On 19 March, the UCL Economist’s Society hosted Professor Edward Prescott (Arizona State University and Federal Reserve Bank of Minneapolis), the 2004 recipient of the Nobel Memorial Prize. I sat down with Dr. Ramin Nassehi to discuss Professor Prescott’s seminar on “RBC Methodology: And Its Successful Use”.
Dr. Nassehi explained that Professor Prescott revolutionised macroeconomics. Before, macroeconomics was thought of as mechanical – people were cogs in a machine without agency. The new idea was that if people could predict and foresee the future, then they would change their behaviour accordingly. This is the macroeconomics we have today.
Professor Prescott’s seminar presentation was about the complications in measuring the economy in aggregate. The issue is that GDP is not capturing things like the real value of medical services or free apps on iPhones. Possible improvements were discussed to counter such issues. However, what struck Dr. Nassehi most was Professor Prescott’s personality and how enthusiastic and engaged he was with students. Professor Albert Marcet’s introduction of Professor Prescott was also considered extremely fitting: there are many different types of Nobel winners but Professor Prescott falls into the category of those who continue to do hard work and make immense contributions – in this case to the areas of macroeconomics and finance.
Overall, it was a great evening for everyone who attended!