Noble Prize Economics at First 38 years2.docx

1、Noble Prize Economics at First 38 years2The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1969-2007by Assar Lindbeck*18 April 1999 (updated in December 2007)IntroductionIn conjunction with its tercentenary celebrations in 1968, Sveriges Riksbank (the central bank of Sweden)

2、instituted a new award, The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel on the basis of an economic commitment by the bank in perpetuity. The award is given by the Royal Swedish Academy of Sciences according to the same principles as for the Nobel Prizes that have been awa

3、rded since 1901.The procedures for selecting the Laureates are also the same. Each year the Academy receives some 200-300 nominations, usually covering a little more than one hundred nominees. (Unsolicited suggestions from persons who have not been asked to submit nominations are not considered.) Th

4、e Economics Prize Selection Committee of the Academy (with five to eight members) commissions expert studies of the most prominent candidates, sometimes by Swedish experts but usually by foreigners. The Prize Committee presents its award proposal to the Social Science Class of the Academy (Class IX)

5、 in the form of a report, with an extensive survey of the main candidates that are considered for a Prize. The report motivates the proposal and includes all the solicited expert studies. On the basis of this material the class suggests a Laureate (or a shared Prize between two or, at most, three La

6、ureates) regularly following the committees proposal. Finally the entire Academy meets to take the final award decision, usually in October.What criteria have guided the awards so far? And what have been the main problems when selecting the Laureates?It is useful to start a discussion of these issue

7、s with a rough classification of the various types of economics prize awards given so far. It should be kept in mind, however, that all such classifications are rather arbitrary since the multidimensional nature of scientific contributions makes it difficult in avoid overlaps.A Classification of Pri

8、zes for the First 38 yearsGeneral Equilibrium TheoryPaul Samuelson (1970) for having developed static and dynamic economic theory;Obvious examples of this type of award are the Prizes to Paul Samuelson (1970) for having developed static and dynamic economic theory; to Kenneth Arrow and John Hicks (1

9、972) for their pioneering contributions to general economic equilibrium theory and welfare theory; to Gerard Debreu (1983) for his rigorous reformulation of the theory of general equilibrium; and to Maurice Allais (1988) for his pioneering contributions to the theory of markets and efficient utiliza

10、tion of resources. (See the table from a link at the end of the article for an attempt to classify the awards into various fields of research.) Contributions in this category have dealt largely with the analytical structures of theoretical economic models, often highlighting the formal similarity of

11、 these structures, and clarifying the conditions for consistency, equilibrium, stability and efficiency of the economic system. Often, these contributions also have included important comparative static experiments, i.e., analyses of how equilibrium positions change in response to changes in various

12、 exogenous factors (parameters).It is largely due to the above-mentioned theorists that general equilibrium theory has become the basic approach in theoretical economic analysis. For instance, Hicks formulated conditions for multimarket stability, and extended the applicability of the static method

13、of analysis to several periods. He also initiated rigorous dynamic analysis of capital accumulation. Because it was deeply anchored in microeconomic theories of the behavior of individual consumers and firms, the models developed by Hicks offered far better ways to study the consequences of changes

14、in various parameters than did earlier general equilibrium models (such as Lon Walras general equilibrium system of equations). Hicks also presented a celebrated aggregate general equilibrium model with four markets - commodities, labor, credit and money - the so-called IS-LM model.Samuelsons work w

15、as not only a continuation of the contributions by Hicks; it also represented a discontinuity, i.e., a break-through, in terms of analytical sophistication. This is recognized in the Prize citation, which declares that Samuelson actively contributed to raising the level of analysis in economic scien

16、ce. It is hardly an exaggeration to say that he single-handedly rewrote considerable parts of central economic theory: microeconomic theory, static and dynamic, partial and general equilibrium theory, as well as welfare-economics. By extracting interesting inferences from simple mathematically formu

17、lated models, exploiting effectively the second-order conditions of maximization procedures, he derived results which still today rank among the classical theorems of economics.Arrows and Debreus main contributions to general equilibrium theory were to achieve greater generality by applying more pow

18、erful mathematical methods, such as the theory of convex sets. The generality allowed them to define the concept of a good so broadly that the same theory may be used not only in static equilibrium analysis but also in analysis of the spatial distribution of production and consumption activities, in

19、tertemporal analysis and the analysis of decision-making under uncertainty. Arrow also highlighted the difficulties of deriving social welfare functions from individual preferences Arrows so called impossibility theorem.Maurice Allais contributions, made largely in the 1940s, have great similarities

20、 both with Paul Samuelsons (contemporaneous) work and Arrows and Debreus (later) contributions. A special feature of Allais work is that he describes the economys path to equilibrium as a process by which competition removes all surpluses in firms. Allais analysis also covers the case where returns

21、to scale in production give rise to natural monopolies. His contributions thereby laid the foundation for a school of Post-War French economists who analyzed the conditions for an efficient use of resources in large public monopolies (such as Electricit de France and SNCF, the state railway system,)

22、. Allais also anticipated parts of the modern theory of economic growth.MacroeconomicsNumerous prices has been given to macroeconomics, i.e., that branch of economic analysis that explains the behavior of the national economy as a whole in terms of a number of broad aggregates, such as private consu

23、mption, investment, exports, imports, government spending of goods and services, etc. Some of the awarded contributions in this field concern sectors (submodels) of national economies, while others deal with an entire national economy. An award in macroeconomics that refers both to special sectors a

24、nd to the entire national economy is the 1976 Prize to Milton Friedman. The Prize citation referred to his contributions to consumption analysis, monetary history and theory. Milton Friedmans book A Theory of the Consumption Function in 1957 is a successful attempt to combine formal theory and its e

25、mpirical application for a specific sector of the economy. His extensive empirical study of the monetary history of the United States (together with Anna Schwartz) may be regarded as an example of rather pure empirical research, even though the study clearly was based on a theoretical framework emph

26、asizing a monetary interpretation of macroeconomic fluctuations.Franco Modigliani (awarded in 1985) developed two important building blocks in macroeconomic models, namely submodels of private consumption and the financial sector. In particular, in his life-cycle theory of saving Modigliani studied

27、the consequences for household saving of changes in demography and economic growth. Together with Merton Miller he also laid the foundation for the field corporate finance. The Modigliani-Miller theorem states the conditions under which the value of a firm in the stock market is influenced (or not i

28、nfluenced) by the dividend policy of the firm, and the way the firm finances its investment, e.g., via equity capital or borrowing. The Prize to James Tobin (1981) is another example of an award for theoretical contributions concerning specific sectors of a national economy - the award being given f

29、or his analysis of financial markets and their relation to expenditure decisions, employment, production and prices. Tobins way of modeling interactions between financial and real sectors quickly became an integrated part of macroeconomic models for national economies, with an important role played

30、by the relation between the market value of a capital asset and its reproduction costs the so-called Tobins q. Adding the stock of real assets - land, buildings, inventories and claims on raw materials - Tobins portfolio model also becomes the natural analytical tool with which to analyze direct eff

31、ects on product prices of changes in the supply of money.The shared Prize to James Meade and Bertil Ohlin (1977) for their contribution to the theory of international trade and international capital movement is another example of a contribution concerning a specific sector of a national economy: the

32、 sector of foreign transactions. In the case of Ohlin, the award referred to his development of a theory of international and interregional trade, designed to explain both the causes and the consequences of trade known as the Heckscher-Ohlin model. Ohlin showed that the trade patterns of individual countries depend on their proportions of available factors of production (capital and labor), and that international trade tends to equalize the returns to these factors among countries. James Meade analyzed trade policy in a world with various market distortions, hence anticipating the theory of