Liz Farquhar, liz.farquhar@asu.edu
(480) 965-7774
October 15, 2004

Prescott wins ASU’s first Nobel

Edward Prescott, the W. P. Carey Chair in Economics at ASU, was named winner of the 2004 Nobel Prize in economic sciences Oct. 11.

Prescott is a professor in the department of economics at ASU’s W. P. Carey School of Business and a senior monetary adviser at the Federal Reserve Bank of Minneapolis. He shares the prize with Finn E. Kydland of Carnegie-Mellon University.

In its announcement, the Nobel Committee of the Royal Swedish Academy of Sciences, Stockholm , lauded Prescott and Kydland “for their contributions to dynamic macroeconomics: the time consistency of economic policy and the driving forces behind business cycles.” Prescott received notification at his Arizona home at 4 a.m. local time.

“I was sleeping a the time,” Prescott says. “I couldn’t figure out how to make the cell phone work. The first three times I cut them off before I knew who it was.”

The prize, including a check for 10 million Swedish kronor (about $1.36 million) to be shared by the two, a gold medal and a diploma, will be presented on Dec. 10, the anniversary of Nobel’s death in 1896.

“I am honored and thank all those that have helped me, in particular Finn Kydland,” Prescott says. “The money is nice, but I am not in this game for the money. I am in it because I love doing it – figuring things out and interacting with students and colleagues.”

Kydland collaborated with Prescott on his groundbreaking research on business cycles.

ASU President Michael Crow says Prescott ’s honor is historic for the university, not only because it represents individual achievement, but also because it ushers in a new era.

“Edward Prescott is most deserving of this highly prestigious honor,” Crow says. “He is a man of great intellect, drive and commitment, who always puts others – particularly students – first. We are immensely proud to have Ed at ASU, and we hope this is the beginning of many Nobel Prize winners coming out of this great institution. We are extremely excited about the fact that he chose to join this university because of what we are attempting to achieve.”

Prescott , known for his work on growth theory and time inconsistency, is one of a small circle of scholars who have altered the course of macroeconomic thinking in the past three decades. The span of his research includes seminal work in business cycles, economic development, general equilibrium theory and finance, and his work has addressed some of the most important questions in economics. His insights have had profound implications for the conduct of fiscal and monetary policy and even bank regulatory issues.

Within the discipline, Prescott is known for his impact on students. His doctoral students are rising stars at universities across the country, and he also is known for his work with talented undergraduate students.

“Many in the world do not understand that economics underlies the rise and fall of countries, businesses, governments and standards of living,” says Robert Mittelstaedt, dean of the W. P. Carey School. “Ed Prescott’s research and teaching has enlightened students, business people, government officials and other academics. In the process, he has opened our eyes to the realization that economic results are rarely random, but the result of policies and actions that need considered judgment. While his research is widely read, he also has a huge impact on individual students, helping them learn from the master on a personal basis.”

Gary Stern, president of the Federal Reserve Bank of Minneapolis, where Prescott has been a consultant since 1980, added his praise.

“On behalf of myself and the Federal Reserve Bank of Minneapolis, I wish to extend heartfelt congratulations to Ed on this well-deserved award,” Stern says. “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 policy makers, has benefited from the insights offered by Ed’s important work.”

Prescott was on the faculty at the University of Minnesota for two decades, where he was a Regents Professor and McKnight Presidential Endowed Professor in Economics before coming to ASU. In 2002, he was awarded the Erwin Plein Nemmers Prize in Economics – a prestigious honor generally reserved for economists believed to be contenders for the Nobel Prize. Also in 2002, he presented the Richard T. Ely Lecture, titled “Prosperity and Depression,” at the American Economic Association meetings.

Prescott earned a Ph.D. in economics from Carnegie-Mellon University and a master of science in operations research at Case-Western Reserve University.

“I am confident good things are going to happen in economics here at ASU,” Prescott says. “A small group can get quite a reputation fairly fast. I see no reason why ASU can’t become one of the major research departments in economics. There is a lot of talent here.”

In 1968, the Bank of Sweden (Sveriges Riksbank) instituted the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”, and it has since been awarded by the Royal Swedish Academy of Sciences, located in Stockholm, Sweden.

Farquhar, with the W. P. Carey School of Business, can be reached at (480) 965-7774 or (liz.farquhar@asu.edu).