shiller presentation
TRANSCRIPT
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TheYale
Tradition
in
Macroeconomics
RobertJ.Shiller
ArthurOkun ProfessorofEconomics
NewHaven,April8,2011
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onlythree
professors:
Jeremiah
Day,
Prof.
of
MathematicsandNaturalPhiloso h Ben amin
Silliman,Prof.ofChemistryandMineralogy,
JamesL.
Kingsley,
Prof.
of
Language
and
Eccl.
History,andsixtutors,noeconomicsatall
PoliticalEconomyfirstappearsinYaleCatalog
18245
Stillnoeconomics rofessors
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EconomicsTextUsed182837:Jean
BaptisteSay
(1767
1832)
d'conomie politique1803
Morelikely:Courscompletd'economie
politiquepratique1828
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SecondYaleEconomicsText:Francis
WaylandUsed
Starting
1837
ofBrown
University
182755
PublishedElementsofPoliticalEconomy1837
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FromWaylandsElementsof
PoliticalEconomy
1837
.
labor.No
man
will
labor
long
without
a
,
industriouslywillhelabor.
.
idleness.God,has,inourpresentconstitution,
,theseare,generally,sufficienttomakeaman
, .
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WaylandontheTragedyofthe
Commons
ourwestern
forests.
A
tribe
among
them,
of
a
,
landaslargeasoneofourstates,butitisnot
,
.
..
everythinggoestowaste,andthewhole
.
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e eg nn ngso eve opmen
E n mi t Y l 1 7
Supposeyou
were
cast
upon
an
island
,
indolent,thoughtheirsoilandclimatewerevery
,
wouldtaketorenderthemindustrious?(p.97)
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WilliamGrahamSumner18401910,
FirstYale
Economist
GraduatedYaleCollege1863
Yalehired
him
as
tutor
in
mathematics18667
Later,becameYaleProfessorofPoliticaland
SocialScience
HissociologycoursewasthefirstsonamedinAmerica
att e oc a assesOweEachOther(answer:
nothing)
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YalesfirstProfessorof
PoliticalEconomy,1873,
but
became
M.I.T.
president1881
FirstpresidentofAEA,
1886
92 RobertDimand:
Others,likeFrancisA.
,
duringtheircareers,
onl to fade in the
discipline'smemory.J.
Hist.EconThought1998
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H nr W l tt F rn m 1 41
SonofNewHavencanalbuilder
andrailroadmagnate,B.A.Yale
1874,Yale
Prof.
of
Political
Economy1880inSheffieldSon
Henry
W.
Farnam:
ScientificSchool
Providedpersonalfundstohire
ArthurHadle
and
construct
Irvin
Fishersengine
ConvertedtheNewEnglandReview,
largelytoeconomicsuntilhe
foundedandfundedtheAER 1911
13 Presi entAEA,1911
Fishers
obituary
of
him
emphasizeshissocialactivismand
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FarnamMemorialGardens(Edwards&
FarnamBA1866 YaleTreasurer188899
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SonofYaleGreekprofessor,graduatedYale1873
FirstYale residentwhowasnot aminister,1899
Fifth
president
of
AEA,
SpecializedintwoofthesameareasasYale's
president:railroads
and
antitrust
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HadleyEconomics:AnAccountofthePublicWelfare1896
demand):Desire
alone
cannot
increase
. .
...ifanintervaloftimeelapsesbetweenthe
hesellsandspendsthemoneythusobtained
,
reciprocaldemandceasestoworksmoothly.P.
.
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bediminished
by
a
forced
reduction
in
the
.
unemployment,thetwomostimportantare
fluctuationsofcommercialcredit.p.405
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WasClaysEconomics Assignedat
Yale? FromF.ScottFitzgeraldTheGreatGatsby
1925:
while
Jay
Gatsby
[a
Yale
man]
nervously
awaitedDaisyinNickCarrawayshousehe
lookedwithvacanteyesthroughClays
Economics.Why
this
book?
ButRayFairhasfoundnoevidencethatYale
everusedEconomics byHenryClay.Irving
Fishersown
text
ElementaryPrinciplesof
Economics1910,1912, andTaussigsPrinciplesofEconomics wereusedinthe1910s,FF&Bstarted
1925.
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rd
YaleProfessor
of
EconomicHistor
&Bones)
AHistoryofCommerce1907,
is
an
economic
historyoftheentire
worldsinceancient
Egypt,fun
reading
on
GoogleBooks
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YaleProfsArgueWWIShouldBe
Financedby
Taxes,
1917
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ElementaryEconomicsFairchild
Furniss
&
Buck
AllYaleeconomicsstudents
FredRogers
Fairchild
(1877
1966),EdgarStevenson
urn ssan orman y ney
Buck.MacMillanCompany.
Firstedition
1927
Lasteditionwasapparently
1948,sameyearasfirst
Economics
PrinciplesofEconomics1954added4th author
ReubenEmmanuel
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1936 O osed overnmentex enditurestimulusdurin
NewDeal.SaidNewDealhaddistinctlyamateurish
flavor Advocateofbalancedbudgetrule,soundfinance
1936TestifiedtoUSSenatecommitteeinfavorof
reducedexpenditures
and
a
moderate
increase
in
taxationRooseveltstheorythattheroadto
prosper ty sspen ng,notsav ng, s a ac ousan
pernicious.
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governmentcould
still
borrow
to
stimulate
economy
sincenationalincomegrowthwouldeventuallybring
debt/NIratiodown
Fairchild:
the
new
philosophy
of
public
debt
amountstoromancingandwishfulthinking.
OpposedMarshallPlan:Unlessweabandonthe
currentgrandiose
notions
of
America
policing
the
world,feedingit,takingtheloadofreconstruction
afford
it.
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Departmentof
Economics,Sociology
andGovernment,1929
Associate
dean,
SheffieldScientific
School,starting1929
Dean
of
the
Graduate
School,1934
a e rovost,
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Ph.D.Yale
PoliticalEconomy1930
WinnerofYaleMedal,
1962
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4th Edition(1939)ofFF&BElementary
EconomicsHad
No
Macroeconomics
,
business,division
of
labor)
theory,imperfectcompetition)
PartIIIDistri utiono Wea t Income
PartIVMoney&Banking
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B thesummerof1929mostlinesofbusinessactivit intheUnitedStateswereshowingsomerecession,andthiswasfataltoadomesticstructureofspeculative
expansion,ofacceleratedprofittakingandofsecurity
valueswhich
could
move
up
only.
p.
605
FactualdescriptionofNewDealpolicies(especiallyregardingcreditandbanking)follows,reportingbrief
NomentionofKeynes,hardlyanyofFisher
No real theor of de ressions!
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advocate AuthorofKe nesat Saxonsretirementparty:
Harvard:EconomicDeceptionasaPoliticalCredo
Retired1961
Died1962
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FF&BandtheirConflictwithIrving
Fisher Fisherwasinhislateryearsalienatedfrom
someinhisdepartment
FF&Bseemtoseethemselvesasexpositorsof
receiveddoctrine.Nohintofcontroversyin
thebook.
Economists
names
are
hardly
ever
given(exceptinlistsofsuggestedreadingsat
endsofmajorsectionsofbook).Frequent
referencesinstead
to
government
agencies
andtheirstatistics.
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Irvin Fi h r 1 7
1 47
B.A.Yale1888,YalesfirsteconPhD
1891
,
RobertDimand:
Once
the
most
citedmonetaryeconomist,the
thecenterofcontroversiesover
theoryandpolicy,Fisherlostthe
profession'sattention,
vanished
fromcitationlistsin
macroeconomics,andwas
regardedasanembarrassmentby
discipline.Then,
after
his
death,
his
contributionstomacroeconomics
becameincreasin l citedand
influential,asmacroeconomics
developed
in
ways
that
brought
it
closertoFisher'sapproach.
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MyFatherIrvingFisherbyIrvingNorton
Fisher
1956
onhis
work
was
so
complete
that
he
was
progressuntilhewentoutsidetomailsome
.
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FisherCoFounderofLifeExtension
Institute,which
Encouraged
Exercise
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FisherWasbehindYalesSwitch
FromGymnastics
to
Athletics,
1914
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FisherisVicePresidentofNon
SmokersLeague
1923
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FisherCriticismoftheMedical
Establishment Hedeploredtheultraconservativeattitudeof
therunofthemillmedicalmanandoften
remarkedthatthemajorityofthemwerefiftyyearsbehindthetimesbecauseofthetime
lag
between
making
new
discoveries
and
their
generalapplication.(IrvingN.Fisherp.116)
IrvingFisherrodeabicycletoworkatYale,
jogged,hiked
the
East
Rock
for
exercise,
in
an
erawhenfewadultsdidsuchthings.
AlltheprofitsfromhisHowtoLivebookwent
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ElementsofGeometry1896
Inventions:(asmemberofYale
crewteam strokeindicatorfor
InfinitesimalCalculus1897 EffectofDietonEndurance1907
Yalecrew,VisibleIndex(Rand
Kardex1925,
precursor
to
Rolodex 1956 foldin chair PurchasingPowerofMoney1910 HowtoLive1915(21editions,
400kco ies
b
37,
6
million
electricbedsuspendedby
pulleysfromtheceiling,an
givenawaybyMetropolitanLife)
TheMoneyIllusion1928
,
entirelyfromwood,pricelevel
mechanism,FisherIdealIndex
TheStockMarketCrashandAfter1930
, ,
icosahedralequal
area
map
projection
WorldMapsandGlobes1944
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Brainar & Scar s 2000
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Brainar &Scar s 2000
(2Good,2ConsumerCase)
Fishers 1945 Patented Equal Area Icosahedral Map
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Fisher s1945PatentedEqualAreaIcosahedralMap
Pro ection anIm rovementofR.Buckminster
FullersDymaxionProjection)
AtBISinSwitzer an T ereIsan
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BankStatistics
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Collegeinto
a
single
Faculty
of
Arts
and
DepartmentofEconomicscreatedthen
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, ,
IrvingFisher
no
longer
there
New iresa vise to et eretooutvote t e
icecap,theconservativeeconomists
Departmentwastransformedfroma
conservativetomoderneconomics
department
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Advisers
1973
5 Authorofman books
StabilizationPolicyTen
YearsAfter
with
DuesenberryandPerry
11980
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PhDHarvard1942
Durin WWII devised
system
to
figure
out
fromserialnumbers
whatwereproduction
numbersatmunitions
ac or es
Statistician,developed
accounting
Department
chair
1959
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PhDHarvard1949
SeniorResearc
Economistwith
the
andSocialPolicy
Studiesat
Yale
University
Jointlyauthoredmuch
ofhusband
Richard
Ruggleswork
MarriedRichard1946,
Accidentaldeath
1987
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graduates
Yale
1950 Skull&Bones
Authorof50books,first
ofwhich
was
God&ManatYale 1951
Syndicatedcolumnist
TVshow
Firing
Line
196699
BestknownAmerican
conservative
Buckleys God and Man at Yale: The
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BuckleysGodandManatYale:TheSuperstitionso Aca emicFree om 1951
.. ,
himselfto
Yale
economics
during
his
, ,
reliance,andindependence,itisonlybecause
texts.Itisbecausehehasnothearkenedto
,
glorifythe
government,
enshrine
security,
and
. .
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194647:EconomicAnalysisandPublicPolicyby,
19478:
TheElementsofEconomics LorieTarshis
194850:Economics,AnIntroductoryAnalysis byPaul.
Prof.Buck:Apparentlyherefusedtoadoptthe
departmentprescribedtextbooks.Instead,heuses
thetext
that
for
many
years,
and
in
a
happier
age,
wasusedbytheentiredepartmentofeconomicsa
bookwhichhecoauthoredwithProfessorFairchild
and,
mirabiledictu,
Prof.
Furniss.
p.
99
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Ph.D.
Harvard
1936,
joined
Yale
1945
EconChair1950?60
DefendedYaleagainstBuckley
FormerYale
president
Kingman
BrewsterJr.oncecreditedDr.
ReynoldswithtransformingYale's
economicsfacultyfromoneof
theworst
departments
in
the
countryintooneofthebest.Dr.
ReynoldstoldBrewsterthathe
diditbyhiringpeoplebrighter
an mse . ur ng s
chairmanship,the
faculty
grew
from31to65members,twoof
.
(WashPost2005)
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Reynolds
expansion
1950
CouncilofEconomic
Advisers
under
Kennedy NobelPrize1981
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department
1951
as
partofReynolds
expansion
Triffin
dilemma
that
reservecurrencymust
rundeficits
Keynes
Triffin
plan
for
asupranationalcentral
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JoinedYale
1951
as
part
ofReynoldsexpansion
EisenhowerCEA
member1959
Newsweekcolumnist
from1965
voca e
ax
ase
incomespolicyTIP1971
ofGovernors
1974
86
,
isanextralegalformof
redistribution
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AlfredCowles (1891
,
alsofounded
1932ColoradoSprings
CowlesCommission
U.Chicagostarting1939
Commissionfrom
Chicago,1955,along
withTjalling Koopmans
andJacob
Marshak
Kenneth Boulding on Cowles
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KennethBouldingonCowles
Foundation,
quoted1955
" " ,
continued,"that
the
Cowles
Commission
and
constitutesuchagroupinthepresentday,in
worldcanaffordtoremaincompletely
,
researchtechniques
and
new
points
of
view
activities"oftheCommission.
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,
makethe
Cowles
Foundation
non
exclusive
,
economicsdepartmentthatspecializedin
,
WhenBillNordhausreturnedfrombeingYale
provost,
e
not
ta e
an
o ce
at
ow es.
Thismayhavebrokenthetraditionthatall
ow espeop e aveo cesat ouse
Robert Solow Cowles and the
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RobertSolow Cowlesandthe
Traditionof
Macroeconomics,
1991
Anniversarycelebration
1983
FoundationPapersincludesalmostnone
marketclearingschoolthathascaptivatedso
fromthe
bracing
air
of
the
New
England
.
moneyand
growth
tradition
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eminentlyscientific
view
that
in
a
world
with
a
,
institutions,andpaperassets(somewithfixed
,
monetarytheoryandmonetarypolicyarenot
undifferentiated"M"
is
exogenously
varied
by
,
helicopterdropsatthat.
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, ,
exemplifiedby
younger
people
today,
is
a
,
tobeconfusedwithicecap).
.
Friedmangotgreatpublicityby
overemp as z ng
t e
connect on
etween
moneysupplyandinflation,playingtothe
pu c,creat nga a ses mp c tya outpo cy
Tobinwas
moral,
not
jumping
on
bandwagons
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"
ofAssets",1938,
Econometrica.
"RationalBehavior,
UncertainProspects
andMeasurable
Utility",1950,
.
Electedpresidentof
,
beforehetookoffice
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FoundationtoYale1955
Cowlescoffeehour
Measurementwithout
Theory NobelPrize1975
ReynoldsStartsEconomicGrowth
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Center1961
persuadedFord
[Foundation]todonate$15milliontoestablish
theYaleEconomic
row
en er,w c
heservedasfounding
.
Nowthe
worlds
centerfordevelopment
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EconomicAdvisers
underPresidentJohnson
Foundingeditor,
BrookingsPapersonEconomicActivity
OkunsLaw
MiseryIndex
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Miller
PhDHarvard1937
Competition,Cartels
and
their
Regulation
1962
DeanofYalegraduate
school
1961
9 CofounderofYale
SchoolofManagement
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describesalumni
resistancetocreatingavocationalschoolat
Yale
SchoolofOrganizationandManagement
sciences,public
as
well
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HarvardBA1939 Ph.D1947
JuniorFellowHarvard1947
50
JohnBatesClarkMedal
1955
Ruggles,Reynolds,and
Millerconvincedmethat
t erewou ea
renaissanceof
the
department;itwouldgrow
andimprove. Thatwas
indeedwhathappened.
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B referrin thesu ortofdomestictothatofforei n
industry,heintendsonlyhisownsecurity;andbydirecting
thatindustry
in
such
a
manner
as
its
produce
may
be
of
the
, , ,
asinmanyothercases,ledbyaninvisiblehand topromoteanendwhichwasnopartofhisintention.Norisitalwaysthe
worsefor
the
society
that
it
was
not
part
of
it.
By
pursuing
his
owninteresthefrequentlypromotesthatofthesocietymoreeffectuallythanwhenhereallyintendstopromoteit.Ihavenever
known
much
good
done
by
those
who
affected
to
tradeforthepublicgood. Itisanaffectation,indeed,notvery
,
employedindissuadingthemfromit.
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me
understands
Smith
and
understands
how
a
improvedtocontributetosuchmoralpurpose
ThankstoRobertDimand,Ann
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Juddfor
their
Historical
Work
FisherandModern
Macroeconomics,AmericanEconomic
Review,1997,editorof
rv ng
s erpapers,
JamesTobinpapers.
,
EconomicsDepartment:ofPastLeaders1999