Class of the titans

A student's account of meeting economics Nobel laureates with differing views

Nobelist Robert Lucas addresses U of M economics students at the Federal Reserve Bank of Minneapolis. Home page images show Edward Prescott.

Photos: Patrick O'Leary

By Philip Zeller

In the midst of the greatest recession my generation has experienced, the chance to study under a world-renowned expert on depressions and financial crises is, for an undergraduate, tremendous. That is what professor Tim Kehoe gave 26 aspiring economists in his course on depressions and financial crises.

On the first day of lecture, Kehoe declared the course should be the most important part of the students' lives. The students worked with data and analytical models (many developed by Kehoe's colleagues) to determine the causes of significant economic downturns and, hopefully, recoveries. The class, though rigorous and time-consuming, has been worthwhile.

The students used Great Depressions of the Twentieth Century, co-edited by Kehoe and Nobel laureate Edward Prescott, as their primary text. In mid-October, Kehoe told his students they would take a field trip to the Federal Reserve Bank of Minneapolis, where Kehoe is an adviser, to attend a presentation by Prescott and fellow Nobel laureate Robert Lucas.

A live subject

"The current financial crisis has been tragic for many people, but it gives me as an economics professor the opportunity to show my students that economics is a very live subject, with a major impact on the world around us and on them personally."—Tim Kehoe, Distinguished McKnight University Professor of Economics.

The class was giddy at the prospect. These economists are ranked fifth and 10th, respectively, in the IDEAS ranking of economists, a system based on quantity and quality of published economics research.

On Tuesday, November 10, the class headed to "the Fed." Prescott and Lucas gave brief overviews of their recent research, and then took questions from the students.

Great minds think unalike

It struck me that two men of similar education and work backgrounds, both with tremendous accolades in economics, could present vastly different solutions to economic meltdowns.

A free market economist and outspoken political conservative, Prescott boldly stated, "Economic stimulus is really an economic depressant." In stark contrast, the more interventionist Lucas attributed the length of the great depression partially to the noninterventionist and anti-immigration policy of the Hoover administration. While the gentlemen were entirely cordial and friendly, they clearly have significant professional disagreements.

Afterward, I asked Prescott for his thoughts on the green movement and its effect on technological progress, productivity, and economic growth. He said that while he doesn't question the negative impact of greenhouse gases, and he is confident the green movement can lead to technological growth, he worries that the movement could lead to a technological retrogression, conceivably slowing economic growth.   

The chance to candidly chat with Nobel laureates is certainly one I would, in all likelihood, have never had at the other schools where I studied before attending the University of Minnesota.