Anna Schwartz

Definition

Anna Schwartz was a prominent American economist best known for her collaboration with Milton Friedman on the monetary history of the United States. Together, they authored 'A Monetary History of the United States, 1867-1960,' which laid the foundation for monetarist theory and emphasized the role of money supply in determining economic performance. Schwartz's work significantly influenced economic policy, particularly regarding the importance of controlling inflation through monetary measures.

5 Must Know Facts For Your Next Test

1. Anna Schwartz co-authored 'A Monetary History of the United States' with Milton Friedman, which was published in 1963 and became a pivotal work in economics.
2. Schwartz's research highlighted the relationship between money supply changes and economic fluctuations, particularly during the Great Depression.
3. She played a crucial role in promoting the idea that monetary policy should focus on controlling inflation and managing money supply to ensure economic stability.
4. Schwartz argued against the Keynesian view that fiscal policy was more effective than monetary policy in managing economic cycles.
5. Her work has influenced central banking policies worldwide, as economists increasingly recognized the importance of monitoring money supply to prevent economic crises.

Review Questions

• How did Anna Schwartz's collaboration with Milton Friedman contribute to our understanding of monetary policy?
  • Anna Schwartz's collaboration with Milton Friedman resulted in a groundbreaking analysis of monetary history, particularly through their joint publication 'A Monetary History of the United States.' This work demonstrated how changes in the money supply significantly impact economic performance, especially during periods of recession like the Great Depression. Their findings shifted focus from fiscal policy to a greater emphasis on monetary policy as a primary tool for managing economic stability.
• Discuss how Anna Schwartz's views on monetary policy challenged prevailing Keynesian economics at her time.
  • Anna Schwartz challenged Keynesian economics by arguing that monetary policy was more effective than fiscal policy for managing economic cycles. While Keynesians emphasized government spending to stimulate demand, Schwartz, along with Friedman, posited that controlling money supply could directly influence inflation and economic growth. This perspective not only questioned established norms but also laid the groundwork for monetarism as a dominant economic theory in later decades.
• Evaluate the lasting impact of Anna Schwartz's contributions to economic theory and central banking practices.
  • Anna Schwartz's contributions have had a lasting impact on both economic theory and central banking practices. Her emphasis on the importance of money supply management helped reshape monetary policy frameworks globally, leading central banks to prioritize inflation control as a key objective. The shift towards monetarism has encouraged policymakers to consider how variations in money supply influence broader economic conditions, making her work essential for understanding contemporary economic strategies and responses to financial crises.

Related terms

Milton Friedman: An influential American economist who was a leading figure in the development of monetarist theory, advocating for the control of money supply to manage inflation and economic stability.

Monetarism: An economic theory that emphasizes the role of governments in controlling the amount of money in circulation, arguing that variations in money supply have major influences on national output in the short run and on price levels over longer periods.

Great Depression: A severe worldwide economic downturn that occurred during the 1930s, which greatly influenced Schwartz and Friedman's research on the impact of monetary policy on economic activity.