On behalf of myself and the Federal Reserve Bank of Minneapolis, I wish to extend heartfelt congratulations to Ed on this well-deserved award. Ed's contributions to economics have not only fueled advances in theoretical work, but have also had profound impacts at a policy level—as we at the Minneapolis Fed know from personal experience. Over the years this bank, along with all monetary and fiscal policymakers, has benefited from the insights offered by Ed's important work.
While topics such as growth theory and time inconsistency may seem arcane, Ed's insights have important implications for the conduct of tax and fiscal policy, as well as monetary policy and even bank regulatory issues. Even those economists who don't agree with Ed cite his innovative and creative techniques for addressing economic questions.
"One of the benefits of working with someone of Ed's accomplishments is that he makes everyone else better, and his stature has certainly paid dividends for the Minneapolis Fed. He has co-authored numerous articles with bank economists and offered invaluable guidance and direction to others. We feel privileged to have worked with him over the years, and we look forward to many more productive years to come.
Gary H. Stern, President, Federal Reserve Bank of Minneapolis
That Ed Prescott has won the Nobel prize in economics comes as no surprise to his colleagues at the Minneapolis Fed. For close to 25 years, Ed has had a major impact, not only on the economic profession, but on the Bank's view on economic policy.
Ed's path-breaking work on the problem of time inconsistency alone is worthy of a Nobel prize. This work has made us rethink the way macroeconomics should be used to guide monetary policy. When you then consider his research on business cycles, on the equity premium puzzle, on the valuation of the stock market, and on the question as to why some countries are poor and others rich, its easy to see why Ed's colleagues thought he was sure to win the Nobel.
On a more personal note, because of Ed, I have been able to attract some of the best scholars in our profession to the Minneapolis Fed. Much of our success as a research department has its roots in Ed's presence and Ed's research.
Arthur J. Rolnick, Senior Vice President and Director of Research, Federal Reserve Bank of Minneapolis
Ed Prescott is richly deserving of the Nobel Prize in Economics. He is one of the founders of real business cycle theory, which has become the dominant paradigm in modern macroeconomic research and analysis. He has also made major contributions to our understanding of the problem of time consistency in economic policymaking and to our understanding of the factors that cause some economies to grow faster than others. In addition, he has imparted his insights, his rigorousness, and his view of economics as science to his numerous graduate students (and their students), and they are now making major contributions to the field in their own right. It is an honor to have him as a colleague in our department.
Warren W. Weber, Senior Research Officer, Federal Reserve Bank of Minneapolis
Twenty years ago I left the Phd program from Harvard to come and work as
Ed's research assistant and I have been learning from him ever since. It
was the best move of my life. Ed opened my eyes to creative,
thought-provoking research. Ed and Finn are two of the most influential
macroeconomists of the last 50 years. They have changed the way that we
approach the interaction of theory and measurement in a fundamental way.
They are the fathers of the entire school of Minnesota Macroeconomics. In
the 1980s they were regarded as kooky renegades, in the 1990s their work
was regarded as controversial but extremely important, in the 2000s their
methodological approach has been adopted by serious macroeconomists
everywhere. Their prize is both long overdue and well-deserved.
Patrick Kehoe, Monetary Advisor, Federal Reserve Bank of Minneapolis
Ed has revolutionized the way we do macroeconomics—here
at the Minneapolis Fed and at universities across the globe.
He has made major theoretical and methodological breakthroughs
and has addressed important questions in macroeconomics, such as
What are the causes of business cycles and depressions?
What drives movements in stock prices? Why are some countries rich and some poor?
In recent work, Ed asks, Why are Americans working much more
than Europeans? His answer is lower taxes. When I think about
the many hours that Ed spends in his office, in the classroom,
and with his graduate students, I know the answer in his case
is not lower taxes. It is his love of the science.
Ellen R. McGrattan, Monetary Advisor, Federal Reserve Bank of Minneapolis
This is great, great news. I am extremely happy for you.
To say it is well deserved, to say it took too long in coming, would be such massive understatement, I won't say it.
But let me do say something: Thanks so much for being a great advisor. You
have always made
economics exciting, exciting, exciting. And whatever strange little ideas
I've had, whatever
directions my research has gone, you have always been incredibly supportive
(while at the same time challenging my ideas to improve them).
James Schmitz, Senior Economist, Federal Reserve Bank of Minneapolis
Ed Prescott is a phenomenally deserving Nobel prize winner. He has
three major papers, each of which on their own, would be worthy of a
Nobel prize. This fact is simply amazing. Most Nobel prize winners
win for one great contribution, or a collection of contributions none
of which on their own would be Nobel worthy. In the 1980's, Ed and
Finn Kydland revolutionized macroeconomics with what came to be known as real business cycle theory. About the same time, he and Kydland altered our thinking on government policy by demonstrating that what is optimal for a government to plan to do is not what is optimal for a government to actually do when the time comes to do it. To paraphrase Kydland and Prescott's words, this made then current methods for analyzing government policy simply inappropriate. Finally, in the 1990's, Ed and Rajnish Mehra altered our thinking about finance with their discovery of the equity premium puzzle (that the risk associated with equities is far too small relative to bonds to justify their higher average returns). Fundamentally altering our thinking on three vital economic topics is astounding. I am proud to be his colleague.
Christopher J. Phelan, Senior Economist, Federal Reserve Bank of Minneapolis