Edward C. Prescott, 81, Dies; Won Nobel for
Studying Business Cycles
https://www.nytimes.com/2022/11/23/business/edward-c-prescott-dead.html
Related:
https://noahpinion.substack.com/p/macroeconomics-is-still-in-its-infancy
https://www.nytimes.com/2022/11/23/business/edward-c-prescott-dead.html
Related:
https://noahpinion.substack.com/p/macroeconomics-is-still-in-its-infancy
Nobel-Winning Economist Edward C. Prescott Dies at
81 – WSJ
https://www.wsj.com/articles/nobel-winning-economist-edward-c-prescott-dies-at-81-11667922532
Related:
https://www.bloomberg.com/news/articles/2022-11-07/edward-prescott-nobel-prize-winning-economist-dies-at-81
https://www.wsj.com/articles/nobel-winning-economist-edward-c-prescott-dies-at-81-11667922532
Related:
https://www.bloomberg.com/news/articles/2022-11-07/edward-prescott-nobel-prize-winning-economist-dies-at-81
Paul Krugman (2009):
https://www.nytimes.com/2009/09/06/magazine/06Economic-t.html
By the 1980s, however, even this severely limited acceptance of the idea that recessions are bad things had been rejected by many freshwater economists. Instead, the new leaders of the movement, especially Edward Prescott, who was then at the University of Minnesota (you can see where the freshwater moniker comes from), argued that price fluctuations and changes in demand actually had nothing to do with the business cycle. Rather, the business cycle reflects fluctuations in the rate of technological progress, which are amplified by the rational response of workers, who voluntarily work more when the environment is favorable and less when it’s unfavorable. Unemployment is a deliberate decision by workers to take time off.
Put baldly like that, this theory sounds foolish — was the Great Depression really the Great Vacation? And to be honest, I think it really is silly. But the basic premise of Prescott’s “real business cycle” theory was embedded in ingeniously constructed mathematical models, which were mapped onto real data using sophisticated statistical techniques, and the theory came to dominate the teaching of macroeconomics in many university departments. In 2004, reflecting the theory’s influence, Prescott shared a Nobel with Finn Kydland of Carnegie Mellon University.
https://www.nytimes.com/2009/09/06/magazine/06Economic-t.html
By the 1980s, however, even this severely limited acceptance of the idea that recessions are bad things had been rejected by many freshwater economists. Instead, the new leaders of the movement, especially Edward Prescott, who was then at the University of Minnesota (you can see where the freshwater moniker comes from), argued that price fluctuations and changes in demand actually had nothing to do with the business cycle. Rather, the business cycle reflects fluctuations in the rate of technological progress, which are amplified by the rational response of workers, who voluntarily work more when the environment is favorable and less when it’s unfavorable. Unemployment is a deliberate decision by workers to take time off.
Put baldly like that, this theory sounds foolish — was the Great Depression really the Great Vacation? And to be honest, I think it really is silly. But the basic premise of Prescott’s “real business cycle” theory was embedded in ingeniously constructed mathematical models, which were mapped onto real data using sophisticated statistical techniques, and the theory came to dominate the teaching of macroeconomics in many university departments. In 2004, reflecting the theory’s influence, Prescott shared a Nobel with Finn Kydland of Carnegie Mellon University.