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Oct 20

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.

Feb 24

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Carl Menger

Carl Menger, was an Austrian economist (1840-1921), who is considered to be, along with W. S. Jevons and M.-E.-L. Walras, a co-founder of marginalism and of the theory of utility, and was also founder of the Austrian School, where his main followers Wieser and Böhm-Bawerk were his disciples. In his “Principles of Economics”, 1871, Menger attacked as incorrect the labor theory of value, expressing his view that the factor determining the value of a good is not the amount of work nor other goods needed to produce it, but the importance we place on the basis of the satisfaction we believe that it can offer.

Oct 2

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Bertil Ohlin

Bertil G. Ohlin Bertil Gotthard Ohlin, 1899-1979, was a Swedish economist, politician and Professor of Economics at the University of Copenhagen and at the Stockholm School of Economics. Along with the British economist James Meade, he received the Nobel Prize in Economic Sciences in 1977, for their significant addition to the development of the theory of international trade and international capital movements.

Ohlin’s main contribution to the economic theory is found in his book “Interregional and International Trade”, 1933, in which he modernizes the theory of international trade and builds on a previous theorem belonging to Eli Heckscher, that has, ever since, been known as the Heckscher-Ohlin model. This model derives from David Ricardo‘s theory of comparative advantage (known as Ricardian trade theory). Its core idea is that each country will specialize in producing those products for which it has better factor endowment. This model predicts and explains the patterns and flows of international trade. However, this model would result to be proven incorrect by the Leontief paradox, nevertheless stimulating new contributions to explain it.

In the macroeconomics field, Ohlin less well known theories are also of great interest. He studied ways of stimulating and cutting demand throughout business cycles depending on the needs of the economy. His studies were a prelude to J. M. Keynes’ works.

Ohlin became the leader of the Liberal People´s Party from 1944 to 1967, being the main opposition party at that time, against the Social Democrat Government. During 1944 and 1945 he was appointed as Minister of Commerce for the wartime government.

Mar 22

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Arthur Cecil Pigou

Arthur Cecil Pigou Pigou was a British economist (1877-1959), disciple of Alfred Marshall, whom he succeeded as a professor at Cambridge. Pigou is remembered above all as a precursor of welfare economics, for his books “Wealth and Welfare”, 1912, and “The Economics of Welfare”, 1920, in which he used measures of national income and its distribution in order to understand how wealth and welfare are related. He is also remembered for making a distinction between different degrees of price discrimination.

Being part of the Cambridge school, Pigou used common tools derived from neoclassical economics, such as marginalism, amongst others.

Jan 11

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Antoine Cournot

Antoine Cournot
Antoine Augustin Cournot, 1801-1877, was a French philosopher and mathematician and one of the precursors of marginalism. He was Professor of mathematical analysis at the Lyon University and later on became Rector of the Dijon Academy. Cournot applied his knowledge of mathematics to economics and developed an important model on oligopolies known as Cournout duopoly model.

Cournot presented his model in his “Researches into the Mathematical Principles of the Theory of Wealth”, 1838. In this model he introduced the concepts of Nash equilibrium and non-cooperative games, decades before they were formally formulated. The model, as well as Stackelberg duopolies, considers quantity the key variable rather than price.

The difference with Stackelberg’s model is that Cournot’s is a simultaneous game in which all firms decide their output at the same time, not as in sequential games. Each firm decides its profit-maximizing quantity as a best response to other firms’ quantities. The model predicts that as the number of firms grows, competition will make total profits tend to zero.

Mar 27

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Anne-Robert-Jacques Turgot

Turgot Turgot was a French abbot (1727-1781), Baron de l’Aulne, who after leaving the clergy became an economist and stateman, and author of the book “Reflections on the Formation and Distribution of Wealth” published in 1776. One of the great Physiocrats, and student of François Quesnay, was the first to clearly formulate the law of diminishing returns. Turgot was an early supporter of trade and economic liberalization, this being the main reason of his great influence on Adam Smith.

Mar 29

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Alvin Harvey Hansen

Alvin Hansen Hansen was an American economist (1887-1975), professor at Harvard University and one of the main precursor of the New Economic Science or Keynesianism, in the U.S. In fact, Hansen is known for popularizing the IS-LM model.

Hansen, heavily influenced by the psychological environment of the Great Depression, also addressed the concept of steady stateand long-term stagnation.

Mar 22

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Alfred Marshall

Alfred Marshall was an English economist (1842-1924), and the true founder of the neoclassical school of economics, which combined the study of wealth distribution of the classical school with the marginalism of the Austrian School and the Lausanne School. Professor at Cambridge, he was the author of “Principles of Economics”, 1890, which became the most widely read manual in microeconomics in his time. This book, which is his major work, established a radical change on how economics were taught. Instead of just writing long pages, Marshall draw diagrams throughout the chapters, allowing a better understanding of economic theories and models, such as J. S. Mill’s reciprocal demand, or an analysis on the differences between fixed and variable cost, and the importance of time periods when analyzing these matters. In fact, Marshall is the precursor of today’s cost analysis.

Of unquestionable educational clarity and filled with profound social principles, Marshall contributed to economic science with concepts such as elasticity and the further development of other subjects, surpluses for instance. Although he did not invent the term nor did he initiate this theory, he did made a clearer separation and definition of different kind of surpluses, such as consumer’s and producer’s surplus.

Also in his “Principles of Economics”, he stated the differences between internal and external economies of scale, as well as a diagram which depicted the fluctuations in supply and demand that took place before arriving to a steady state, a general equilibrium. This equilibrium was reached by means of changing amounts, not prices, as Léon Walras stated.

He is also considered as founder of the Cambridge School, where he taught economics until his retirement. Other renowned economists belonging to this school are Arthur C. Pigou and J. M. Keynes.

Dec 22

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Alban William Housego Phillips

Alban William Housego Phillips, 1914-1975 was a New Zealander economist and Professor at the London School of Economics. Phillips was a follower of Keynesianism and published several articles in which he used mathematically based models to analyse the relations between the Keynesian multiplier and the accelerator effect. However, Phillips is best known worldwide for his famous Phillips curve.

In 1958 he published his article “The Relation between Unemployment and the Rate of Change of Money Wages Rates in the United Kingdom, 1861-1957” in Economica. In this article he provides evidence of the relationship between unemployment and the rate of change of money wages and the basis of what is known as the Phillips Curve.

Jan 31

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Adam Smith

Adam Smith was born in 1723. His father was a lawyer and civil servant, and during his years as a moral philosophy student at the University of Glasgow, Adam Smith developed an increasing interest in liberty, reason and free speech. He then went on to continue his studies at Oxford, where he started writing about the low quality of education in English universities. Later, he taught at Edinburgh and the University of Glasgow, where he would end up occupying the position of rector until his death, in 1790.

During his lifetime, Smith met well known philosophers such as David Hume and Voltaire and other intellectual leaders such as Benjamin Franklin, François Quesnay or A.-R.-J. Turgot, who influenced his work, helping him become the first great economist of the Classical school of economics.

“The Wealth of Nations,” which took twelve long years to write, finally published in 1776, is the foundation of modern economics. It was basically against prevailing mercantilist theories, introducing the importance of the principle of division of labour and defending free trade. Basically, Smith understood that the satisfaction of individual self-interest, limited by that of the others was the best means to achieve the greatest good for the greatest number of people. However, he supported the State’s action in justice, education, health, and in all those enterprises that private initiative was unable to address.