Results for “nobel” 599 found
Thomson Reuters predicts the 2013 Nobel Laureate in economics
Joshua D. Angrist, David E. Card, Alan B. Krueger, Sir David F. Hendry, M. Hashem Pesaran, Peter C.B. Phillips, Sam Peltzman, and Richard A. Posner, all very good possible picks in my view.
My personal prediction (which never once has been correct, at least not in the proper year) is for an early “shock” prize to Banerjee, Duflo, and Kremer, in part to show (try to show?) that economics really is an actual science.
In any case the above link offers Reuters picks for the science prizes as well. Here are some other speculations for the science prizes as well.
For the pointer I thank Michelle Dawson.
Nobel Prizes: Al Roth and Lloyd Shapley
Great choices. Al Roth for matching and the design of new types of markets. Lloyd Shapley for fundamental contributions to game theory and mathematical economics including the Gale-Shapley algorithm which is a cornerstone of the matching methods Al Roth pioneered. I am especially pleased about this because of Roth’s great work on improving kidney allocation. Here is Roth’s blog, Market Design and here he is giving a talk at Google. Here is what I wrote in 2010 about Roth
Roth has applied heavy-duty theory to the very practical problems of matching doctors to residency programs, children to schools, economists to departments and kidneys to patients in a way that is stable, incentive-compatible, and maximizes the gains from exchange. In my view, Roth is the most influential economist working today. Influential among other economists? Yes. But what I really mean is influential in the world.
Previous posts on MR about Roth (also here). Roth’s papers.
More soon.
2012 Nobel Laureates in economics
Alvin Roth and Lloyd Shapley!
Great picks. Both have done work on matching theory, bargaining theory, allocation theory, and market design. Here is Roth’s blog, he often reads MR by the way and sometimes sends us links. I now need to repack and travel, my apologies, but Alex is likely to have more to say. Alex in particular has many excellent past posts on Roth. Here is an excellent overview of the contributions of Shapley. Here is Wikipedia on Shapley. Here is a Forbes profile of Roth. Here is the Swedish information.
I think of this as a prize about how theory can be turned into usable results, how trade and matching can be made more efficient in concrete ways, how trade is a coordination game, and the intimate connection between issues of trade and issues of distribution.
Richly deserved by both men.
Handicapping the 2012 Nobel
This article mentions Alvin Roth, Bob Shiller, Richard Thaler, Robert Barro, Lars Hansen, Anthony Atkinson, Angus Deaton, Jean Tirole, Stephen Ross, and William Nordhaus.
I’ll predict a triple prize to Shiller, Thaler, and Eugene Fama. Fama clearly deserves it, can’t win it solo (too strongly EMH in an age of financial crisis), but can be bundled with two people from behavioral finance and irrational exuberance theories.
Barro will get it, but not in an election year. Hansen and Ross are good picks but I don’t see them getting it before Fama does. Paul Romer deserves mention but this is probably not his year because of politics in Honduras.
William Baumol cannot be ruled out. A neat idea — but unlikely — is Martin Feldstein and Joseph Newhouse for their pioneering work in health care economics, plus for Feldstein there is public finance too.
Tirole and Nordhaus are deserving perennials, with various bundlings (e.g., Oliver Hart, or for Nordhaus other names in environmental). I hope the Krueger-Tullock idea is not dead but I would bet against it, same with Armen Alchian and Albert Hirschman. Dale Jorgensen has a shot.
I believe Duflo and Banerjee (and possibly Michael Kremer too, maybe even Robert Townsend) will get it sooner than people are expecting, though not this year as they just presented in Stockholm. Next year I think.
Not once in the past have I been right about this.
Addendum: Here is the talk from Northwestern.
An excellent blog post on the various Nobel literary contenders
From Literary Saloon, you can read the post here.
Addendum: Mo Yan has won, one of his best-known novels is Red Sorghum.
The new Nobel Prize in literature odds
The Japanese novelist Haruki Murakami has emerged as the early favourite to win this year’s Nobel prize for literature.
The acclaimed author of titles including Norwegian Wood, The Wind-Up Bird Chronicle and, most recently, IQ84, Murakami has been given odds of 10/1 to win the Nobel by Ladbrokes.
Last year the eventual winner of the award, the Swedish poet Tomas Tranströmer, was the betting firm’s second favourite to take the prize, given initial odds of 9/2 behind the Syrian poet Adonis, at 4/1. This year Adonis has slipped down the list, given odds of 14/1 alongside the Korean poet Ko Un and the Albanian writer Ismail Kadare.
New names in Ladbrokes list this year include the Chinese author Mo Yan and the Dutch writer Cees Nooteboom, both coming in with strong odds of 12/1 to win the Nobel prize.
And:
Britain’s strongest contender for the Nobel this year, which goes to “the most outstanding work in an ideal direction”, is – according to Ladbrokes – Ian McEwan, who comes in at 50/1, behind the singer-songwriter Bob Dylan, at 33/1. American novelist Philip Roth is at 16/1, alongside his compatriot Cormac McCarthy, the Israeli author Amos Oz and the highest-placed female writer, the Italian Dacia Maraini.
The article is here.
Robert Mundell’s tips on how to accept a Nobel Prize
Christopher Sims, Nobel Laureate
Here is Sim’s home page, lots of content. Here is his Wikipedia page. Here is Sims on scholar.google.com. Here is a video of Sims speaking. Sims is currently at Princeton but most closely associated with the University of Minnesota. Basically this is a prize in praise of Minnesota macro, fresh water macro of course, and lots of econometrics. Think of Sims as an economist who found the traditional Keynesian methods “just not good enough” and who worked hard to improve them. He brought a lot more rigor into empirical macro and he helped define a school of thought at the University of Minnesota. His influence will endure. Some of his results raised the status of the “real shocks” approach to business cycles, although I think of Sims’s work as more defined by a method than by any set of conclusions.
I think of Sims as having three major contributions: vector autoregression as a macroeconomic method, impulse response functions, and deep examinations of money-income causality. Via Tim Harford, here are powerpoint slides on the first two, first rate presentation. If you know some math, this is the place to go on Sims.
Here are Jim Hamilton’s mathematical notes on impulse response functions. It has helped economists sort out the differences between expected and unexpected shocks and it has become a regular part of the macroeconomic toolkit. The Swedes give a simple — perhaps too simple — exposition of impulse response functions. Wikipedia has a simple introduction:
In signal processing, the impulse response, or impulse response function (IRF), of a dynamic system is its output when presented with a brief input signal, called an impulse. More generally, an impulse response refers to the reaction of any dynamic system in response to some external change. In both cases, the impulse response describes the reaction of the system as a function of time (or possibly as a function of some other independent variable that parameterizes the dynamic behavior of the system).
Here is one good brief survey of VAR techniques. Here is another: tough stuff! Here is one of Sim’s seminal papers related to VAR techniques. Basically this stuff is saying we don’t know as much as we might like to think we do, most of all about macroeconomics. It is suggested that empirical work proceed with extreme caution and that we should see what we can scoop out of the data in a robust fashion.
He has done serious work on extending concepts of Granger causality; in this context the question is whether money causes output or is it output causing money? Sims’s empirical techniques helped bring people to the conclusion that it was often output causing money and in the 1980s this was a revelation of sorts (though not a new idea to economics).
Here are his files on the topic of rational inattention, coming out of Shannon’s communications theory, not what he is best known for but he has made contributions in that area as well. In this paper he tries to show how rational inattention can give rise to partially Keynesian results. With Sargent, he also has contributions to the fiscal theory of the price level.
Here is a 2007 interview with Sims, quite accessible. He says that monetary policy doesn’t matter as much as you think. He does favor explicit monetary targets, and he worries about the fiscal foundations of the euro. Here is a more technical interview, on statistics, Bayesian reasoning, and GMM, it’s Sims putting some of the math into words, sort of.
Overall: Sims is one of the most important figures in macro econometrics in the last thirty years, if not the most important. He clearly deserves a Nobel Prize.
Nobel for Sargent and Sims
The Nobel in Economics goes to Thomas Sargent and Christopher Sims, for empirical macroeconomics.
Let’s go back to the Lucas Critique of 1976. Lucas looked at the large econometric models of the 1970s, models that contained hundreds of variables relating economic aggregates like income, consumption, unemployment and so forth. Lucas then asked whether these models could be used to predict the impact of new policies. One could certainly take the regression coefficients from these models and forecast but Lucas argued that such a method was invalid because the regression coefficients themselves would change with new policies.
If you wanted to understand the effects of a new policy you had to go deeper, you had to model the decision rules of individuals based on deep, invariant or “structural” factors, factors such as how people value labor and leisure, that would not change as policy changed and you had to include in your macro model another deep factor, expectations.
The Nobel for Christopher Sims and Thomas Sargent is for work each did in their quite different ways to develop ideas and techniques to address the Lucas Critique. Sargent’s (1973, 1976) early work showed how models incorporating rational expectations could be tested empirically. In many of these early models, Sargent showed that including rational expectations in a model could lead to invariance results, nominal shocks caused by changes in the money supply, for example, wouldn’t matter.
Sargent’s name thus became connected with rational expectations and new-classical invariance results. Sargent himself, however, has long moved past rational expectations models towards models that incorporate learning. What will people do when they don’t know the true model of the economy? How will they update their model of the economy based on observations? In these learning models the goal is to look for a self-confirming equilibrium. The interesting thing about a self-confirming equilibrium is that people’s expectations and learning can converge on a false model of the economy! Sargent has thus evolved in a very different direction than one might have imagined in 1976.
Sargent is also a very good economic historian, having written important pieces on monetary history (and also here on America) that combine history with theory.
Sims was also unsatisfied with the standard econometric models of the 1970s. In response, he developed vector auto regressions. In its simplest form a VAR is just a regression of a variable on its past values and the past values of other related variables. It’s easy to run a VAR on unemployment, inflation and output, for example. Such a VAR doesn’t tell you much about structural parameters but surprisingly even very simple VARs have quite good forecasting ability relative to the macro models of the 1970s, this was another reason why those models declined in importance.
Sims, however, took the models a step further by showing that you could identify fundamental shocks in these models by making assumptions about the dynamics or ordering of the shocks. Interest rates respond to government spending, for example, before government spending responds to interest rates. Note that these ordering assumptions tend to be quite neutral with respect to different economic models so VARs could be used to test different theories and could also be used by practioniers of many different stripes. Thus VAR models caught on very quickly and have come to dominate macro-economic modelling.
VAR models can also be identified in different ways, instead of identifying based on ordering, for example, one can identify based on what economic theory predicts about long-run relationships. For example, a monetary shock should affect the price level but not the output level in the long-run. More generally, modern macro models are dynamic models–they make predictions about how variables evolve over time–so relating a VAR to a model thus creating a structural or identified VAR has been the natural way to examine the data and to test modern models.
With identification in hand one can then use these models to plot impulse response functions. How does a shock to oil prices work its way through the economy? When does GDP begin to fall and by how much? How long does it take the economy to recover? What about a shock to monetary policy? Sims (1992), for example, looks at monetary shocks in five modern economies. Understanding these dynamics has played an important role in recent debates over the importance of money, government spending and real shocks.
Thomas Sargent, Nobel Laureate
Most of all, this is a prize about expectations, macroeconomics, and the theory and empirics of policy. Let’s start with Sargent, noting that I will be updating throughout.
Sargent has made major contributions to macroeconomics, the theory of expectations, fiscal policy, economic history, and dynamic learning, among other areas. He is a very worthy Laureate and an extraordinarily deep and productive scholar. Here is Wikipedia on Sargent. Here is his home page, rich with information. Here is Sargent on scholar.google.com. Here is the explanation for both laureates from Sweden. Here is a Thomas Sargent lecture on YouTube.
He now teaches at NYU, and is a fellow at Hoover, though much of his career he spent at the University of Minnesota. Sargent is one of the fathers of “fresh water” macro, though his actual views are far more sophisticated than the critics of his approach might let on. He has done significant work on learning and bounded rationality, for instance. This is very much a “non Keynesian” prize.
I think of Sargent as a “foundationalist” economist who always insists on a model and who takes the results of that model seriously. In general he would be placed in the “market-oriented” camp, though it is a mistake to view his work through the lens of politics.
Sargent was first known for his work on rational expectations in the 1970s. He wrote a seminal paper, with Neil Wallace, on when rational expectations will mean that monetary policy does not matter. You will find that article explained here, and the paper here. Expected monetary growth will not do much for output because it does not fool people and thus its nominal effects wash away.
One of his most important (and depressing) papers is Sargent, Thomas J. and Neil Wallace (1981). “Some Unpleasant Monetarist Arithmetic“. Federal Reserve Bank of Minneapolis Quarterly Review 5 (3): 1–17. The main idea of this paper is that good monetary policy requires good fiscal policy. Otherwise the fight against inflation will not be credible. This is probably his most important paper.
He followed up this paper with Sargent, Thomas J. (1983). “The Ends of Four Big Inflations” in: Inflation: Causes and Effects, ed. by Robert E. Hall, University of Chicago Press, for the NBER, 1983, p. 41–97. This is a masterful work of economic history, showing that monetary stabilizations, from hyperinflation, first required some fiscal policy successes. I view this as his second most important paper, following up on and illustrating “unpleasant monetarist arithmetic.”
These two papers inspired work from other researchers on a “fiscal theory of the price level,” integrating monetary and fiscal theories. In Sargent’s view the quantity theory is a special case of a more general theory of asset-backed monies, and for fiat monies the relevant backing cannot be determined without referring to the fiscal stance of the money-issuing government.
His Dynamic Macroeconomic Theory has been an important Ph.d. text for macro.
Sargent also has important work on computational learning, such as Sargent, Thomas J. and Albert Marcet (1989). “Convergence of Least Squares Learning in Environments with Hidden State Variables and Private Information”. Journal of Political Economy 97 (6): 251. doi:10.1086/261603. A short summary of his work on learning can be found here; I will admit I have never grasped the intuitive kernel behind this work. I have not read Sargent’s work on neutral networks, you will find some of it here. It may someday be seen as path breaking, but so far it has influenced only specialists in that particular area. It is considered to be of high quality technically. Here is his piece, with Marimon and McGrattan, on how “artificially intelligent” traders might converge upon a monetary medium of exchange; think of this as a modern and more technical extension of Carl Menger.
Here is an old paper with Sims, co-laureate, on how to do macro econometrics with a minimum of theoretical assumptions; this reflected a broad move away from structural models and toward “theory-less” approaches such as Vector Auto Regression. Here is his introductory paper on how to understand the VAR method. Sargent’s worry had been that structural models estimate parameters, but then those parameters will vary with policy choices and in essence the economist will be using an “out of date” model. VAR models are an attempt to do without structural estimation as much as possible, though critics might suggest this enterprise was not entirely successful.
Here is Sargent’s take on the history of the Fed; basically the Fed first had an OK model, then forgot it for a while (the 1970s), then relearned it again. In July 2010 he penned a defense of the Greenspan-era FOMC, based on the view that they were tackling worst case scenarios. Here is Sargent’s paper, with Tim Cogley, on what the Fed should do when it does not know the true model.
Circa 2010, in an interview, Sargent defends the relevant of freshwater macro during the recent financial crisis. While my view is not exactly his, it is a good corrective to a lot of what you read in the economics blogosphere. This is the single most readable link in this entire post and the best introduction to Sargent on policy and method for non-economists. The last few pages of the interview have a good discussion of how the euro was an “artificial gold standard,” how it was based on an understanding of the “unpleasant monetarist arithmetic point, and how breaking the fiscal rules has led to the possible collapse of the euro. Recommended.
He has a very interesting 1973 paper on when the price level path will be determinate, again with Neil Wallace. Here is his old paper on whether Keynesian economics is a dead end. Here is his appreciation of Milton Friedman’s macroeconomics. Here is his recent paper on whether financial regulation is needed, in a context of efficiency vs. stability. Sargent has toyed with free banking ideas over the decades, casting them in the context of “the real bills doctrine.” Here is a recent paper on determinants of the debt-gdp ratio.
He is not primarily known for his work on unemployment, but he has a lot of good papers in the area, many of them are listed here. Here he uses layoff taxes and unemployment compensation to explain the behavior of unemployment in Europe over the decades.
His work on “catastrophe,” with Cogley and others, suggests that the equity premium changes with historical memory.
With Velde, Sargent wrote a detailed and excellent book on the history of small change; why was small change scarce for so many centuries? Hint: the answer involves Gresham’s Law. There is an MR discussion of this book here. This book illustrates just how deep Sargent’s learning and erudition runs.
Here are his new papers, Sargent remains very active.
Overall: Sargent really is one of the smartest, deepest, and most scholarly of all contemporary economists. The word “impressive” resonates. He has enough contributions for 1.6 Nobel Prizes, maybe more. He has influenced the thought of all good macroeconomists. The economic history is dedicated and path breaking. If I had to come up with a criticism, I find that some of his papers have an excess of rigor and don’t leave the reader with a clear intuitive result. I am not as enamored of foundations as he is. Still, that is being picky and this is a very very good choice for the prize. I would have considered a co-award with Neil Wallace, however, since two of Sargent’s most important papers (JPE 1975) and “unpleasant monetarist arithmetic” were written with Wallace.
Probably I won’t be updating this post any more!
Nobel Prize in economics goes to Thomas Sargent and Christopher Sims
I’ll be updating this morning’s posts for a while, so visit the site, don’t rely on your RSS feed. Great choices!
Nobel predictions
From Thomson-Reuters, via Greg Mankiw, the list is here. They cite Doug Diamond, Jerry Hausman, Anne Krueger, Gordon Tullock, and Hal White, all great picks, as the favorites.
This year’s economics Nobel lectures
Served up by Mark Thoma, I have not viewed them.
Rob Shimer on the new Nobel Laureates
Read his short piece here and I thank RSK for the pointer.
From another direction, David Z. sends along to me Bruno Frey's Economists in the PITS (pdf), about the scarcity of slots in the top journals.
Mario Vargas Llosa wins Nobel Prize
That's for literature, sadly he never had the chance to win a prize for economics, as his political career as a Peruvian classical liberal was cut short by electoral defeat. He has many fine books but I have two particular favorites: The War of the End of the World (serious and epic, concerning a millenarian revolt in Brazil) and Aunt Julia and the Scriptwriter (a fun story and spoof of telenovela culture). Conversation in the Cathedral is sometimes considered a classic but I find it unreadable. I suspect his early The Green House will resonate more with Latin Americans. His last major novel, The Bad Girl, was entertaining but not entirely satisfying and it reminded me a bit too much of an older man writing about sex. The Feast of the Goat is a very good study of political power. Here are previous MR mentions of Mario Vargas Llosa.
Here is Wikipedia on Vargas Llosa. Alex has done a good bit of work with Alvaro Vargas Llosa, son of Mario and a prominent writer on classical liberal themes, and perhaps he will relate some of that to us.