Sunday, October 14, 2012

Nobel Prediction

Tomorrow the Nobel Prize for Economics will be announced.  Names being bantered around include
  • Jean Tirole - for contributions to a number of areas including industrial organization, auction theory, regulation.  Co-winner could be Fudenberg.
  • Eugene Fama - efficient market hypothesis the idea that asset prices fully incorporate all available public information
  • Robert Shiller - why asset prices are not efficient ie Fama is wrong.  Co-winners could be Lo & McKinley or Schleifer & Vishny.
  • David Romer - endogenous growth theory  old growth theory said that the rate of growth of an economy is driven by the growth rates of population and technology - but assumes growth rates of population and technology are fixed outside of the model.  New growth theory says that the growth rate of technology is determined by firms decisions on how much to invest in R&D and new technologies.  Co-winners could be either Aghion & Howitt or Grossman & Helpman. 
  • Robert Barro - for contributions to both rational expectations and new growth theory
Now that most of the rational expectations and RBC pioneers (Lucas, Sargent, Sims, Kydland, Prescott) have gotten their awards (the notable exception being Robert Barro) it would be nice to move on to the New Keynesian School - except I don't see an obvious single name there.
  • Fischer, Gray, and Taylor for developing rational expectations models with sticky prices and wages.
  • Calvo - menu costs.  Co-winners could be Taylor Akerlof (already won one for lemons) Yellen and Mankiw.
  • Stiglitz already won - so maybe his partner Dixit for monopolistic competition.  
  • Bernanke Gertler Gilchrist - models in which non-trivial financial sectors accelerate shocks 
My prediction is David Romer for endogenous growth theory.

Late Note:  hmm my macro-finance-centric oversight.  I assumed Shapley had already won a Nobel Prize (maybe at the same time as Aumann won).  Well he is certainly deserving of one.  I don't really know anything about Roth's work other than he has co-authored a number of papers with my former classmate Tayfun Sonmez on applications of matching problems.

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