STOCKHOLM, Sweden -- American Edmund S. Phelps won the 2006 Nobel Memorial Prize in Economic Sciences on Monday for furthering the understanding of the trade-offs between inflation and its effects on unemployment.
In doing so, the 73-year-old Columbia University professor showed how low inflation today leads to expectations of low inflation in the future, thereby influencing future policy decision making by corporate and government leaders.
The Royal Swedish Academy of Sciences said his work, done in the late 1960s, had "deepened our understanding of the relation between short-run and long-run effects of economic policy." Mr. Phelps challenged the prevailing view in the 1960s that there was a stable, negative relationship between inflation and unemployment, illustrated by the so-called Phillips curve.
Links:
WSJ Commentary 2004: "Some of my own research recognizes deep advantages in capitalism, a market system driven by entrepreneurs and financiers leaping into the unknown."
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