Finn Kydland and Edward Prescott were awarded the Bank of Sweden Prize in Economic Science in Memory of Alfred Nobel for 2004 for their work in “time-consistent policy and the generation of the business cycle”.

As is the case with these awards, the contributions of these men have long ago been absorbed by the academic community. The primary effect of awarding these prizes is to confer prestige on the winners, encouraging further work in a particular area, and enhancing the value of their opinions in the public media.

For discussions of the merit of these awards see “A Nobel Prize for Not Much” by Frank Shostak on Mises.org and “Kydland and Prescott win Nobel” and “Prescott on Tax Cuts” on Econlog.

From the point of view of Capital Flow Analysis, it appears that the prize committee, in the last seven years, has fortunately turned its attention away from financial economics and capital markets towards more theoretical areas where, hopefully, less damage will be wrought upon investors.

Although Dr. Eugene Fama (of Efficient Market fame) was frequently mentioned as a contender for the 2004 prize, the committee looked in other directions.

For further background, see Fallacies of the Nobel Gods.

This entry was posted on Tuesday, October 26th, 2004 at 2:05 pm and is filed under Economic Theory. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

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