Edmund Phelps

Part of a series on
Macroeconomics
Basic concepts Aggregate demand Aggregate supply Business cycle Deflation Demand shock Disinflation Effective demand Expectations Adaptive Rational Financial crisis Growth Inflation Demand-pull Cost-push Interest rate Investment Liquidity trap Measures of national income and output GDP GNI NNI Microfoundations Money Endogenous Money creation Demand for money Liquidity preference Money supply National accounts SNA Nominal rigidity Price level Recession Shrinkflation Stagflation Supply shock Saving Unemployment
Policies Fiscal Monetary Commercial Central bank Universal basic income
Models IS–LM AD–AS Keynesian cross Multiplier Accelerator Phillips curve Arrow–Debreu Harrod–Domar Solow–Swan Ramsey–Cass–Koopmans Overlapping generations General equilibrium DSGE Endogenous growth Matching theory Mundell–Fleming Overshooting NAIRU
Related fields Econometrics Economic statistics Monetary economics Development economics International economics
Schools Mainstream Keynesian Neo- New Monetarism New classical Real business-cycle theory Stockholm Supply-side New neoclassical synthesis Saltwater and freshwater Heterodox Austrian Chartalism Modern monetary theory Ecological Post-Keynesian Circuitism Disequilibrium Marxian Market monetarism
People François Quesnay Adam Smith Thomas Robert Malthus Karl Marx Léon Walras Knut Wicksell Irving Fisher Wesley Clair Mitchell John Maynard Keynes Alvin Hansen Michał Kalecki Gunnar Myrdal Simon Kuznets Joan Robinson Friedrich Hayek John Hicks Richard Stone Hyman Minsky Milton Friedman Paul Samuelson Lawrence Klein Edmund Phelps Robert Lucas Jr. Edward C. Prescott Peter Diamond William Nordhaus Joseph Stiglitz Thomas J. Sargent Paul Krugman N. Gregory Mankiw
See also Macroeconomic model Publications in macroeconomics Economics Applied Microeconomics Political economy Mathematical economics
Money portal  Business portal
v t e

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

Early in his career, he became known for his research at

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 title changed to McVickar Professor Emeritus of Political Economy.

Early life and education

Phelps was born on July 26, 1933, in Evanston, Illinois, and he moved with his family to Hastings-on-Hudson, New York when he was six, where he spent his school years.^[1] In 1951, he went to Amherst College for his undergraduate education. At his father's advice, Phelps enrolled in his first economics course in his second year at Amherst. Economist James Nelson gave the course, which was based on the famous textbook Economics by Paul Samuelson. Phelps was strongly impressed with the possibility of applying formal analysis to business.^{[citation needed]} He quickly became aware of an important unsolved problem with the existing economic theory and the existing gap between microeconomics and macroeconomics.

After receiving his

Research in 1960s and 1970s

After receiving his Ph.D., Phelps went to work as an economist for the

Phelps spent 1969–70 at the Center for Advanced Study in Behavioral Science at Stanford University. Discussions with fellow Nobel prize winners Amartya Sen and Kenneth Arrow and especially 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.^[12] 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

In the late 1970s, Phelps and one of his former students,

In 1982, he was appointed the McVickar Professor of Political Economy at Columbia. During the early 1980s, he wrote an introductory textbook synthesizing contemporary economics knowledge. The book, Political Economy, was published in 1985 but had limited classroom adoption.[15]

In the 1980s, Phelps increased collaboration with European universities and institutions, including

Over the late 1980s and the early 1990s, Phelps created a new non-monetary theory of employment in which business asset values drive the natural rate. The theory, first fully set out in his book Structural Slumps (1994), explains Europe's slump without disinflation in the 1980s: the elevation of the world real rate of interest, declining opportunities for continuing technological catching up and the mushrooming social wealth granted by Europe's emerging welfare state play the main causal roles. Two sequel papers in 2000 and 2001 on the theory of 'structural booms' explained US inflationless expansion in the late 1990s and claimed its transience.^[citation needed] His papers develop the thesis that the great economic swings experienced by the West in the past century not only originate in non-monetary shocks but also operate fundamentally by non-monetary mechanisms. This book, as well as subsequent papers, argued that the fluctuation of unemployment rates in the United States, the United Kingdom, and France stemmed from the accumulation of wealth with minimal investment.^[18]

In the mid-1990s, his research turned to what he called

Current focus

Phelps's current work is about the benefits and sources of a country's structural dynamism: the enterprise and creativity of entrepreneurs, the skill of financiers in selecting and supporting the best projects, and the knowledge managers draw upon in evaluating and making use of new methods and products.^[19] Every dynamic economy has its doldrums and even torpid economies may rise, perhaps with delay, to an extraordinary opportunity. However, great dynamism, he argues, brings advantages in virtually every dimension of economic performance, not just in productivity. For Phelps, the challenges presented in a creative and evolving business sector provide most people with their main vehicle for the exploration, exercise, and development of their talents.^[20]

In the already-advanced economies, that is perhaps the best reason that policy must aim to build a business sector of high dynamism and broad inclusion. The research task is to identify the institutions that are pathways to dynamism and the institutions that are obstructions.

Phelps's own research on dynamism began at the European Bank for Reconstruction and Development in 1990 and 1992–93, where he worked on the theory of capitalism and issues of mass privatization in Eastern Europe. Later in the decade, he turned to studying a range of economic institutions in Western Europe and the United States. He conducted research with a focus on the Italian economy as Senior Advisor to Italy in Europe of the Consiglio Nazionale delle Ricerche from 1997 to 2000.

In 2001, he and Roman Frydman founded the Center on Capitalism & Society at Columbia (now a unit of Arts and Sciences) to promote and conduct research on capitalism.

In 2008, writing in the wake of the Great Recession, Phelps criticized the "false" models of neoclassical economics, but he also wrote with skepticism regarding Keynesian resurgence:^[21]

What theory can we use to get us out of the impending slump quickly and reliably? To use the "new classical" theory of fluctuations begun at Chicago in the 1970s – the theory in which the "risk management" models are embedded – is unthinkable, since it is precisely the theory falsified by the asset price collapse. The thoughts of some have turned to John Maynard Keynes. His insights into uncertainty and speculation were deep. Yet his employment theory was problematic and the "Keynesian" policy solutions are questionable at best... At the end of his life, Keynes wrote of "modernist stuff, gone wrong and turned sour and silly". He told his friend Friedrich Hayek he intended to re-examine his theory in his next book. He would have moved on. The admiration we all have for Keynes's fabulous contributions should not sway us from moving on.

Since around 2006, his main research focus has been innovation and economic growth as fueled by the creativity of ordinary people within a nation. His book Mass Flourishing (2013) remarks that cavemen had the ability to imagine new things and the zeal to create them, but a culture liberating and inspiring dynamism is necessary to ignite what Lincoln called a "passion for the new."^[22] These theses on the central role of values for indigenous innovation and the good life are tested in the book Dynamism, coauthored with Raicho Bojilov, Hian Teck Hoon and Gylfi Zoega, which was published by Harvard University Press in 2020.

Phelps has severely criticized the economic policy of U.S. president Donald Trump. It feels "like economic policy at a time of fascism [...] The leader controls the economy and tells the companies how things are going to be done."^[23]

In June 2020, he and other Nobel laureates in Economics, as well as architects, chefs and leaders of international organizations, signed the International Appeal of 7 June 2020 in favor of the purple economy ("Towards a cultural renaissance of the economy"), published in Corriere della Sera,^[24] El País^[25] and Le Monde.^[26]

Personal life

In 1974 Phelps married Viviana Montdor.^[27] Publications have noted that despite his many accomplishments, Phelps does not own a car.^[28]

Honors and awards

In 1981 Phelps was elected to become a member of the National Academy of Science in the USA. In 2006, he was awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, referred to, colloquially, as the Nobel Prize in Economics for "his analysis of inter-temporal tradeoffs in macroeconomic policy." In announcing the prize, the Royal Swedish Academy of Sciences said Phelps's work had "deepened our understanding of the relation between short-run and long-run effects of economic policy."^[29]

In the year 2000, Phelps was made a Distinguished Fellow of the

External links

Wikiquote has quotations related to Edmund Phelps.

• Edmund Phelps official webpage at Columbia University
• Appearances on C-SPAN

Nobel Prize

• Professor Edmund S. Phelps Wins 2006 Nobel Prize in Economics, a Columbia University press release
• "Edmund Phelps's Contributions to Macroeconomics" (PDF). nobelprize.org. Archived from the original (PDF) on January 3, 2007. Retrieved November 26, 2011.
• Uchitelle, Louis (October 10, 2006). "American Wins Nobel in Economics". The New York Times. Retrieved February 11, 2019.
• Edmund S. Phelps on Nobelprize.org

Awards
Preceded by Thomas C. Schelling	Laureate of the Nobel Memorial Prize in Economics 2006	Succeeded by Roger B. Myerson