|
|
 |
|
chicagotribune.com >> Business
Professor with Chicago ties wins Nobel Prize
By Eileen Alt Powell, Associated Press. Associated Press writers Matt Moore in Stockholm and Ananda Shorey in Phoenix contributed to this report
Published October 12, 2004
An American and a Norwegian won the 2004 Nobel Memorial Prize in economic sciences Monday for research on how government policies affect economies around the world and why supply-side shocks like high oil prices can dampen business cycles.
The work by Norwegian Finn E. Kydland and Edward C. Prescott, a professor at Arizona State University at Tempe with ties to the Chicago area, has led to reforms at many of the world's central banks, the citation said. Their research also has given academics better tools for understanding what causes economies to boom or go into recession, it added.
The two professors, who earned their doctorates at Carnegie Mellon University in Pittsburgh, have collaborated on work since the 1970s. They will share an award worth about $1.3 million.
Kydland, who is 60, teaches at Carnegie Mellon and at the University of California at Santa Barbara. Prescott, 63, has taught at a number of universities, including the University of Minnesota, the University of Chicago and Northwestern University. Besides teaching at Arizona State, he serves as an adviser to the Federal Reserve Bank of Minneapolis.
Prescott was a visiting professor in the University of Chicago's economics department in 1978-79 and was a University of Chicago faculty member in 1998-99.
He then went to Northwestern where he taught for three years. Prescott was a visiting professor in the Weinberg College of Arts and Sciences from 1979 to 1980 and was finance professor at the Kellogg School of Management from 1980 to 1982.
The Royal Swedish Academy of Sciences in Stockholm, which oversees the prize, said the professors' research showed that governments and central banks could be more effective if they adopted consistent, long-term rules and followed them. It was published in the late 1970s when many Western economies were shifting from one policy to another as they grappled with slow growth and high inflation, or "stagflation."
The academy also praised the pair for "transforming the theory of business cycles by integrating it with the theory of economic growth."
While most economists at the time looked at how changes in demand like consumer spending affect the economy, Kydland and Prescott looked at supply-side changes, such as advances in technology or changes in oil prices as driving forces in business cycles.
Kydland, who is on a brief visit to Norway, said he learned about the prize while lecturing students at the Norwegian School of Economics and Business Administration in Bergen.
"I was a little perturbed when they interrupted my lecture until I got to the secretary's office and found out what the phone call was about," he said. "It is wonderful to get this recognition."
He said that the theories he and Prescott formulated encouraged governments and monetary authorities not to make jarring changes in their policies.
"The idea is that state institutions should not take (economic steps) that people notice," he said. "If people don't notice, that is a good thing."
Prescott, who became the fifth American to receive the award since 2000, told reporters in Tempe that he learned he had won the Nobel prize in a 4 a.m. phone call.
"I am honored and thank all those that have helped me, in particular Finn Kydland," Prescott said. "The money is nice, but I am not in this game for the money. I am in it because I love doing it--figuring things out and interacting with students and colleagues."
Robert Lucas, 1995 Nobel economics prize recipient and former colleague of Prescott, noted that Prescott and Kydland had long been rumored as candidates for the prize.
"It was overdue," said Lucas, a professor at the University of Chicago.
Prescott's Nobel win was the first by an Arizona State scholar, the school said.
Americans have dominated the Nobel prizes in economic sciences; 36 of the 58 winners have been Americans.
The economics prize is the only award not established in the will of Swedish industrialist Alfred Nobel, the inventor of dynamite. The medicine, physics, chemistry, literature and peace prizes were first awarded in 1901, while the economics prize was set up separately by the Swedish central bank in 1968.
The Nobel prizes are presented Dec. 10, the anniversary of Nobel's death. The peace prize is awarded in Oslo, and the other Nobel prizes are presented in the Swedish capital, Stockholm.
Copyright © 2004, Chicago Tribune
|
|
|
|
|
