Nobel Laureate: Create "credible and forward-looking" economic policies
By Minerva BC Newman
Cebu, Philippines (11 February) -- A 2004 Nobel Laureate for Economics, Prof. Finn Erling Kydland encouraged institutions to create "credible and political feasibility" of economic policies for a far-reaching effects on economic growth.
Kydland, a Nobel Laureate for Economics at the Dept. of Economics at the University of California, was in Cebu recently as keynote speaker on the "Bridges: Dialogues Towards a Culture of Peace" lecture series sponsored by the International Peace Foundation and hosted by the University of San Carlos (USC), Cebu.
This is the second time that USC-Cebu hosted the lecture series. Nobel Laureate for Physics, Prof. David Jonathan Gross had his lecture on the "Coming Revolutions in Fundamental Physics" last January 11 and now Nobel Laureate for Economics, Prof. Finn Erling Kydland.
In Kydland's speech, he emphasized that with good policies that aim to "stop corruption; make easy access to import technology; improve institutions and maintain stability," encourage a tremendous potential among poor nations in income increases.
He also cited the important role of the current and future decisions made by individual households and firms regarding consumption, investments, labor supply and others that are dependent on the present situation and anticipated future policies in planning for today and the future.
"It is important that when government makes its plan, it must also consider how business will react to its policies," Kydland said.
The Nobel Laureate further explained that new policies or decisions may lead to the accumulation of human capital overtime, making it difficult for new graduates to find jobs.
"That is why economic development is very important since it could yield high wages without government interference," he added.
Professor Kydland and Prof. Edward Prescott of Arizona State University were awarded the 2004 Nobel Prize I Economic Sciences for their research on business cycles and macro-economic policy, specifically, the driving forces behind business cycles and the time consistency of economic policy.
Their work established the foundations for an extensive research program on the credibility and political feasibility of economic policy.
Their research has shifted the practical discussion of economic policy away from the isolated policy measures towards the institutions of policy making, a shift that has largely influenced the reforms of central banks and the design of monetary policy in many countries over the last decade.
More recently, according to his briefer, Prof. Kydland has conducted research on the role of monetary policy for the business cycle.
He studied Ireland and Argentina's economies because he believed that there is a lot for other nations' policy makers to learn from the respective successes and failures of these two countries. (PIA-Cebu) [top]