Robert Barro

Last updated

Robert Barro
Born (1944-09-28) September 28, 1944 (age 80)
New York City, U.S.
Education California Institute of Technology (BS)
Harvard University (PhD)
Spouse Rachel McCleary
Academic career
Field Macroeconomics
Institution Harvard University
School or
tradition		 New classical macroeconomics
Doctoral
advisor		 Zvi Griliches
Doctoral
students		 Zvi Hercowitz
Xavier Sala-i-Martin
Xavier Gabaix
George-Marios Angeletos
Emi Nakamura
Michael Kremer
Contributions Ricardian equivalence hypothesis
Economic growth
Time consistency
Information at IDEAS / RePEc

Robert Joseph Barro (born September 28, 1944) is an American macroeconomist and the Paul M. Warburg Professor of Economics at Harvard University. [1] Barro is considered one of the founders of new classical macroeconomics, along with Robert Lucas Jr. and Thomas J. Sargent. [2] He is currently a senior fellow at Stanford University's Hoover Institution and co-editor of the influential Quarterly Journal of Economics . [3]

Contents

Academic career

Barro graduated with a B.S. in physics from the California Institute of Technology in 1965, where he was a student of Richard Feynman, but he realized he "wouldn't be close to the top in those fields." [4] He then turned to economics and earned a Ph.D. from Harvard University in 1970. [5] He first reached wide notice with a 1974 paper, "Are Government Bonds Net Wealth?" It argued that under certain assumptions, present governmental borrowing would be matched by increased bequests to future generations to pay future taxes expected to pay down the government bonds; thus a lowering of current taxes, financed by the issuance of government bonds, would have no effect on the public's spending on consumer goods. The paper was in direct response to Alan Blinder and Robert Solow's results, which had implied that the long term implications of government borrowing would be compensated for by the wealth effect. The paper is among the most cited in macroeconomics. Its implications of his Ricardian equivalence are still being debated.

Barro collaborated with Herschel Grossman to produce the influential 1971 article "A General Disequilibrium Model of Income and Employment", [6] which for many years held the distinction of being the most cited article published in the American Economic Review. [7] The article explored the idea that disequilibrium in one market can have spillover effects to another market, creating a distinction between notional demand and effective demand. Barro and Grossman expanded on their work and produced the classic textbook Money, Employment, and Inflation in 1976. [8]

In 1976, he authored another influential paper, "Rational expectations and the role of monetary policy" in which he argued that information asymmetries would cause real effects as rational economic actors in response to uncertainty but not in response to expected monetary policy changes. In it and other essays, he investigated the real effects of monetary changes through which he could significantly contribute to the clarification of the exact circumstances of the validity of the policy-ineffectiveness proposition. While he has revisited the topic since then and critically appraised the paper, it was important in integrating the role of money into neoclassical economics and into the synthesis of general equilibrium and macroeconomic models. [9]

In 1983, he applied the information asymmetry argument to the role of central banks and concluded that central banks, to have credibility in inflation fighting, must be locked into inflation targets that they cannot violate to reduce unemployment. In the 1970s, economist Arthur Okun developed the concept of the Misery Index, which Jimmy Carter publicized during his 1976 presidential campaign, and Ronald Reagan did the same in his 1980 presidential campaign. Numerous sources incorrectly credit Barro with this because of the similarity of name with his own "Barro Misery Index." Barro's version first appeared in a 1999 BusinessWeek article. [10]

His 1984 Macroeconomics textbook remains a standard for explaining the subject, and his 1995 book, with Columbia University economist Xavier Sala-i-Martin, on Economic Growth, is a widely cited and read graduate-level textbook on the theory and evidence concerning long-run economic growth. Barro's research in the 1990s was focused mainly on the theoretical and empirical determinants of growth: he gave fundamental contributions to the theory of endogenous growth, with particular attention to the links between innovation and public investment on one side and growth on the other side. He was a pioneer in the econometric analysis of the main factors associated with growth in the modern era. [11]

Barro served as Vice President of the American Economic Association in 1998, and served on its Executive Committee from 1987 to 1990. [5] He has been a research associate at the NBER since 1978. [5] He was elected a Fellow of the Econometric Society in 1980, and was elected to the American Academy of Arts and Sciences in 1988. [12] [13]

Another often-cited work is a 1988 paper that he coauthored with Gary Becker, "A Reformulation of the Economic Theory of Fertility" published in the Quarterly Journal of Economics , which is influential in thinking about "infinite time horizon" modelling.

Subsequently, Barro began investigating the influence of religion and popular culture on political economy by working with his wife, Rachel McCleary.

Barro believes that the Keynesian multiplier is less than one. He believes that for every dollar the government borrows and spends, spending elsewhere in the economy falls by almost the same amount. [14]

Barro's work has been central to many of the economic and public policy debates of the last 30 years, including business cycle theory, growth theory, the neoclassical synthesis and public policy. Barro received an honorary doctorate from Universidad Francisco Marroquin. [15] The Research Papers in Economics (RePEc) project ranked him as the fifth most influential economist in the world, as of March 2016, based on his academic contributions. [16]

Finally, Barro has been an outspoken opponent of stimulus spending, calling Obama's stimulus bill "garbage" and "the worst bill since the 1930s." [17] [18] [19]

Personal life

Robert Barro is married to Rachel McCleary. Together they have made critical contributions to the field of religion and economics. McCleary holds a doctorate from the University of Chicago and teaches at Harvard. Barro has four children: Jennifer, Lisa, Jason, and Josh, who is a journalist.

Selected bibliography

Books

Articles

Related Research Articles

Keynesian economics are the various macroeconomic theories and models of how aggregate demand strongly influences economic output and inflation. In the Keynesian view, aggregate demand does not necessarily equal the productive capacity of the economy. It is influenced by a host of factors that sometimes behave erratically and impact production, employment, and inflation.

Stagflation refers to an economic condition characterized by a simultaneous occurrence of high inflation, stagnant economic growth, and elevated unemployment. This phenomenon challenges traditional economic theories, which previously suggested that inflation and unemployment were inversely related, as depicted by the Phillips Curve. The term stagflation, a blend of "stagnation" and "inflation," was popularized by British politician Iain Macleod in the 1960s, during a period of economic distress in the United Kingdom. It gained broader recognition in the 1970s following a series of global economic shocks, particularly the 1973 oil crisis, which significantly disrupted supply chains and contributed to rising prices and slowing growth.

<span class="mw-page-title-main">Monetarism</span> School of thought in monetary economics

Monetarism is a school of thought in monetary economics that emphasizes the role of policy-makers in controlling the amount of money in circulation. It gained prominence in the 1970s but was mostly abandoned as a direct guidance to monetary policy during the following decade because of the rise of inflation targeting through movements of the official interest rate.

Rational expectations is an economic theory that seeks to infer the macroeconomic consequences of individuals' decisions based on all available knowledge. It assumes that individuals' actions are based on the best available economic theory and information.

New Keynesian economics is a school of macroeconomics that strives to provide microeconomic foundations for Keynesian economics. It developed partly as a response to criticisms of Keynesian macroeconomics by adherents of new classical macroeconomics.

<span class="mw-page-title-main">Robert Lucas Jr.</span> American economist (1937–2023)

Robert Emerson Lucas Jr. was an American economist at the University of Chicago. Widely regarded as the central figure in the development of the new classical approach to macroeconomics, he received the Nobel Memorial Prize in Economic Sciences in 1995 "for having developed and applied the hypothesis of rational expectations, and thereby having transformed macroeconomic analysis and deepened our understanding of economic policy". N. Gregory Mankiw characterized him as "the most influential macroeconomist of the last quarter of the 20th century". In 2020, he ranked as the 10th most cited economist in the world.

<span class="mw-page-title-main">Fiscal policy</span> Use of government revenue collection and expenditure to influence a countrys economy

In economics and political science, fiscal policy is the use of government revenue collection and expenditure to influence a country's economy. The use of government revenue expenditures to influence macroeconomic variables developed in reaction to the Great Depression of the 1930s, when the previous laissez-faire approach to economic management became unworkable. Fiscal policy is based on the theories of the British economist John Maynard Keynes, whose Keynesian economics theorised that government changes in the levels of taxation and government spending influence aggregate demand and the level of economic activity. Fiscal and monetary policy are the key strategies used by a country's government and central bank to advance its economic objectives. The combination of these policies enables these authorities to target inflation and to increase employment. In modern economies, inflation is conventionally considered "healthy" in the range of 2%–3%. Additionally, it is designed to try to keep GDP growth at 2%–3% and the unemployment rate near the natural unemployment rate of 4%–5%. This implies that fiscal policy is used to stabilise the economy over the course of the business cycle.

The Ricardian equivalence proposition is an economic hypothesis holding that consumers are forward-looking and so internalize the government's budget constraint when making their consumption decisions. This leads to the result that, for a given pattern of government spending, the method of financing such spending does not affect agents' consumption decisions, and thus, it does not change aggregate demand.

Neutrality of money is the idea that a change in the stock of money affects only nominal variables in the economy such as prices, wages, and exchange rates, with no effect on real variables, like employment, real GDP, and real consumption. Neutrality of money is an important idea in classical economics and is related to the classical dichotomy. It implies that the central bank does not affect the real economy by creating money. Instead, any increase in the supply of money would be offset by a proportional rise in prices and wages. This assumption underlies some mainstream macroeconomic models. Others like monetarism view money as being neutral only in the long run.

<span class="mw-page-title-main">Ricardo Reis</span> Portuguese economist (born 1978)

Ricardo A. M. R. Reis is a Portuguese economist who is currently the A. W. Phillips Professor of Economics at the London School of Economics. He works in macroeconomics, finance, and international economics and won the 2021 Yrjö Jahnsson Foundation medal awarded every two years by the European Economic Association for best economist under the age of 45. He writes a weekly op-ed for the Portuguese newspaper Expresso.

<span class="mw-page-title-main">John B. Taylor</span> American economist (born 1946).

John Brian Taylor is the Mary and Robert Raymond Professor of Economics at Stanford University, and the George P. Shultz Senior Fellow in Economics at Stanford University's Hoover Institution.

The policy-ineffectiveness proposition (PIP) is a new classical theory proposed in 1975 by Thomas J. Sargent and Neil Wallace based upon the theory of rational expectations, which posits that monetary policy cannot systematically manage the levels of output and employment in the economy.

<span class="mw-page-title-main">Olivier Blanchard</span> French economist and professor (born 1948(

Olivier Jean Blanchard is a French economist and professor. He is Robert M. Solow Professor Emeritus of Economics at the Massachusetts Institute of Technology, Professor of Economics at the Paris School of Economics, and as the C. Fred Bergsten Senior Fellow at the Peterson Institute for International Economics.

Modern monetary theory or modern money theory (MMT) is a heterodox macroeconomic theory that describes currency as a public monopoly and unemployment as evidence that a currency monopolist is overly restricting the supply of the financial assets needed to pay taxes and satisfy savings desires. According to MMT, governments do not need to worry about accumulating debt since they can pay interest by printing money. MMT argues that the primary risk once the economy reaches full employment is inflation, which acts as the only constraint on spending. MMT also argues that inflation can be controlled by increasing taxes on everyone, to reduce the spending capacity of the private sector.

The neoclassical synthesis (NCS), or neoclassical–Keynesian synthesis is an academic movement and paradigm in economics that worked towards reconciling the macroeconomic thought of John Maynard Keynes in his book The General Theory of Employment, Interest and Money (1936) with neoclassical economics.

Clark Warburton was an American economist. He was described as the "first monetarist of the post-World War II period," the most uncompromising upholder of a strictly monetary theory of business fluctuations, and reviver of classic monetary-disequilibrium theory and the quantity theory of money.

<span class="mw-page-title-main">History of macroeconomic thought</span>

Macroeconomic theory has its origins in the study of business cycles and monetary theory. In general, early theorists believed monetary factors could not affect real factors such as real output. John Maynard Keynes attacked some of these "classical" theories and produced a general theory that described the whole economy in terms of aggregates rather than individual, microeconomic parts. Attempting to explain unemployment and recessions, he noticed the tendency for people and businesses to hoard cash and avoid investment during a recession. He argued that this invalidated the assumptions of classical economists who thought that markets always clear, leaving no surplus of goods and no willing labor left idle.

Disequilibrium macroeconomics is a tradition of research centered on the role of disequilibrium in economics. This approach is also known as non-Walrasian theory, equilibrium with rationing, the non-market clearing approach, and non-tâtonnement theory. Early work in the area was done by Don Patinkin, Robert W. Clower, and Axel Leijonhufvud. Their work was formalized into general disequilibrium models, which were very influential in the 1970s. American economists had mostly abandoned these models by the late 1970s, but French economists continued work in the tradition and developed fixprice models.

<span class="mw-page-title-main">Emi Nakamura</span> American economist (born 1980)

Emi Nakamura is a Canadian-American economist. She is the Chancellor's Professor of Economics at University of California, Berkeley. Nakamura is a research associate and co-director of the Monetary Economics Program of the National Bureau of Economic Research, and a co-editor of the American Economic Review.

Jón Steinsson is an Icelandic-American economist who is the Chancellor's Professor of Economics at University of California, Berkeley, a research associate and co-director of the Monetary Economics program of the National Bureau of Economic Research, and associate editor of both American Economic Review: Insights, and the Quarterly Journal of Economics. He received his PhD in economics from Harvard and his AB from Princeton.

References

  1. ↑ "Robert Barro". ineteconomics.org.
  2. ↑ Solow, Robert, ed. (2004). Productivity growth, inflation, and unemployment: The collected essays of Robert J. Gordon. New York: Cambridge University Press. pp. 226–227. ISBN   978-0-521-53142-9.
  3. ↑ "Institute for New Economic Thinking".
  4. ↑ "Topping the Charts: Prakash Loungani profiles Harvard macroeconomist Robert Barro". Imf.org. September 1, 2007. Retrieved June 5, 2012.
  5. 1 2 3 "Robert J. Barro" (PDF). scholar.harvard.edu. Retrieved December 13, 2024.
  6. ↑ Barro, Robert J.; Grossman, Herschel I. (1971). "A General Disequilibrium Model of Income and Employment". American Economic Review. 61 (1): 82–93.
  7. ↑ Spolaore (2008).
  8. ↑ Kolmar, 803.
  9. ↑ Galbács, Peter (2015). The Theory of New Classical Macroeconomics. A Positive Critique. Contributions to Economics. Heidelberg/New York/Dordrecht/London: Springer. doi:10.1007/978-3-319-17578-2. ISBN   978-3-319-17578-2.
  10. ↑ Barro, Robert (February 22, 1999). "Reagan vs. Clinton: Who's the Economic Champ?". BusinessWeek. Archived from the original on July 2, 2012.
  11. ↑ "Interview with Robert J. Barro" at Francisco Marroquin University. Guatemala, May 2007
  12. ↑ "Book of Members, 1780–2010: Chapter B" (PDF). American Academy of Arts and Sciences. Retrieved May 17, 2011.
  13. ↑ "Current Fellows". www.econometricsociety.org. Retrieved February 8, 2024.
  14. ↑ Cassidy, John (October 10, 2011). "The Demand Doctor". The New Yorker.
  15. ↑ "Doctorado Honorífico a Robert J. Barro durante el Acto de Graduación (2007)".
  16. ↑ "Economist Rankings at IDEAS".
  17. ↑ Barro, Robert J. (February 23, 2010). ""The Stimulus Evidence One Year On" Economist Robert Barro, Harvard University, WSJ". The Wall Street Journal. Retrieved June 5, 2012.
  18. ↑ Barro, Robert J. (October 1, 2009). ""Stimulus Spending Doesn't Work" Economist Robert Barro, Harvard University, WSJ". The Wall Street Journal. Retrieved June 5, 2012.
  19. ↑ Robinson, Peter (February 19, 2009). "Paul Samuelson Vs. Milton Friedman". Forbes. Retrieved June 5, 2012.
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