Edward C. Prescott

Edward Christian Prescott ( born December 26, 1940 in Glens Falls, New York, USA) is an American economist. For his contributions to dynamic macroeconomics 2004 he received together with Finn E. Kydland the Prize in Economic Sciences the Bank of Sweden in memory of Alfred Nobel.

Life

Kydland and Prescott studied why economy is not evenly developed, but expansionary phases are repeatedly replaced by periods of recession. In essence, they come to the conclusion that the responsibility for this lies in the batch-wise development of new technologies. This prices, productivity and wages are changed and so triggered economic cycles. Another research area concerns the influence of monetary and economic policy on these cycles. Here they come to the conclusion: ". Seem more credible policy and the National Bank, the more stable is the respective business cycle " The Committee stressed that the essential meaning of the results for the practice of many countries regarding monetary and economic policy a rash for granting had the price.

In his methodological and theoretical work Prescott could afford with the Hodrick -Prescott filter named after him also in the field of time series analysis is an important contribution. The Hodrick -Prescott filter allows filtering out the smooth component ( trend) of a superimposed with seasonal and random variables time series. This method is used in empirical economic research. Prescott, together with Rajnish Mehra published the Equity Premium Puzzle.

He teaches at the Arizona State University Tempe and is employed by the Federal Reserve Bank of Minneapolis.