Nobel laureate Edward C. Prescott visits Tamkang

2010/09/23

FENG, WEN-HSING

In 2004, Professor Edward Prescott received the Nobel Memorial Prize in Economics (along with his long-time research partner Finn E. Kydland). He was conferred this honor largely due to his contribution to the field of dynamic macroeconomics, which involved in-depth research on two aspects of economics in particular: the time consistency of economic policy as well as the driving forces behind business cycles. On Monday 20 September, Prof. Prescott came to Tamkang University’s Danshui campus to deliver a lecture on the current status of the global economy.

Prof. Prescott was born in Glens Falls, New York, in 1940. In 1967 he received his doctorate in economics from Carnegie-Mellon University, and he is currently serving as a professor at Arizona State University and an economist at the Federal Reserve Bank of Minneapolis. During his career, Prof. Prescott has taught and held official posts at a variety of schools and institutions, including the University of Minnesota, Twin Cities (1980-1998; 1999-2003), the University of Chicago (1998-1999); he served as the president of the Society for Economic Dynamics and Control (1992-1995), the president of the Society for the Advancement of Economic Theory (1992-1994), the editor of publications such as Economic Theory and the Journal of Economic Theory, and an academician at the American Academy of Arts and Sciences and the Econometric Society. He also received the prestigious 2002 Erwin Plein Nemmers Prize in Economics.

The focus of Prof. Prescott’s research has in large part centered on macroeconomics, general equilibrium theory, and economic development. The Nobel-winning paper that he wrote with Prof. Kyland was entitled “Rules Rather Than Discretion: the Inconsistency of Optimal Plans”, and was a treatise on the problem of inconsistency in short and long-term government policies. In it, he emphasized the primacy of economic policy rules over personal discretion to stimulate economic performance, a principle that then prompted many countries to establish independent central banks. Their second major contribution to the field came in their discourse on the driving forces behind business cycles. In this, they identified factors relating to market supply as the central force driving the ebb and flow of business cycles. Their dissertation even influenced economic methodology, prompting more and more researchers to use quantitative economic theory in their analyses of problems.

Prof. Prescott came to Taiwan specifically to attend the 2010 Taipei International Conference on Growth, Trade, and Dynamics. During his trip, Tamkang University had the honor of a personal visit and scheduled lecture from the distinguished Nobel laureate. The lecture was given on a crucial topic explored in Prof. Prescott’s recent research, with the heading “Asia Booming, U.S. Depressed, and Europe Stagnating”. The occasion afforded Tamkang students the chance to rub shoulders with a renowned economic scholar, to come face to face with a mentor and teacher who relishes the process of teaching, and instructs in a humorous yet focused fashion. His much-anticipated lecture surpassed all expectations and was the ideal close to a highly edifying visit.

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