Chicago School


DEFINITION of 'Chicago School'

An economic school of thought that originated at the University of Chicago in the 1940s. The main tenets of the Chicago school are that free markets best allocate resources in an economy, and that minimal government intervention is best. The Chicago school includes monetarist beliefs about the economy, and contends that the money supply should be kept in equilibrium with the demand for money. To this end, macroeconomic variables like output and wages are viewed in aggregate for the entire economy.

BREAKING DOWN 'Chicago School'

The Chicago school traces its roots back to Nobel laureate Milton Friedman, whose theories were drastically different from Keynesian economics, the prevailing school at the time. The Chicago school focuses on reducing regulations on business and believes in a laissez-faire approach to competition.

Former fed Chairman Alan Greenspan was thought to be a moderate follower of the Chicago school, and a monetarist in his thoughts toward the money supply.

  1. Laissez Faire

    An economic theory from the 18th century that is strongly opposed ...
  2. Business Cycle

    The fluctuations in economic activity that an economy experiences ...
  3. Neoliberalism

    An approach to economics and social studies in which control ...
  4. Carroll School of Management

    The school of business at Boston College. Its enrollment in 2 ...
  5. Classical Economics

    Classical economics refers to work done by a group of economists ...
  6. Alan Greenspan

    The former chairman of the Board of Governors of the Federal ...
Related Articles
  1. Fundamental Analysis

    How Influential Economists Changed Our History

    Find out how these five groundbreaking thinkers laid our financial foundations.
  2. Professionals

    Get An Academic Finance Career

    Working nine months a year and earning a six-digit salary might seem like the high life, but these jobs are not easy to come by.
  3. Options & Futures

    Nobel Winners Are Economic Prizes

    Before you try to profit from their theories, you should learn about the creators themselves.
  4. Professionals

    7 Courses Finance Students Should Take

    These college classes will help you prepare for the working world. Learn how to stand out from your peers.
  5. Mutual Funds & ETFs

    Strategies For Determining The Market's True Worth

    Learn the strengths and weaknesses of passive and active management when trying to uncover the overall market's worth.
  6. Personal Finance

    What Are Central Banks?

    They print money, they control inflation, and much, much more. All you need to know about central banks is here.
  7. Forex Education

    Free Market Maven: Milton Friedman

    As proponent of free market capitalism, this economist changed the way the world's economies operate.
  8. Retirement

    Economic Indicators To Know

    The economy has a large impact on the market. Learn how to interpret the most important reports.
  9. Investing Basics

    Why Interest Rates Affect Everyone

    Learn why interest rates are one of the most important economic variables and how every individual and business is affected by rate changes.
  10. Investing

    Where the Price is Right for Dividends

    There are two broad schools of thought for equity income investing: The first pays the highest dividend yields and the second focuses on healthy yields.
  1. How do you make working capital adjustments in transfer pricing?

    Transfer pricing refers to prices that a multinational company or group charges a second party operating in a different tax ... Read Full Answer >>
  2. Marginal propensity to Consume (MPC) Vs. Save (MPS)

    Historically, because people in the United States have shown a higher propensity to consume, this is likely the more important ... Read Full Answer >>
  3. Do lower interest rates increase investment spending?

    Lower Interest rates encourage additional investment spending, which gives the economy a boost in times of slow economic ... Read Full Answer >>
  4. Who decides to print money in Russia?

    The Central Bank of the Russian Federation (CBRF), like its peers in most countries, is the governmental entity responsible ... Read Full Answer >>
  5. Who decides to print money in Canada?

    In Canada, new money comes from two places: the Bank of Canada (BOC) and chartered banks such as the Toronto Dominion Bank ... Read Full Answer >>
  6. Who decides when to print money in India?

    The Reserve Bank of India, or RBI, manages currency in India. The bank's additional responsibilities include regulating the ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  3. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  4. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  5. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
  6. Monetary Policy

    Monetary policy is the actions of a central bank, currency board or other regulatory committee that determine the size and ...
Trading Center