2002 Nemmers Prize in Economics Recipient

Edward C. Prescott

For work focused on business cycles and economic fluctuations that has greatly influenced the field of economics, as well as industrial organization, finance, general equilibrium theory, econometrics, and other areas of study

Edward C. Prescott, Regents Professor at the University of Minnesota and senior economic advisor to the Federal Reserve Bank of Minneapolis, is widely regarded as one of the intellectual leaders of the rational expectations movement within modern macroeconomics. His work has greatly influenced the field of economics, as well as other areas of study, such as industrial organization, finance, general equilibrium theory and econometrics.

Prescott's work has focused on business cycles and economic fluctuations. He has demonstrated that standard growth behavior historically studied by microeconomists also can explain business cycle fluctuations that macroeconomists have sought to understand. His theory that a substantial part of business cycles are simply the best response of the economy to policy changes that affect the economy's productivity is widely accepted in the field of economics.

Prescott's work has also considered the importance of an organization's ability and willingness to commit to specific policies over the long term. Prescott argues that people put their trust in organizations-including government and corporations-because they believe those organizations will deliver on their commitments. Failure to follow through on commitments would make people unwilling to invest in those organizations in the future. This line of reasoning has been considered crucial in the development of central banks that can act independently and maintain credibility in the marketplace.

Prescott received his bachelor's degree in mathematics from Swarthmore College in 1962, his master's degree in operations research from Case-Western University in 1963, and his Ph.D. in economics from Carnegie-Mellon University in 1967.

He has held teaching positions at the University of Chicago, Carnegie-Mellon University, and the University of Pennsylvania. During 1979-82, he served on the faculties of Northwestern's Weinberg College of Arts and Sciences and Kellogg School of Management.

Prescott is a co-editor of Economic Theory and a research associate for the National Bureau of Economic Research. He is a former president of the Society of Economic Dynamics and Control and Society for the Advancement of Economic Theory and a former associate editor of the Journal of Economic Theory, International Economic Review and the Journal of Econometrics.

He has authored more than 70 principal articles, addressing topics like business cycles, economic development, general equilibrium theory, banking and finance and economic policy. He is a fellow of the Econometric Society and a fellow of the American Academy of Arts and Science.