. Burns. His master degree was accompanied by postgraduate fellowship in statistics at Columbian University. From 1934-35, he was a research fellow under Henry Schultz.
Major works:
Theories related to Economics: Friedman made a restatement of the Quantity Theory of Money in the post-Keynesian era.
The Quantity Theory of Money can be mathematically formulated as:
MV=PY where, M: money supply
V: velocity of money
P: price level
Y: output
This mathematical form can be alternatively restated as:
M= (P/V)* Y
Hence, money supply is a major determinant of the output level. Friedman propounded that as interest rate has a major role to play in the supply of money, it also determines the level of output to that extent.
Friedman's work on Consumption Function or the permanent income hypothesis in 1957 is also of great significance.
Statistical theories: Friedman in association with many others, worked towards the development of a more effective sampling technique called “Sequential Sampling”. It is this sampling method which is regarded as the standard analysis of quality control inspection. This is an extremely simple technique applied to fundamental economic concepts in quality control.
Others: Other important contributions include his criticism of the Phillips curve and the concept of natural rate of unemployment (1968).
Selected publications:
Income from Independent Professional Practice, with Simon Kuznets as co-author (1945)
Essays in Positive Economics (1953)
Studies in the Quantity Theory of Money (1956)
A Theory of the Consumption Function (1957)
Capitalism and Freedom (1962)
Price Theory: A Provisional Text (1962)
A Monetary History of the United States (1867-1960), co-authored by Anna J. Schwartz (1963)
An Economist's Protest: Columns on Political Economy (1972)
Free to Choose, with co-authoress Rose Friedman (1980)