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Chicago School of Economics

The Chicago School of Economics is a neoclassical school of economic thought that originated from the University of Chicago in the 1940s. The ideas of Milton Friedman acted as the starting point for the development of the Chicago School of Economics. The main ideas of the Chicago school are that an economy functions best with the least amount of government invention and that free markets are most effective for resource allocation¹. The Chicago School is critical of Keynesian government intervention and places Monetarism over Keysnesianism. The Chicago School also demonstrates preference for positive economics, which is the use of statistical data to verify theories. The School's strong belief in free markets and limited government regulation influenced intuitions such as IMF and the World bank.

The general assertion for this school of thought are that monopolies are the result of the government’s attempt to control an economy and that governments should not try to manage aggregate demand and should instead focus on controlling the consistent growth of money supply¹. The Chicago School has generated ideas about economic theories of socialism, economics in Western households, and equilibrium models about foreign trade. The Chicago School states that, “The unifying thread in all this is not political or ideological but methodological, the methodological conviction that economics is an incomparably powerful tool for understanding society”¹

 

References:

1. About the Department. Retrieved from www.economics.uchicago.edu/about/

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