Oct 30

Joan Robinson

Joan Violet Robinson, 1903-1983, was a British economist and Professor at Cambridge University, and belonged to the Post-Keynesian doctrine. She was recognized as a contributor to Keynes‘ famous “The General Theory of Employment, Interest and Money”, 1936.

One of her first and most notorious contributions to economics was in the field of imperfect competition, which can be seen in her book “The Economics of Imperfect Competition”. Along with Chamberlin’s work, Robinson’s book is considered to be the foundations of market structure analysis.

Robinson is well known for her heterodox economic thoughts; especially for her receptivity for certain Marxist approaches. Her top work “The Accumulation of Capital”, 1956, extended Keynesianism by going ahead of the issues in the short-run and analysing the long-run issues of development, economic growth and capital accumulation.

Oct 23

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Michael Spence

Andrew Michael Spence

Andrew Michael Spence, born in 1943, is an American economist and has been Professor at Harvard University and Stanford University, amongst others. He is currently a lecturer at New York University. His researches and contributions have been mainly in the field of economics of information, and together with economists George A. Akerlof and Joseph E. Stiglitz, Spence was awarded the Nobel Prize in Economic Sciences in 2001 for his work regarding asymmetric information.

Spence paid special attention to the study of those situations in which if certain market participants have more information than the rest, they will take care of disseminating this information to everybody. For instance, it shows how companies use their dividend policy to signal their profitability to market analysts.

In his book “Job Market Signaling”, 1973, he develops Akerlof’s previous studies and applies them to the labour market: when hiring a new employee, and as the firm does not know the labour value that this potential employee will add, they will offer an average salary level that will not match what the best candidates deserve. It is therefore important to inform others about the features that are not readily observable, what Spence called signalling. Academic degrees are a way of signalling inside the labour market as they are used to show above average labour value.

Oct 20

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Christopher Pissarides

Christopher Pissarides
Christopher Antoniou Pissarides, born in 1943, is a Cypriot economist and a School Professor at the London School of Economics. His research has mainly been focussed in the field of macroeconomics, specially in job search frictions explaining unemployment. Pissarides, along with Peter A. Diamond and Dale T. Mortensen were the joint winners of the Nobel Prize in Economic Sciences in the year 2010, for their analysis of markets with search frictions.

Pissarides’ studies have been of great contribution to the search and matching theory. He has observed the relations and interactions between the labour market and the macro economy. He is one of the developers of the matching function, a concept that tries to explain the flows from unemployment to employment, at a given moment, using empirical work to support it.

Pissarides and Mortensen wrote their famous “Job Creation and Job Destruction in the Theory of Unemployment” first published in 1994 in the Review of Economic Studies. This paper was a summation of the authors’ researches and conclusions. The Mortensen-Pissarides modelthat was forged in this work has been key in modern macroeconomics. It has a matching function that describes how workers are matched to vacancies based on a Nash’s bargaining analysis.

Oct 15

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Oliver Williamson

Oliver Williamson Oliver Eaton Williamson, born in 1932, is an American Economist and has been a Professor at the University of Pennsylvania, Yale University and the University of California, Berkeley. In year 2009 he was awarded the Nobel Prize in Economics Sciences along Elinor Ostrom, for their analysis of economic governance.

Williamson’s contributions have been of great interest in the field of industrial organization theory. He has argued that hierarchical and market organizations, such as firms, can also realize the function of governance’s structures in the resolution of market conflicts. However, problems can also arise from this intervention, as firms with enough size can disturb the order and abuse their market powers. Williamson’s analyses about hierarchy and market power are at the core of some of his articles, such as “Economies as an Antitrust Defense: The Welfare Tradeoffs”, 1968, and “Market and Hierarchies: Some Elementary Considerations”, 1973.

As a disciple of Ronald Coase he took special interest on transaction costs, and made a distinction between two different kinds: repeated case-by-case and relationship-specific contracts. The latter comes from the repetition of the first one, and comes from an on-going relation that ends with an entrenchment amongst parties. In fact, Williamson is considered to be the economist that produced the most articles about transaction costs, from which must be highlighted the following: “Transaction-Cost Economics: The Governance of Contractual Relations”, 1979, and “The Economics of Organization: The Transaction Cost Approach”, 1981.

Oct 13

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Joseph Stiglitz

Joseph Eugene Stiglitz, born in 1943, is an American economist and could be consider as a supporter New Keynesian Economics. In 2001, jointly with George A. Akerlof and Michael Spence, he was awarded the Noble Prize in Economic Sciences for his work regarding analysis in markets with asymmetric information. In 2003 he became a Professor at Columbia University.

Stiglitz paid special attention and studied those situations in which the market agents that are worst informed, manage to extract market information through the use of sampling technics. This was an extension and completion of Spence´s work on signalling, but from the consumer’s point of view. Through different papers and works, such as “Credit Rationing in Markets with Imperfect Information”, published in 1981 and co-authored by Andrew Weiss, Stiglitz has analysed and explained that some market phenomena, such as unemployment and credit rationing, are better understood by the existence of asymmetric information.

As a result of the research that Stiglitz carried out involving efficiency wages, he and Carl Shapirodeveloped the Shapiro-Stiglitz model in their article “Unemployment as a Worker Discipline Device”, 1984. This model helps explain why unemployment exists, even in equilibrium, and why also, even without minimum wages, wages do not decrease fast enough for everyone to be hired.

Stiglitz was part of the Clinton administration from 1993 to 1997. He also served as senior vice-president and chief economist at the World Bankfrom 1997 to 2000.

Oct 10

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Ronald Coase

Ronald Harry Coase, 1910-2013, was a British Economist and Professor Emeritus of Economics at the University of Chicago, where he also held the direction of the magazine “Journal of Law and Economics” from 1964 to 1982. Coase was awarded the Nobel Prize in Economic Sciences in 1991, for identifying and describing transaction costs and property rights for the institutional structure, and also explaining their role in the functioning of the economy.

Coase is considered father of the economic analysis of law and of the new institutional economics. As a member of the Chicago School, his ideas were influenced by this doctrine. Coase’s concept of “economics” was based in pragmatism, as something that has to be relevant and useful in the real world, and thus turned his back on excessive dogmatism, to what he refers as “blackboard economics”. He believed that you could not understand the behaviour of something without seeing and touching its reality.

In 1937 Coase published “The Nature of the Firm”, in which he stated that firms were created to act as a coordinating agency for a number of productive individuals. In this way, instead of operating independently, they do so within a global framework, avoiding tough negotiations and heavy costs, the so called transactions costs. He explained the reason of companies and of their different sizes through the idea that a company stops expanding when its growth causes its structure to be too complex, and this complexity has a multiplying effect on errors.

Coase also researched externalities and the social costs they underline. He published his article “The Problem of Social Cost”, 1960, in which he argues against the blame on externalities, as he believes this is unclear, and where he theorized on how to achieve an efficient market resource allocation. As the Coase theorem states, “the initial allocation of legal entitlements does not matter from an efficiency perspective so long as they can be freely exchanged” meaning that free exchange will solve market resources misallocation.

In the field of monopoly theory he developed the Coase conjecture. It states that monopolists that have durable-goods will lose market power because they will be incapable of maintaining their prices levels, as they will be seduced to end up decreasing prices, to reach all income levels.

Oct 8

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William Vickrey

William Vickrey
William Spencer Vickrey, 1914-1996, was a Canadian economist settled in the United States and Professor of economics at Columbia University. He shared the Nobel Prize in Economic Sciences in 1996 with the Scottish economist James Mirrlees, for their contribution to the economic theory of incentives under asymmetric information. His contributions to the economic theory have always tried to answer needs and gaps of it, and his economic philosophy was influenced by J. M. Keynes.

Vickrey claimed that information asymmetries’ occurred often and made decision taking harder. In situations where an agent had a better knowledge of information, he could use it to his advantage. Vickrey carried out researches about auctions, raising designs and developing ways to increase its efficiency. His theories are nowadays applied and used by the world´s central banks when new debt auctions are held. He gives name to the Vickrey auction. His ideas are reflected in his key paper “Counterspeculation, Auctions, and Competitive Sealed Tenders”, 1961. Vickrey’s work on information asymmetry in the area of fiscal policy, gave way to James Mirrlees’ theories about revealed preferences.

Oct 7

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Friedrich A. von Hayek

Friedrich A. von Hayek Friedrich August von Hayek, 1899-1992, was an Austrian-Hungarian economist, philosopher and Professor from 1931 to 1950 at the London School of Economics and from 1950 to 1962 at the University of Chicago. He won the Noble Prize in Economic Sciences jointly with Gunnar Myrdal in the year 1974 for their pioneer work regarding theory of money and economic fluctuations, and for their research on the interdependence of economic, social and institutional phenomena.

Hayek was disciple of Joseph Schumpeter, Ludwig von Mises, Gottfried Haberler and Fritz Machlup and became a follower of the ideas of the Austrian school. For many, he has been regarded as the father of modern liberalism. His ideas inspired the School of Chicago’s neoliberal monetarism.

Hayek has been one of the greatest critics of the planned and socialist economy, as he considers it inevitably leads to totalitarianism and to the absence of individual freedom. He reflects this issue in his “The Road to Serfdom”, 1944. He believes the economy has its own way of working and describes the cycles of the economy, in what is seen as his greatest contribution to economics, in his work “Pure Theory of Capital”, 1941.

He perceived the economy as a coordination problem, and all maladjustment in the economy are due to the improper coordination between agents, however this disorders would serve to achieve a correct and efficient coordination between them. Any economic policy that attempts to correct the economy would, nevertheless, create an artificial patch that would in the long term aggravate the situation.

Oct 4

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Paul Samuelson

Paul A. Samuelson Paul Anthony Samuelson, 1915-2009, was an American economist and Professor at the Massachusetts Institute of Technology. He was the first American to win the Nobel Prize in Economic Sciences, in 1970; he was granted this prize for his contribution in raising the level of scientific analysis in economic theory.

Samuelson is sometimes referred to as the “father of modern economics”. His “Economics: An Introduction Analysis”, 1948, in which he explains the Keynesian economic principles, has been the most widely-spread economic textbook ever since, being translated to over 40 languages.

He is the author of the theory of revealed preference, that states the demand curve is not only utility-based. Regarding macroeconomics, he has insisted in the relation between the acceleration principle and the multiplier principle, and along his contributions to trade theory, he extended the Hecksher-Ohlin model by means of the factor price equalization theorem, by which it is said that free trade not only leads product prices to equalize, but also production factors prices.

Samuelson is considered to be the maximum formulator of the mixed economycharacteristics, one of the founders of Neo-Keynesianismand a key figure of neoclassical economics.

Oct 3

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Maurice Allais

Maurice Félix Charles Allais, 1911-2010, was a French economist, physicist and Professor of Economics at the École Nationale Supérieure des Mines de Paris (Mines ParisTech). His pioneer contributions to the theory of markets and to the efficient utilization of resources, had him win the Noble Prize in Economic Sciences in 1988. He defined himself as a “Liberal Socialist”

Allais took Léon Walras’ and Vilfredo Pareto’s previous works regarding equilibrium and market efficiency, and developed them with a more rigorous mathematical formulation back up. He is also known for the Allais paradox, which is a breach in the decision theory, as it fails the expected utility theory. He was able to apply his theory of behaviour under uncertainty in the general equilibrium model, by demonstrating that a competitive allocation of risks leads to an optimal allocation of resources. Allais also made contributions in the area of monetary policy and studied the influence of non-rational behaviour in economic decisions, serving as an inspiration for Kahneman´s work.

Allais’ papers, always written in French, that stand out among his major works are: “Á la recherche d’une discipline économique” (In Search of an Economic Discipline), 1943, and “Économie et intérêt” (Economy and Interest), 1947.