Nobel Laureate Edward C. Prescott will deliver a public lecture on Friday, November 22, 2013 at 4:30 p.m. in the Mellon Auditorium at Posner Hall on the Carnegie Mellon University campus. His appearance is the inaugural event in the new Tepper Lecture Series, where a distinguished Ph.D. alumnus of CMU’s Tepper School of Business, formerly known as GSIA, returns to address the school community.
Prescott earned his Ph.D. in economics at CMU in 1967 and served as a faculty member from 1971 to 1980. He is currently a senior monetary advisor at FRB in Minneapolis and is the W.P. Carey Chair in the Department of Economics at Arizona State University.
Prescott and Finn E. Kydland, The Richard P. Simmons Distinguished Professorship and University Professor of Economics at the Tepper School of Business, shared the 2004 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. The Nobel Prize Selection Committee recognized the pair for “their contributions to dynamic macroeconomics: the time consistency of economic policy and the driving forces behind business cycles."
Their pioneering research changed macroeconomic thinking, specifically regarding economic policy and business cycles. They put forth the concept of ‘time-inconsistency,’ in that governments will suffer credibility loss by a public that realizes later decisions may contradict earlier policy. For example, a government that does not enforce a drug patent in an effort to reduce its eventual monopoly price will experience a reduction in innovation. Their work on business cycles challenged the prevailing opinion that these cycles were driven by demand. They demonstrated that historical fluctuations in output and employment could be explained by changes in technology and learned that “business cycle fluctuations are the optimal response to real shocks. The cost of a bad shock cannot be avoided, and policies that attempt to do so will be counterproductive, particularly if they reduce production efficiency.”
Additional details on Edward C. Prescott
and the 2004 Nobel Prize in Economics
are available at the official website of the Nobel Prize: nobelprize.org