Columbia economist wins Nobel Prize

Colleges and Universities A-Z Columbia University
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<p><a href="http://news.bbc.co.uk/2/hi/business/6033837.stm%5B/url%5D"&gt;http://news.bbc.co.uk/2/hi/business/6033837.stm&lt;/a&gt;&lt;/p>

<p>US scoops Nobel economics prize </p>

<p>American Edmund S Phelps has won the 2006 Nobel Prize in Economics for his work on inflation and unemployment. </p>

<p>He is the sixth American to win a Nobel Prize this year, with only the literature and peace prizes remaining. </p>

<p>Professor Phelps, 73, was educated at Amherst and Yale and now teaches at Columbia University in New York. </p>

<p>The Swedish Academy said his work "deepened our understanding of the relation between short-run and long-run effects of economic policy". </p>

<p>The economics prize has been funded by the Swedish Central Bank since 1969, and has been dominated by Americans. </p>

<p>It is the only one of the awards not established in the will left by Swedish industrialist Alfred Nobel 111 years ago, and its official title is the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. </p>

<p>The prize of 10m kronor ($1.4m, £723,000) will be awarded in a ceremony in Stockholm on 10 December. </p>

<p>The prize this year represents a return to a more traditional economic approach, after last year's award to game theorists Thomas Schelling and Robert Aumann. </p>

<p>Professor Phelps has been concerned with explaining the relationship between unemployment and inflation, which had been described by some economists as a trade-off. </p>

<p>He argued that inflation expectations could become embedded in the economy, leading to stagflation despite high unemployment. </p>

<p>This also meant that if inflation expectations were kept in check, the economy could run at a lower level of unemployment than would otherwise be the case. </p>

<p>Such views helped influence central banks to try and curb inflationary expectations promptly. </p>

<p>Professor Phelps said of his work: </p>

<p>"I tried to put the people back into our economic model and inparticular to take into account their expectations about what other economic actors are doing at the same time and in the future."</p>

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<p>University press release:</p>

<p>
[quote]
Professor Edmund S. Phelps Wins 2006 Nobel Prize in Economics</p>

<p>Edmund S. Phelps, McVickar Professor of Political Economy at Columbia University and director, Center on Capitalism and Society at the Earth Institute, was awarded the Nobel Prize in Economics on Monday, October 9 by the Royal Swedish Academy of Sciences. </p>

<p>Phelps won the award – officially named the Sviriges Riksbank Prize in Economic Sciences – for his analysis of intertemporal tradeoffs in macroeconomic policy.</p>

<p>The Academy noted that the work of Edmund Phelps has deepened our understanding of the relation between short-run and long-run effects of economic policy. His contributions have had a decisive impact on economic research as well as policy. Phelps showed how the possibilities of stabilization policy in the future depend on today's policy decisions: low inflation today leads to expectations of low inflation also in the future, thereby facilitating future policy making.</p>

<p>Low unemployment and low inflation are central goals of stabilization policy. During the 1950s and 1960s the view of a stable tradeoff between inflation and unemployment was established, the so-called Phillips curve. According to this, the price for reduced unemployment was a one-time increase of the inflation rate. Phelps challenged this view through a more fundamental analysis of the determination of wages and prices, taking into account problems of information in the economy. Individual agents have incomplete knowledge about the actions of others and must base their decisions on expectations. Phelps formulated the hypothesis of the expectations-augmented Phillips curve, according to which inflation depends on both unemployment and inflation expectations.</p>

<p>As a consequence, the long-run rate of unemployment is not affected by inflation but only determined by the functioning of the labor market. It follows that stabilization policy can only dampen short-term fluctuations in unemployment. </p>

<p>About Edmund S. Phelps
Edmund S. Phelps joined the Department of Economics at Columbia in 1971 after several years at Pennsylvania and earlier Yale. He was named McVickar Professor of Political Economy in 1982 and director of the Earth Institute’s Center on Capitalism and Society in 2001.* Phelps was elected to membership in the National Academy of Sciences in 1981 at age 47. He is also a fellow of the American Academy of Arts and Sciences and of the Econometric Society. In 2000 he was named a Distinguished Fellow of the American Economic Association. Besides his B.A. from Amherst College in 1955 and his Ph.D. from Yale in 1959 he has six honorary doctorates: Amherst College (1985), University of Rome 'Tor Vergata' (2001), University of Mannheim (2001), Universidade Nova Lisbon (2003), University of Paris-Dauphine (2004) and, in October, the University of Iceland (2004). In May 2004 he was named an honorary professor at Renmin University, Beijing, and in June 2005 he was named an honorary professor at Beijing Technological and Business University and Beijing’s Mundell University of Entrepeneurship.</p>

<p>Columbia and the Nobel Prizes
Columbia has a distinguished tradition in economics, with its faculty winning four Nobel Prizes in economics over the past decade; the most recent in 2001 to University Professor Joseph E. Stiglitz, former chief economist at the World Bank and author of Making Globalization Work. Other past faculty members in economics have included the late William S. Vickrey, James Heckman, Robert Mundell, Edwin R.A. Seligman, Robert M. Haig, Carl S. Shoup, among others. </p>

<p>In the past five years, five Columbia faculty members have received Nobel Prizes. Besides Stiglitz and Heckman in the economics department, Eric Kandel, Richard Axel and Linda B. Buck won for medicine.

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<p>Yale Ph.D., Columbia professor.
I like that.</p>

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<p>Yeah me too :D That's kind of like my dream. But anyway, congrats to prof. Phelps.</p>