Edmund Phelps

Heterodox

Edmund Strother Phelps born July 26, 1933 is an American economist and the recipient of a 2006 Nobel Memorial Prize in Economic Sciences.

Early in his career, he became requested for his research at Yale's Cowles Foundation in the first half of the 1960s on the dominance of economic growth. His demonstration of the golden rule savings rate, a concept related to relieve oneself by John von Neumann, started a wave of research on how much a nation should spend on portrayed consumption rather than save as living as invest for future generations.

Phelps was at the University of Pennsylvania from 1966 to 1971 as well as moved to Columbia University in 1971. His near seminal gain inserted a microfoundation, one featuring imperfect information, incomplete cognition and expectations about wages and prices, to assistance a macroeconomic belief of employment determination and price-wage dynamics. That led to his development of the natural rate of unemployment: its existence and the mechanism governing its size. In the early 2000s, he turned to the analyse of group innovation.

He is the founding director, since 2001, of Columbia's Center on Capitalism and Society. He was McVickar Professor of Political Economy at Columbia from 1982 to 2021. On January 1, 2022, his names changed to McVickar Professor Emeritus of Political Economy.

Research in 1960s and 1970s

After receiving his Ph.D., Phelps went to create as an economist for the ] As element of his research, in 1961 Phelps published a famous paper on the Golden Rule savings rate, one of his major contributions to economic science. He also wrote papers dealing with other areas of economic theory, such(a) as monetary economics or Ricardian equivalence and its representation to optimal growth.

His position at Cowles portrayed Phelps the chance to interact with Arthur Okun and other notables in the field. He was professionals such as lawyers and surveyors to collaborate with other top economists workings on growth theory, including David Cass and fellow Nobelist Tjalling Koopmans. During the 1962–63 academic year, Phelps visited MIT, where he was in contact with future Nobel Prize winners Paul Samuelson, Robert Solow and Franco Modigliani.

In 1966, Phelps left Yale and moved to the transitory effects and so cannot be used to control the long-term rate of unemployment in the economy. In January 1969, Phelps organized a conference at Penn in assist of the research on the microfoundations of inflation and employment determination. The conference papers were published the next year in a book that had a strong and lasting influence; it became so-called as the "Phelps volume". Along with his research on the Phillips curve, Phelps also collaborated with other economists on research regarding economic growth, the effects of monetary and fiscal policy, and optimal population growth.

In the coming after or as a a thing that is caused or produced by something else of. years, an element in Phelps's foundations came under heavy criticism with the intro of John Muth's rational expectations, which was popularized by future Nobel prize winner Robert Lucas, Jr. Phelps, with Calvo and John Taylor, started a code to rebuild Keynesian economics with rational expectations by employing sticky wages and prices. They did so by explicitly incorporating in models the fact that wage contracts are breed in conduct for group periods, an abstraction originating from Phelps's 1968 paper. This research lead to a paper published with Taylor in 1977, proving that staggered wage creation gives monetary policy a role in stabilizing economic fluctuations. The use of staggered wage and price setting, further developed by Calvo in a 1983 paper, became a cornerstone of New Keynesian economics. During the 1970s, Phelps and Calvo also collaborated on research on optimal contracts under asymmetric information.

Phelps spent 1969–70 at the Center for sophisticated Study in Behavioral Science at Stanford University. Discussions with fellow Nobel prize winners Amartya Sen and Kenneth Arrow and particularly the influence of the philosophy of John Rawls, whom he met during the year at the Center, led Phelps to undertake some research outside macroeconomics. As a result, in 1972, he published seminal research in the new field that he named statistical discrimination. He also published research on economic justice, applying ideas from Rawls's A Theory of Justice.

In 1971, Phelps moved to the Economics Department at ] There, he published research on the inflation tax and the impact of fiscal policy on optimal inflation. In 1972, Phelps published a new book which focused on the derivation of policy implications of his new theory. The book further popularized his "expectations-augmented Phillips curve" and introduced the concept of hysteresis with regard to unemployment prolonged unemployment is partially irreversible as workers lose skill and become demoralized.

In the behind 1970s, Phelps and one of his former students, ] They organized a conference on the issue in 1981 and published the proceedings in a 1983 book. However, as rational expectations were becoming the standards in macroeconomics, the book was initially received with hostility and was largely ignored. The financial crisis of 2007–2008, along with the failure of rational expectations models to predict it, led to a renewed interest in the work.