Department of Economics

University of Minnesota

Graduate Alumni Newsletter

Fall 1997/Winter 1998

The Spanish Connection

Tim Kehoe and Wendy Williamson

The Beginning

The University of Minnesota Department of Economics connection in Spain began with a visit by Walter Heller to the Banco de España in 1967. There he met Luis Angel Rojo, who was the chief economic advisor, and arranged for two students of Rojo, Antoni Bosch and Andreu Mas-Colell, to enter the Ph.D. program in Economics at the University of Minnesota. Heller also managed to obtain money for fellowships for these students from Dwayne Andreas, who had opened the Spanish market to soybean exports from the United States. As Heller wrote in a department memo in 1967, "Andreas has a special interest in Spain, is trying to work with the liberalizing forces there on the commercial and financial sides, and if we were to decide that these Spanish students were really of good caliber, I'm quite sure he would accept our recommendation to provide financial support from his (Andreas) Foundation funds."

This was the start of a steady flow of students from Spain to the United States. Former Minnesota economics students are found not only in universities throughout Spain, but also in the Spanish government and the private sector. So widespread was the influence of these Minnesota economists in Spain that the term "Minnesoto" came to mean any Spaniard who had studied economics in the United States.

Dwayne Andreas is a native Minnesotan - he was born in Worthington in 1918. After dropping out of college in the late 30s, he became a seed salesman and then worked in his family's grain and feed business. In 1945 his family's company was acquired by Cargill (now the largest private company in the U.S.). Andreas came along with the purchase, and became Vice-President of the Vegetable Oil Division by age 27. He soon proved his value by making at least 6 million for Cargill in 1946 in flax-seed trading. In 1952 Andreas was invited to a trade conference in the Soviet Union and was one of the first Americans to obtain a visa to visit Russia for business purposes. While there he managed to set up a deal with the Russians (with support from Eisenhower and Nixon) to sell the Soviet Union surplus U.S. butter and cottonseed oil. After this, Andreas's contacts with politicians worldwide grew immensely. Other Cargill executives, however, did not appreciate his Russian trip (remember, this was the height of the Communist scare -- the company was afraid of banks cutting their credit), and he was forced to resign. Andreas then returned to another family grain business and got involved in soybean crushing, and this led to his hiring at Archer-Daniels-Midland in 1966, where he was CEO for almost twenty-five years. His first act at ADM was getting rid of the public relations department. In 1969 he moved the company from Minneapolis, where it was headquartered, to Decatur Illinois. Andreas turned the financially troubled company around, and did it primarily by his expansion into the production and export of soybeans - so much so that he is often called the "Soybean King."

Walter Heller, as most of you know, was chair of the Council of Economic Advisers during the Kennedy Administration, a post that Hubert Humphrey had helped him obtain. Heller had met Andreas through Humphrey. As Walter Mondale said, "Hubert had a million friends. Dwayne was his best friend." (p.48 New Yorker profile). After Andreas agreed to commit money for the fellowship, the method of funding it every year was very informal. Heller would just write to Andreas each summer saying that the department needed x amount of money, and Andreas would either send a check or transfer ADM stock to the University Foundation. Heller would also send an update on all the Andreas fellowship recipients, along with a brief note casually mentioning some political function, such as: "Any chance that you will be at the dinner for Ed Muskie in Washington on July 14?" or: "Having had three meetings at the White House (including the one at Camp David) in the past month, I have had some fascinating insights into what's cooking in the Carter Administration. I hope we will have a chance to talk about it before too long."

After Walter Heller died in June of 1987, Andreas wrote the department, "Walter always did a certain amount of private consulting in making the selection of who the students would be. Walter and I have a good friend, J.M. Barturen, who persuaded us to start this program in the first place." At this point, Barturen was consulted for students to send to Minnesota, but the program began to decline without Heller's presence. The Banco de España also filled in the void by providing fellowships to some students who arrived in the early 90s. The last Andreas fellowship in the department was granted in 1993. So for 25 years, Andreas had funded the graduate education of nearly 40 Spaniards at Minnesota, donating almost $325,000.

Antoni Bosch ('75), now at the Universitat Pompeu Fabra, sent us the most complete memoir of his Minnesota experience:
"I came to Minnesota almost 30 years ago, the summer of '68. I was so innocent, and I was so ignorant!

At the time I had no clue what a Ph.D. was, what it meant to be a graduate student, or where Minnesota was located on the U.S. map. To me Minneapolis sounded like a place where cars raced once a year for 500 miles, and the U.S. the country where immigrants had been landing for centuries after a dreadful crossing of the ocean. Consequently, after admission to the U of M, I prepared myself for the long journey. I bought two boat tickets for my wife and I (she was 20, I was 23 and we had been married for two weeks). The boat was leaving from Le Havre, France on a certain August day, so we departed from Barcelona by train the night before, overloaded with luggage. After Barcelona to Paris by the night train, we changed stations in Paris, took a train to Le Havre, then the boat, and the crossing (as dreadful as in the movies: along the Irish coast we headed into a big storm which stayed with us all the way), the entrance into the Hudson estuary, the bridges, the Statue, the big hangar where immigration officers inspected X-rays of our lungs and medical records which were, then, compulsory to bring along for admittance into America. From the harbor, cutting across Manhattan in a cab, we went directly to the Greyhound depot. Well, you know, we had been told that people in the U.S. did not travel by train but by bus (nobody mentioned planes to us); so we bought tickets for our two-day journey, and I made it to Minneapolis with my wife, who, not being able to stand all that tension any longer, had to visit a doctor for emergency abdominal surgery on our second day there.

To make things simpler, we hardly spoke any English and, believe me, we did not understand a word when people spoke to us in their thick American accents. So when some helpful soul translated to me that one did not get a Ph.D. in one year, as I had presumed all along, I was flabbergasted. Remember that I had never heard of anybody getting a Ph.D., much less going to the U.S. for that purpose. The best students in my class, two or three of them, had been sent to the University of Essex, in England, to work on a Masters. Not belonging to this group, I had been offered, with Andreu Mas-Colell, to scrape the bottom, which meant going to such an uncivilized place as the U.S. to study in a God forsaken state. I'm not saying that we were not thrilled by the adventurous prospect, but we certainly looked with envy to those that cinched the plum, and went to England to get a Masters.

Forebodings aside, in a few weeks I had grown a beard, kept my hair long, and bought a heavy coat. Soon I felt like a local, except that, for many months still, I could not manage to say "Hi" and smile, whenever I went by somebody on the street.

In Minneapolis I discovered freedom and I plunged into it with all the enthusiasm of a neophyte. I joined communes, became a hippie, smoked pot, I was all for free love, my wife left me for a swinging full-professor in the French Department, we had lovers--the more the merrier--I had a child, discovered sit-ins, demonstrations, the Socialist Workers Party, the Democratic Convention in Chicago, the Black Panthers, ... Amerika. Minneapolis meant a crash course in living.

If you want to know it, I also attended my classes regularly, did most of my homework, on occasion felt homesick, but all this was just a blur in an exhilarating adventure. From denizen in a military dictatorship to flower child in one go! There was little time left for existence theorems, thank God.

For two years I would be an Andreas Fellow. Andreu and I were the first in a long line of Andreas Fellows. In all likelihood, without the fellowship, for me there would have been no studies in Minneapolis, no Ph.D. in economics, no Sixties. My dear Dwayne Andreas, you will never know how much I owe you. You may not even be aware of how much the economics profession in Spain owes you. Suddenly, unexpectedly, after 1968, going to the U.S. to study a Ph.D. in economics became a must for the best and the bravest Spanish students. The Andreas fellowships opened ajar the door to the U.S., not only to Minnesota. It set an example, and the example was eagerly followed. Many students went to Minnesota, or nearby, to Wisconsin, to Northwestern, and soon, the whole U.S., from coast to coast, attracted Spanish majors in economics. From trickle to avalanche, the U.S. received young Spaniards and returned to Spain full fledged economists. From Minnesota, Northwestern, Wisconsin, MIT, the "Minnesotos" were returning in force to Spain.

The coining of the name Minnesoto by those who had not been abroad meant many things. It was to be used to keep one's distance from us, the brainwashed technicians who were confusing economics with mathematics. But it also reflected the awe towards those returning with a cargo of knowledge and purpose. Minnesoto was meant to ridicule, but it also denoted admiration. The name enjoyed an enormous success. Even today, we are called Minnesotos, whether we studied in Minnesota or not, and poor Andreu occasionally appears in the newspapers as the leader of the Minnesotos.

But whatever Minnesoto was supposed to mean, thirty years later there is no doubt that, starting with Mr. Dwayne Andreas and the University of Minnesota, the leading Departments of Economics in the U.S. have s ucceeded in modernizing economic thought in Spain and academic life in the Spanish Universities."

[Editors' note: Thanks to all the Spanish students who replied to our request. We will continue the story in the next issue of the newsletter. Please send in your reminiscences if you haven't done so yet to wendy@atlas.socsci.umn.edu]

The Andreas Fellows

Tom Stinson: Political Economy 102

Craig Swan

Tom Stinson ('73) has served as Minnesota State Economist since 1987. This is a half time position that is supplemented with a faculty appointment in the Department of Applied Economics on the St. Paul campus. Tom is also part of the state team that deals with bond rating agencies and works on other topics "as assigned," including assessing the impact of the 1997 flooding in the Red River Valley on the state economy. He notes that "as with the President's Council of Economic Advisors some of the most valuable work that I do is discouraging bad ideas."

Tom argues that "the role of the revenue forecast is to provide a credible, mutually accepted starting point for the budget negotiations between the governor and the legislature. The most accurate forecast in the world is no good if the governor and the legislature ignore it and spend two months debating how much money there is to spend.

"To add to credibility the Finance Department contracts with Data Resources Inc. (DRI) for their national economic forecast. The legislature believes that the DRI forecast cannot be influenced by the Governor. As part of maintaining the credibility of the forecast I spend more than a little time testifying before legislative committees and briefing legislative leadership and the Governor on the forecast."

"A state council of economic advisors is convened to evaluate the DRI national forecast. If the Council and the Finance Department economists agree that DRI's forecast is significantly more optimistic than the consensus of forecasters, a less optimistic national scenario will be developed and used. In this way the Council, which includes Ed Foster, Art Rolnick ('73), and Jim Campbell('79) as well as some other local business economists, adds to the credibility of the forecast."

"While we do not benchmark the DRI forecast against a time series model, Art brings the Minneapolis Fed's time series forecast to the council meeting so it can be compared with the DRI control forecast. Internally we convert the national forecast to a Minnesota forecast. Pat Meagher, a Minnesota ABD, has responsibility for that portion of the forecast. Then using key series from the Minnesota forecast--particularly estimates of wages, personal income, and employment--we forecast the revenues."

"Each revenue source is forecast differently. Some are forecast with regression models. The individual income tax is forecast with the aid of a 20,000 file micro-simulation which allows the analyst to assign different growth rates to different types of income and deductions."

"During the period I have been state economist the final forecast has not been tampered with by the Governor or any other political appointee. In the early 1980s the state went through a disastrous period of continuing and growing budget shortfalls. Those shortfalls were popularly attributed to political interference with the forecast. Both governors remembered that period and did not want to expose themselves or the state to that possibility."

"Behavioral changes produced by changes or prospective changes in the tax law can create large swings in revenues. Unusual one-time events, such as a large corporate buyout, can create material changes in the forecast. In order to be credible you need to be able to explain the sources of these large swings in revenues. We highlight all of the assumptions and one time events which are incorporated into the forecast."

"I came to revenue forecasting from the tax side. I had worked on tax issues for a number of years for the USDA before taking the State Economist position. Of course, a strong background in economics from the University of Minnesota has helped greatly."

When asked how one can survive for 10 years as State Economist, Tom replied, "Make sure you have good staff to work with. The details that are necessary to keep straight are too much for any one person to be able to keep track of and the stakes are so high--a 1 percent error is $300 million--that in the absence of top notch colleagues working with you the job is impossible. I have two of the best, one of whom, Pat Meagher, is a former Minnesota graduate student. Without them I would be doing something else by now."

NEW FACULTY

Matt Mitchell is a new assistant professor this fall. He has a freshly-minted Ph.D. from the University of Rochester, where he was advised by Glenn MacDonald and Hugo Hopenhayn ('89). Matt's primary fields are in industrial organization and microeconomics. His dissertation developed models of learning that he used to study issues in the theory of the firm, such as the optimal level of firm diversification. Matt is also studying the issue of optimal patent policy.

Andy Atkeson became an associate professor in the department this fall as the latest victim of our revolving door with the University of Pennsylvania, where he had been an assistant professor since 1993. Before going to Philadelphia, Andy had been an assistant professor at the University of Chicago. Andy received his Ph.D. from the Graduate School of Business at Stanford in 1988, where he worked with Tom Sargent. Tom had arranged for Andy to work with Patrick Kehoe when Patrick was visiting Stanford and later for Andy to spend time at Minnesota when he was writing his thesis, which dealt with international borrowing and lending in a world with private information. Among other research projects, Andy has worked with Patrick on modeling economic transition in Eastern Europe, with Bob Lucas on efficient allocations in economies with heterogeneous agents and private information, and with Victor Rios-Rull ('90) on modeling the 1994-95 financial crisis in Mexico.

Manuel Santos's arrival this fall as a full professor strengthens the department's macroeconomics and theory groups as well as our Spanish connection. Before coming to Minnesota, Manuel had been an assistant, then associate professor at the Universitat Autònoma de Barcelona from 1987 to 1991, a professor at the Universidad Carlos III de Madrid from 1991 to 1994, and a professor at the Instituto Tecnológico Autónomo de México from 1994 to 1997. Manuel finished his Ph.D. at the University of Chicago in 1984 with a thesis on determinacy of equilibria in overlapping generations models. He has published papers on such diverse topics as computation of equilibria in dynamic models, economic growth and human capital accumulation, and incomplete financial markets in dynamic economies. Manuel is particularly well known for developing general conditions that ensure that the policy function that solves a dynamic programming problem is continuously differentiable. The search for these conditions had been one of the major problems in macroeconomic theory and mathematical economics of the 1980s.

FORMER FACULTY

Nobuhiro Kiyotaki has won the 1997 Nakahara Prize of the Japan Economics Association (formerly the Japan Association of Economics and Econometrics). The Nakahara Prize was initiated in 1995 to honor young members of the JEA under the age of 45 who have achieved international recognition. The selection committee for the prize consists of three Japanese economists, three overseas economists, and the President of the JEA. Nobu is now at the London School of Economics, and his e-mail is kiyotaki@cep.lse.ac.uk. Nobu was also just elected a fellow of the Econometric Society this January. Congratulations Nobu!

Charlie Holt wrote to us recently from the University of Virginia: "I'm in my second year as chair of the Economics Department, and I call Jim Simler and Craig Swan for advice every now and then. I'm a co-editor of a new Kluwer Academic Press journal, Experimental Economics, that will begin this summer. All of my recent research pertains to putting "bounded rationality" into a theoretical analysis of games, a kind of stochastic generalization of the Nash equilibrium that explains unusual data patterns from laboratory experiments. Daughter Abbi finished UVA and is working at Monticello (outside on a dig) temporarily, where my wife Zanne is a research librarian. Our other daughter Sallie is in her second year at Smith College, where she is taking a course next semester entitled: Whole Woman Body Self Cross Culture (besides Italian, Intermediate Tennis, Organic Farming, and History of the Environment)." Charlie can be reached at cah2k@uva.pcmail.virginia.edu.

ECONOMICS RESEARCH LIBRARY

Early this fall, the outside of the library was painted for the first time in 20+ years. I'd been requesting this for at least 9 years. Then the "U" hires a new president and it gets painted in 3 months! So I just had to thank this guy personally. I met the president, Mark Yudof, at his inaugural celebration on October 17th. It was a beautiful fall day and there were over 400 professors marching up the mall to Northrup Auditorium in full regalia. At the reception in the Weisman Art Museum, I introduced myself to Yudof and thanked him for getting the building painted, adding that I even washed the library windows on "Beautiful U Day" -- a campus cleanup event during inaugural week. He replied, "That's the best thing I've heard all afternoon." So as you can see, he is a charmer as well as a doer. The campus has really been spruced up (even the Washington Avenue Bridge has been repainted!) and it has created more pride in old maroon and gold.

The library webpage continues to grow in size with the addition of lots of discussion papers <http:// www.econ. umn.edu/~econlib>. It amazes me how many overseas users find their way to our website to request papers and assistance. Our own paper series, however, has only grown by one since last spring:

301) Zheng, Charles Z. The Optimal Design Of First-Price Auctions With Financial Constraints And Default Risks. December, 1997. 63p.

Write to me for copies of any papers, to submit any news for the next newsletter, or to update your address in the web alumni directory. Have a good 1998!

Oh! Nicaragua!

Tapen Sinha*

I was invited to give a keynote speech for a meeting of CEOs of insurance companies of Central America when they met last year in Nicaragua. I gave two speeches. In the first one I talked about the use of the Internet for the insurance business. It was somewhat strange because I was talking to people who were selling insurance where there were no phone lines!

My first surprise was on the plane. I flew COPA, the Panamanian Airlines. With food, you got a fresh green chili. I have flown a lot of airlines, but never in my life have I gotten a hot chili with food! I sat next to a guy who wanted my pen to fill out his immigration form. I thought he was an American, but he was a Nicaraguan who grew up in the US and went to Texas A&M to study business (he took a class in Marketing with an old friend of mine, it IS a small world). Many wealthy Nicaraguans have gone back to Nicaragua to start up their own businesses. The funny thing was (I found out later) that these people speak among themselves in English rather than in Spanish even when they are in Nicaragua. It sort of distinguishes them from the rest of the crowd. They have created a new "Brahmin class" by the virtue (?) of talking in English. Nicaragua, the original banana republic, where the US sent Marines to protect the plantations (and the Marines stayed from 1912 to 1933!) created an elite who saw themselves as Americans many decades ago. So it is not a surprise that this would happen in the 1990s.

Anyway, as soon as I landed in Managua, I got the VIP treatment. They took me through a special gate at the airport and sat me down in this HUGE room with BIG leather sofas, cable TV with CNN, ESPN, etc., and finger food (with nice looking women serving it!). They took my passport and got my luggage and I did not have to lift a finger (except to eat food). I did not have to go through the normal customs process fighting the sweaty crowd. Then they put me in one of those BMWs with tinted windows! It whizzed through the streets of Managua and we went way out of town to a place called Playa Montelimar.

That place is now a hotel. But, once upon a time, during the rule of Somoza, it was his holiday "cottage". The main building (which now houses a dining hall for 100) was the holiday home for Somoza and his family of five! Managua (notice the agua in the name and it goes for Nicaragua too) sits by a huge lake but there is no ocean there. Somoza wanted a cottage by the ocean. So he had to get a road built - 100+ kilometers - but he did not want regular blacktop so he got the whole thing built with hexagonal stones ten inches in diameter! All 100+ km. of it. The house sits atop a cliff and there is a 5 km. secluded beach that goes with it. Hey, for a family of five, you need some privacy!

This was the only resort I ever stayed in that had an airstrip in which you could land a 747. Since I did not have a 747 with me, I did the next best thing - I jogged on it every day I stayed there. This place was also where Daniel Ortega had his victory celebration after the revolution that brought him to power in Nicaragua (and the contras, and Ollie North!).

It seems that to please the Americans, Somoza declared that he would give $1 million for any person who brought Castro's beard (and by implication, his head) to him. Castro went to Montelimar (for Ortega's victory celebration) and claimed that he brought Castro's beard (and the rest of him), so HE should get that $1 million!

You know how some airports (and hotels) have various clocks displaying different times in important cities around the world. The Managua airport was one of the few that displayed the time for Nueva Dehli (New Delhi). That was a surprise. Unfortunately, the time was off by half an hour!

I did see Daniel Ortega briefly (on my way back to the airport). He was giving a speech in front of a crowd of students of UNAN (National University of Nicaragua). Not many buildings of Managua survived the earthquake they had some years ago -- the city is mostly composed of shanties. The funny thing is that they have these spanking new school buses. The schools (even in parts of the capital Managua) were no more than mud huts with bricks and logs to sit on. I was wondering why they had such brand new school buses (they were more modern than most school buses you find in the US). I found out why! They came from international donor organizations. The money spent on those buses could have easily built better schoolhouses. Probably those decisions were made in comfortable offices in Washington DC and nobody bothered to check!

One of the main problems facing Nicaragua today is the VERY high rate of unemployment. It is 51%, no it is not a mistake, and it really is 51%. Thanks to the Sandinistas and the Contras, the country is full of guns. Depending on which side you chose during the civil war, you either have an M16 or a AK47 (funny to think that the gun Mikhail Kalashnikov designed in 1947 is still used so much to this day and yet, Kalashnikov was not able to make one kopek out of it!). The high unemployment rate and the presence of guns is a very explosive mix. However, compared with other Central American countries (such as Guatemala or El Salvador), the level of violence involving guns is not that high. I am not sure why. May be they don't have enough ammo!

The other main problem the country is facing now has to do with land rights. When the American plantation barons practically ruled the country, they made sure they had the land rights. In fact, Nicaragua had one of the freest land ownership rules in the world. Anybody, from any country, could own land there. However, with political power moving to the Somoza family, things began to change. The Somozas, especially Papa Somoza, did not have much respect for the law. If he liked something, he just took it! As a result, he acquired a lot of land for himself. Anyway, when the Sandinistas came to power, in their famous Decree Number Three, they confiscated all the land owned by the Somozas and their perceived allies. And there was lots of it. When it became clear that Daniel Ortega had lost the election in 1990 to Violeta Chamorro, there was a four month gap before the transition of power took place. During that period, Ortega and his friends basically gave away the land to their supporters in what later became known as the Great Piqata. So now there are parcels of land that had claimants from the pre-Somoza era, claimants from the Somoza era, and claimants from the Ortega era. And this problem covers lots of land close to Managua or within Managua itself. This is a huge problem now for many Nicaraguan businesses because they are finding it difficult to get land with free and clear titles.

*Tapen Sinha ('86) is the Seguros Comercial America Chair in Risk Management and Insurance in the Department of Actuarial Studies and Insurance at the Instituto Tecnológico Autónomo de México de Mexico (ITAM) in Mexico City. Before he joined ITAM, he was an Associate Professor of Finance at Bond University in Australia (1989-96). He has also taught at the National University of Singapore (1987-89), University of Wisconsin-Parkside (1984-87), and Ripon College in Wisconsin (1983-84).

Margaret Hagert

1918-1998

Ed Foster

Last Spring we reported that Margaret had been hospitalized with cancer. She passed away in her home, in Grand Forks, N. D., on New Year’s Day, January 1, 1998, at age 79. She worked as Economics graduate secretary for 25 years, from 1957 to her retirement in 1982. I said last Spring that she had served as mother to generations of graduate students: When she came across a troubled student she would lock the office, sit the student down for a counseling session, and perhaps keep the door locked for as much as an hour. The Director of Graduate Studies never learned what transpired in those sessions; they were confidential.

It was the value of this kind of contribution, her empathy for students in general and her kindness to them, that led me to realize that classifying her job as a "secretary" was a great misnomer. Her job was really one of serving students, with secretarial duties wedged in to the breaks in her day. As a result, as part of a general reorganization of civil service staff positions two years ago and inspired by her example, we reclassified her job to be "graduate studies coordinator," a professional civil service position requiring a college degree with training and experience in student personnel work. We have been blessed with a first incumbent in that position (Vanessa Bailey) who shares Margaret’s values and justifies the reorganization of the job.

Professor Leo Hurwicz contributes the following memoir:
"Margaret Hagert was exceptionally knowledgeable in the complexities of Graduate School rules and regulations, and invariably generous in sharing her information with all of us. But, most important, she was genuinely concerned about the welfare of our graduate students, both in their academic and personal problems, helping or comforting as the situation called for. By her warmth and actions, she — as much as anyone — made the Department a more humane place than it otherwise might have been."

Rao Aiyagari Memorial Fund

Neil Wallace

I am soliciting contributions for a fund to be turned over to Rao's wife, Jyotsna. The purpose is to help support the higher education of the Aiyagari children -- Dileep, who is now eight, and Meera, who is now four. I have informed Jyotsna that this effort is underway. She welcomes it in part because it will serve as a way to maintain a connection between the children and Rao's friends and colleagues.

Pledges that total more than $8,000 have already been received. Please make contributions in the form of checks made payable to the "Aiyagari Memorial Fund."
Your check should be sent to:
Neil Wallace
Department of Economics
Pennsylvania State University
613 Kern Graduate Building
University Park, PA 16802-3306
[phone 814-863-3805; neilw@psu.edu]

Unless you specify otherwise, your name will be included on the list of contributors given to Jyotsna. (Individual amounts contributed will be kept confidential.)

Alumni News

John Geweke ('75) is currently chair of the Business and Economics Section of the American Statistical Association. He is also chair of the National Academy of Sciences Panel to Evaluate the Economics Research Service of the U.S. Department of Agriculture. In addition, John recently told us "I was just elected President of the International Society for Bayesian Analysis for 1999 and am serving as President-Elect in 1998. ISBA is an organization of over 300 social and physical scientists who use Bayesian methods in their work, that meets regularly in various countries."

Felipe Morande ('83) writes, "I just received the Spring 1997 issue of the Graduate Alumni Newsletter and it occurred to me that I should let you know of my recent whereabouts. Since 1987 I was a full time professor of Economics at the Graduate Program in Economics of ILADES and Georgetown University here in Santiago. Late March I moved to the Central Bank of Chile to become Chief Economist. So after about 14 years of speculating, theorizing, and publishing on macroeconomics from the academic bench, I now have the opportunity to be a policy-maker. So far, I have enjoyed it and I'm also learning a lot. At the same time, I keep teaching at ILADES/Georgetown one course per semester (Macro II and Open Economy Macroeconomics). Finally, a book edited by me and a colleague was recently launched, with the title (in Spanish) Empirical Studies on Growth in Chile. It is the sixth book that I have edited or co-edited."

Richard Rogerson ('84) is on sabbatical from Minnesota visiting the University of Pennsylvania. His e-mail there is rogerson@econ.sas.upenn.edu.

We recently tracked down Joseph Lian ('86) [formerly Lin], who is now Chief Editor of the Hong Kong Economic Journal. He wrote to us, "Yes, Prescott was right, I am in Hong Kong, and Francis Lui was right, I have switched out of academia into mass media. The Hong Kong Economic Journal is not what the ERC would subscribe to; it is a business/politics daily with a circulation of 60,000. Which is not a large number, since we are a very high-brow and niche paper catering to policymakers, corporate people and professionals. I have been on this job since October of 1996. Some consider my move surprising, since the newspaper is quite anti-Communist, and to take that job on the eve of the Hong Kong Handover is somewhat suicidal. Well, I have survived, and so has press freedom in Hong Kong, at least for the moment. Before that, I was Associate Dean at the Business School o f the Hong Kong University of Science and Technology. I came back to Hong Kong in 1992, after teaching four years at UC-Riverside. Now I miss the mountains and hiking trails of Southern California very sorely. Someday I may come back to the states where my family still is. My wife is working in New York City as an educational psychologist, and our son is doing his junior year at Harvard (not economics though). He said he misses his days at Commonwealth Terrace, the grad housing complex in St. Paul." Joseph can be reached at cedhkej@netvigator.com.

Mike Loewy ('86) is visiting Iowa State this academic year. He can be reached at mloewy@iastate.edu.

Jim Schmitz ('86) and his wife Sara Thompson are proud parents of a baby girl, Alice Elizabeth, born February 24, 1997. Jim reported that Alice weighed 9 lbs., 8 oz., and added, "She's wonderful!" Jim is at the Federal Reserve Bank of Minneapolis (in the brand new building) and can be reached at jas@res.mpls.frb.fed.us.

Lars Ljungqvist ('88) has moved from the Federal Reserve Bank of Chicago to the Stockholm School of Economics. His new e-mail address is nell@hhs.se.

Lance Fisher ('88) spent two months in Minneapolis this summer as a visiting fellow in the department. Until February of 1998 he will be visiting Australian National University. Lance was recently promoted to senior lecturer at the University of New South Wales.

Steve Cassou ('89) is now at the Department of Economics at Kansas State University in Manhattan, Kansas. Steve can be reached at scassou@ksu.edu.

Mario (Christian) Aedo ('90) is now chair of the Economics Department at ILADES/Georgetown University in Santiago Chile. The previous chair was Felipe Morande ('83) [see his note above]. Mario is also a consultant for the Interamerican Development Bank in Latin America, and as such, recently reviewed the social agenda for Ecuador. Mario's two kids, Sofia and Felipe, were both born in Minneapolis. He hopes to bring them back here to visit in 1998 with a stop on the way at Disney World.

Victor Rios-Rull ('90) is now tenured at the University of Pennsylvania.

Chris Ferrall ('90) wrote this summer, "During 1997-98 I'll be on sabbatical from Queen's at the Norwegian School of Economics and the University of Bergen. Bergen is my wife's, Tove Steffensen, hometown. So it's full of admirers and babysitters for our new son, Evan Bard Ferrall, born on June 3, 1997. Queen's now has a searchable index of working papers received from other institutions: . The search engine and other code for the Queen's Reading Room were written by Tove."

Heetaik Chung ('90) wrote recently from Korea about the amazing connection between his high school in Seoul and Minnesota. In the Kyunggi Highschool class of 1976 were five students who went on to the University of Minnesota -- three in the economics department: Heetaik, Taesung Kim (now deceased), and Kunho Cha. Hwataik Han was in the Mechanical Engineering Department at the same time, and Heungwon Tchah was here two years as a visiting fellow at the U of MN hospital. What is also coincidental about this group is that all of them have two daughters, but no sons (sometimes an obsession in Korea). Other Kyunggi graduates in our program included: Bong Soo Lee ('86), Sangdal Shim ('84) and Jaeyoung Kim ('95). Heetaik wrote that Kyunggi was the best high school in Korea until the early 70s when entrance exams were no longer given. In his time, you needed the highest scores to enter Kyunggi. Being a Kyunggi graduate from those days is known to be very honorable and the school is still famous because of its alumni. Heetaik is now at the School of Management and Economics at Hadong University and can be r eached at htchung@han.ac.kr.

Mark Huggett ('91) and his wife Sandra Ospina had a baby girl, Alicia, this fall. Alicia weighed 3.6 kilograms (8 pounds or so). Sandra was the first woman from Colombia to earn an Economics Ph.D. (from the University of Illinois).

Xiaoguang Ni ('91) wrote, "I got tenure at the University of Missouri-Columbia last summer, and I've been enjoying the growing family (two boys, Daniel, 8, and Alan, 5)."

Shomu Banerjee ('92) and his wife Nina are the new proud parents of a baby boy, Ahanu Nathaniel Banerjee, who was born on December 21, 1997. Ahanu weighed 5 lbs, 15 oz. Shomu can be reached at shomu@gsu.edu.

Jose-Miguel Sanchez ('92) has been named director of the Masters in Economics Program at the Universidad de Chile and is also the editor of the journal Estudios de Economia.

Ping Lin ('93) is on sabbatical this year at Lingan College in Hong Kong. His new e-mail is plin@ln.edu.hk.

Donna Boswell Gilleskie ('94) and her husband Gary had a baby boy on November 1, 1997 named Matthew Louis. Matthew weighed 8 lbs, 14 oz. Donna is at the University of North Carolina, Chapel Hill and her e-mail is dbos@dloph1.econ.umn.edu.

Tugrul Temel (MA '94, Ag Econ Ph.D. '95) sent a message recently from the Netherlands. "I am now Deputy-Director of the research institute, Center for World Food Studies (Dutch acronym SOW-VU) of the Vrije Universiteit Amsterdam. The center's main activities are the design and application of regional and national models with an emphasis on food and the agricultural sector. SOW-VU also emphasizes the need to collaborate with local researchers and policymakers. The multi-disciplinary nature of the center is very challenging for me, and I feel privileged working in an environment where economists, agronomists, nutritionists, and ecologists cooperate on common ground. If you are working on food or agricultural issues I would like to hear from you." Tugrul's e-mail is T.Temel@sow.econ.vu.nl.

Karine Moe ('95) and husband Paul had a second child, Halsey Andrew Moe, born May 22, 1997, weighing in at 8 lbs. 13 oz. Karine's first child, a daughter named Avery, is now 3 1/2. Karine is at Macalester College in St. Paul and can be reached at moe@macalester.edu.

Ted Herzog (MA '95) is finishing up his last year of law school at Stanford and has accepted a position with the Dorsey and Whitney law firm in Minneapolis. Ted will be joining the International Practice Group as well as the Corporate, or Private Companies Group.

Ted Temzelides ('95) has moved from the Philadelphia Fed to the Department of Economics at the University of Iowa. Ted can be reached at tedt@blue.weeg.uiowa.edu.

Joao Gata ('95) is now at the Instituto Superior de Gestao (for 1997-98), a private business school in Lisbon, Portugal. He can be reached at jgata@isg.pt.

Notes From The Editor

Wendy Williamson

The task of putting together the newsletter has now fallen on my shoulders, so that is why this issue is two months late. Craig Swan moved over to Morrill Hall to a position created by new University President Mark Yudof. Craig's title is now Vice-Provost for Undergraduate Education, and unlike most administrators, he is still teaching undergrad classes. See his "Swan Song" in a future newsletter. Craig can be reached at craig@atlas.socsci. umn.edu. I miss collaborating with him on this venture, but with the excellent design and layout assistance of Caty Bach, the department office manager, we have managed to get this published. I've heard from lots of alumni who look forward to receiving the newsletter and I want it to continue. So please help us by sending in your contributions.

Last spring when Craig learned of Margaret Hagert's illness, he suggested sending her the newsletters to bring her up to date on "her kids." I sent her all of the past issues and received this reply in July: "Dear Wendy, What a jewel you are! How can I ever thank you? You have no what idea what a lift all those newsletters gave me. I spent all afternoon reading them. Now I know where most of the kids are when I was at the "U". I really appreciated your note. I had a book on all the grads and I also had a file on where they went -- I tried to keep in touch so I would know where they were. Next week I will get 5 more chemo treatments and then they will do a CAT scan to see if the cancer has shrunk. Wish me luck! Love, Margaret." I remember Margaret as very dedicated and supportive of grad students. I only knew her for five of the 25 years she spent in the department. She was always a help to me in trying to understand the inner workings of Econ. I know she will be missed.

Ed Prescott Wins First Dean’s Medal

Notes from the Chair

The department is starting a new initiative called the Economics Roundtable. It’s an attempt to build ties with the larger community, both business and political. Gary Stern, President of the Minneapolis Fed, and Tim Kehoe will speak at the first meeting which is on March 11 at 7:30 a.m. Please contact Caty Bach at (612) 625-6859 if you would like to attend.

The department is in great shape. The Carlson School has moved out and we hope to bring the Economic Research Center to the Management & Economics Building. I want to urge all of you to keep in touch and keep us informed about happenings in your part of the world. And, once in awhile, please drop in. Our TGIFs are better than ever thanks to the graduate students.

Economics Roundtable

The Economics Department at the University of Minnesota is a renowned institution dedicated to research, education and outreach. It has consistently been rated among the top 10 economics departments in the world. The department has been at the center of major developments in economics over the last twenty-five years. The Rational Expectations Revolution which has fundamentally altered macroeconomics grew in substantial part out of research done at Minnesota. Modern models of government behavior are based on the theory of Mechanism Design which was started at Minnesota. The department has always focused on fundamental research in economics and on teaching and training students.

This research is, and should be, of interest to the broader community in the state. As a land-grant institution, one of the University of Minnesota’s principal missions is outreach. The Economics Roundtable is one way for the University to communicate the kinds of research we do to the broader community in Minnesota. We believe that sharing information about our scholarly activities can improve policy-making and can help key decision-makers improve the performance of the enterprises they manage. Each program features a faculty member of the University and a guest speaker, both of whom will speak on issues of interest to policy makers in government, business and non-profit organizations. We will meet once a quarter. Participants will receive a Quarterly Report summarizing developments in economics, especially those occurring in the Economics Department and sister departments at the University and at the Federal Reserve Bank of Minneapolis, which has long had close ties to the University.

Minnesota Graduates Elected Fellows of the Econometric Society

Ed Prescott recently reported that Marty Eichenbaum ('81) and Randy Wright ('86) were just elected fellows of the Econometric Society.

My recent research has concentrated on understanding the causes of fluctuations in aggregate economic activity. This led me to study the impact of real and monetary shocks to the economy. On the real side, I've focused on studying the mechanisms by which technology shocks are propagated over time. The particular mechanisms I've emphasized are labor hoarding and endogenous capacity utilization. On the monetary side, I've worked on measuring the dynamic effects of monetary shocks to the economy as well as on constructing empirically plausible models of the monetary transmission mechanism. More recently I've begun work on understanding the connection between banking and currency crises.

Even though I've been out of graduate school for over 15 years, I am still amazed at the superb education I received. My committee consisted of Tom Sargent (chairperson), Chris Sims and Neil Wallace. It's hard to imagine a better combination of people to have learned from. In the end, I took from them a basic principle that has guided my work: progress in economics comes from the constant interplay of theory and measurement. Anyways, theory without measurement or measurement without theory gets boring pretty quickly.

On the personal side, I live in Wilmette, IL which is a living testimony to the empirical reasonableness of the representative consumer paradigm. My wife, Yona, is an advertising executive. This means that we flip to the football channel only during commercials. We have two children, Rachel, age 12, and Joseph (a.k.a. the young prince), age 4."

"When I left Minnesota in 1984, I got my first job teaching at Cornell, where I spent three years before moving to Penn. I’ve been at Penn since, except for one year at the Hoover Institution (which was like a Minnesota reunion, given that Sargent, Rogerson, Manuelli, and Hopenhayn were all there at the time), and one year at the Minneapolis Fed. I have been working on monetary theory for about 10 years now, and I think that along with various co-authors we have made some progress. In monetary economics I have always tried to adhere to the principles I learned in graduate school, especially those taught to me by Neil Wallace. I have also been working on macro models that explicitly incorporate household production, and looking at their implications for business cycles, development, and policy issues. Although you asked me not to talk about rock-and-roll [Ed: and sex and drugs], I must add that I play guitar in a band called "The Contractions" which includes all economists, except for the drummer, Lorraine Burdett, who is the wife of an economist! We will be playing a concert in Philadelphia at the Society for Economic Dynamics conference this spring."

Minnesota Economics Sweatshirt Offer

Abby Barker

This year graduate students came up with a design for a University of Minnesota Economics Department sweatshirt, and now the offer is being extended to alumni. The shirt is a heavyweight 80% cotton/20% polyester blend, printed in white ink on dark and bright colors. The front design (pictured) is standard; the back design (Top Ten Reasons to Study Graduate Economics at Minnesota*) is optional.

For each shirt ordered, please indicate size (M, L, XL, XXL); color (navy blue, sage green, forest green, slate blue, royal blue, red, black), and whether you want front-only or both sides printed.

Enclose $21.00 for each front-only shirt; $22.50 for each front and back shirt; $2.00 extra for size XXL, and $3.00 per shirt shipping. Make your check payable to Abby Barker and send to the Department of Economics, 1035 Mgmt. & Econ., University of Minnesota, Minneapolis, MN 55455. The deadline for ordering is March 31, 1998. Expect to receive your shirts about the middle of April.

*Top Ten Reasons: 10. Adversity (prelims, winters, Math 5612-13-14) builds character. 9. General Equilibrium Rules! 8. It is the best n years of my life, where inf{n} = 5 and sup{n} does not exist. 7. Faculty-subsidized happy hours. 6. Don't blame me; I'm just the representative agent. 5. Keynes? Who's Keynes? 4. We've got fixed point theorems for your every mood. 3. Simulating data is NOT an oxymoron! 2. Establish existence and uniqueness of the Real World. 1. If you're going to do economics, you ought to do it right!

POSTSCRIPT: FROM THE ARCHIVES

While rooting around in the department archives looking for material on the Andreas Fellowship, I came across the following memo:

Please!! I get enough squawks and complaints in this department without worrying about paper airplanes. A very irate grounds supervisor brought in some incriminating evidence of foul play and demanded that this sort of pastime cease immediately.

We posted this by the 10th floor elevator. After he saw this, Ket Richter said he thought Jim Simler wrote this as a joke. I said it sounded like something Henderson would do. But if it was real and you were one of the culprits, please let us know! Was being officed in a high-rise building really such a novelty in 1967 that grad students had to shoot paper airplanes out of the windows?