Milton Friedman and the Contemporary Monetary Policy

Milton Friedman, American Nobel price winner for Economics, was one of the most important economists in the 20th century. He contributed to the development of macroeconomic theory as well as to the new concept of monetary policy. In the area of economic theory two of main Friedman´s contributions are recorded: the new interpretation of the Quantity Theory of Money and the theory of the Natural Rate of Unemployment. In the area of economic policy his criticism of neo-Keynesian orientation to the stimulation of effective demand and the interest rate targeting is mentioned and his recommendation to manage the money supply is underlined. Friedman´s criticism of the monetary policy of the Federal Reserve during the Great Depression is also paid attention to as well as the contemporary monetary policy of the American central bank.