Milton Friedman And Neoclassicalism

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Nobel Peace Prize winner and famous economist Milton Friedman, started his life in Brooklyn, New York, on July 31 1912. The youngest in his Jewish household, he was already known for his interest in reading and mathematics. His early schooling was held at the public schools of Rahway, New Jersey. In time he was awarded a state scholarship to attend Rutgers University. In his original intent, he was going to go to school for mathematics and eventually have an actuary career; however, he was influenced by a number professors and in time made the transition from mathematics to economics.
That transition led him into The University of Chicago, where he and a group of other economist would create a team. Chicago became known as the “Chicago School”
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Very few people truly believe in every aspect of Neoclassicalism. This is due to its belief on the assumption that supply and demand are equal and that the markets are always clear. Neoclassicalism is heavily devoted to mathematical models to describe the economy and the interaction between individuals within. These models tend to stray away from reality; in a way they show that neoclassical theories aren’t necessarily realistic, but they still help find the answers economists need. George E. P. Box said “Essentially, all models are wrong, but some are useful.” This is proven by Neoclassical…show more content…
Thus creating the Phillips Curve to show this relationship. In the late 1960s, Friedman, along with Edmund Phelps, opposed the original view on the Phillips Curve and provided theirs. Friedman argued for the concept of Stagflation, the argument that the higher the inflation rate, the unemployment rate would go back up as well. Friedman said that not only would we need a higher inlfation rate to keep unemployment down, but also a continuously accelerating inflation rate. In 1970s, this was proven with the stagflation the economy faced. Friedman and Phelps were able to use this and sway the views of most economists. However, there have been arguments since the 1970s that argue against Friedman-Phelps’ theory.

Friedman was one of the most significant supporters of free market. He provided a solution for inflation and fluctuations in the short-run. He is considered a major “friend” to free market economy and liberalism. Many fear his impact will die off, but the significance of his works to our economy show that would be a hard thing to
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