NEW YORK (CNNMoney.com) -- Milton Friedman, the Nobel Prize-winning economist who helped shape modern free market economics, died Thursday in San Francisco. He was 94.

A spokesman for the Milton and Rose D. Friedman Foundation confirmed the news to CNN. The cause was heart failure, according to Reuters.

Friedman, who won the Nobel Prize in 1976, helped interpret and popularize so-called supply-side economics, which came to dominate much of U.S. public policy in the second half of the 20th century.

Supply-side economics holds that minimally regulated markets offer the most efficiency in the distribution of goods and services. The theory was prevalent until it fell out of favor during the Great Depression, when Keynesian economics became popular.

Friedman won the Nobel in 1976 for "his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy," according to the Nobel Prize Web site.

Friedman's theories, which included tight fiscal discipline and deregulation of markets, grew influential in the United States after Ronald Reagan became president.

Friedman's ideas were embraced by President Reagan and British Prime Minister Margaret Thatcher in the 1980s and lauded by many in the business world. But they were also controversial because of the deep cuts in government spending and the more restricted role they entailed for government in buffering citizens from economic forces.

Friedman was regarded as the leader of the Chicago School of monetary economics and the leading proponent of free market theory.

The Chicago School regarded the quantity of money as a key instrument of government policy, capable of influencing inflation and business cycles, according to his biography at the Hoover Institution, where Friedman served as a research fellow.

The changes brought about by Friedman's economic work represented a departure from Keynesian economic philosophy, which included generous provisions for the unemployed and wage and price controls. John Maynard Keynes was an English economist influential in the first half of the 20th century.

Overseas, Friedman's work helped shape policies used in Chile in the 1970s. His influence raised eyebrows among critics because of the repressive political situation in the country in that period.

"Milton Friedman revived the economics of liberty, when it had been all but forgotten. He was an intellectual freedom fighter. Never was there a less dismal practitioner of 'the dismal science' [economics]," Thatcher said in a statement published by Reuters.

Other notable figures, including former Federal Reserve Chairman Alan Greenspan, lamented the news of Friedman's death.

"I am deeply saddened at the passing of Milton Friedman," Greenspan told Reuters. "He had been a fixture in my life both professionally and personally for a half century. My world will not be the same."

Current Fed chief Ben Bernanke said Friedman had "no peer" among economic scholars.

"The direct and indirect influences of his thinking on contemporary monetary economics would be difficult to overstate," Bernanke said in a statement. "Milton conveyed to millions an understanding of the economic benefits of free, competitive markets, as well as the close connection that economic freedoms bear to other types of liberty. He will be sorely missed."

Edward Crane, founder and president of the libertarian Cato Institute, said, "Milton was in my mind the greatest champion of freedom in the 20th century. He was a warm, intelligent, wonderful human being and will be deeply missed."

"Milton changed the direction of the world," observed Crane, who recalled attending a conference with Friedman in China in 1988 where Friedman was received "like a rock star" for his reputation as champion of free markets and a free society. "His first policy concern was freeing people from government influence in their lives," said Crane.

California Gov. Arnold Schwarzenegger said in a statement: "Milton was one of the great thinkers and economists of the 20th century, and when I was first exposed to his powerful writings about money, free markets and individual freedom, it was like getting hit by a thunderbolt."

Even economists who didn't always agree with Friedman concurred on his wide influence.

Friedman "had an enormous impact on the shape of most economies in the world in the last 25 to 35 years," said Mark Weisbrot, economist at the progressive Center for Economic and Policy Research.

"If you go back to his book Capitalism and Freedom [published in 1962], it wasn't even reviewed by major reviewers like [the] New York Times. By the end of Reagan's last term, most of his policies were implemented," Weisbrot said.

"Friedman fought a counterrevolution in the 1950s against Keynesianism," said Weisbrot. "He succeeded in that policy moved to the right and the concerns of workers took a back seat compared to those of creditors and bankers."

Crane said that Friedman "never demeaned the motives of his opponents, although they did him. Milton was always willing to talk to anyone. He was respectful of a questions asked him."

Friedman was born in Brooklyn in 1912 to immigrant parents from a province of what was then part of the Austro-Hungarian Empire.

He received a B.A. from Rutgers University in 1932, an M.A. from the University of Chicago the next year and a Ph.D. from Columbia University.

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