Terminology
The term was coined in the 1950s to refer to economists teaching in the Economics Department at the University of Chicago, and closely related academic areas at the University such as the Booth School of Business and the Law School. They met together in frequent intense discussions that helped set a group outlook on economic issues, based on price theory. The 1950s saw the height of popularity of the Keynesian school of economics, so the members of the University of Chicago were considered outside the mainstream.
Besides what is popularly known as the "Chicago school", there is also an "Old Chicago" school of economics, consisting of an earlier generation of economists such as Frank Knight, Henry Simons, Paul Douglas and others, most of whom leaned to the left and also held strongly Keynesian views. Nonetheless, these scholars had an important influence on the thought of Friedman and Stigler, most notably in the development of price theory and transaction cost economics. However, their relationship to the modern macroeconomists (the third wave of Chicago economics), led by Robert Lucas and Eugene Fama, is more blurred.
Read more about this topic: Chicago School Of Economics