Finn Kydland and Edward Prescott have made fundamental contributions to the research area known as macroeconomics. In a highly innovative way, the Laureates have analyzed the design of economic policy and the driving forces behind business cycles. Their work has not only transformed economic...

I was born on December 26, 1940, in Glens Falls, New York, to Mathilde Helwig Prescott and William Clyde Prescott. My mother's parents were German immigrants. My mother was forced to drop out of high school at age 16 to care for her younger brother and sister after the death of their mother....

Nobel Prize Lecture December 8, 2004

Nobel Prize Lecture, December 8, 2004

In the winter of 1968, Sten Thore, who was then a professor of economics at the Norwegian School of Economics and Business Administration (abbreviated NHH in Norwegian), where I was finishing my three undergraduate years, made me an offer that would change dramatically the path I was to take for...

Advanced information on the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, 2004

This paper considers a monopolist’s supply of outside paper money in a random-matching model with divisible money and divisible goods. When binding supply announcements are feasible, the revenue-maximizing policy is characterized by an initial period where the monopolist initiates a currency...

In this paper we explore whether the changing composition of output in response to technology shocks can play a significant role in the propagation of shocks over time. For this purpose we study two multisector RBC models, with two and a three sectors. We find that, whereas the two sectors model...

In the presence of informational frictions and uncertainty, an investment model is developed to capture the asymmetric dynamics of business cycles. When affected by a negative shock, the economy responds differently than when hit by a positive shock, both in terms of size and recovery length. In...

Since the writing of David Hume, in the eighteenth century, there has been a general agreement amogst economists that an increase in the stock of money leads, initially, to an increase in economic activity. Most writer have attributed the real effects of money, in the short run, to mistaken...