* Ben Shalom Bernanke (born December 13, 1953)

* He is an American economist, attended Harvard, and is a tenured

professor at Princeton University, where he was chair of the Department
of Economics from 1996 until December 2002
* Heserved as Chairman of President George W. Bush’s Council of
Economic Advisers before President Bush appointed him to be
Chairman of the Fed on February 1, 2006.
* Bernanke was confirmed for a second term as Chairman on January 28,
2010, after being nominated by President Barak Obama.
* Studies the political and economic causes of the Great Depression
* One of the 50 most published economists
* He is a new monetarist, follower of Milton Friedman

*
“ The father of the rational expectations in economics”
* September, 27 1930 - October 23, 2005
- Went to Carnegie Mellon University
- 1954 Won Alexander Henderson Award
- 1961 published his theory “Rational Expectations and the Theory of
Price Movements.”
- This theory states that in many economic situations the outcome
depends partly of what people expect to happen.
* Example: The price of a stock or bond, depends partly on what
prospective buyers and sellers believe it will be in the future.
- The theory is based on the assumption that people behave rationally.
- ( Maximize their utility)

*
• Born July 26, 1933 in the United States.
• Won the 2006 Nobel Memorial Prize in Economic Sciences
• Did a demonstration of the Golden Rule savings rate which consisted
on how much to spend on present consumption rather than save and
invest for future generations.
• Argued that labor market equilibrium is independent of the rate of
inflation, therefore there is no long-run tradeoff between
unemployment and inflation.
• Started a program with Calvo and John Taylor to rebuild Keynesian
economics with rational expectations by employing sticky wages and
prices.
• Created a new non-monetary theory of employment in which business
asset values drive the natural rate.
• Published a book called “Rewarding Work” about the causes and
cures of the joblessness and low wages among disadvantaged
workers.

*
 *
* Most influential socialist thinker that emerged during the 19th
century.
* His ideas where largely ignored by scholars in his own lifetime, but
he gained acceptance in the socialist movement after his death in
1883.
* His original ideas have been modified.
* Revolutionary communist who’s work inspired the
foundation of many communist regimes.
* Marx criticized utopian socialist, arguing that their preferred small
scale socialistic communities would be bound to poverty, and that
only a large change in the economic system can bring about real
change.
* Engels's book, The Condition of the Working Class in England in
1884, led Marx to conceive that the modern working class is the
most progressive force for revolution.
*
* Born in November 18, 1914 and died in March 4, 1975.
* Focused his work on the years the Britain had high unemployment
and stable/falling wages.
* Designed and built the MONIAC hydraulic economic computer in
1949.
* On 1958 he published his work of unemployment and inflation on
the Phillips Curve.
* He made other contributions on stabilization policy.
* Inspired Paul Samuelson and Robert Solow.
* In 1969 he had a stroke and returned to New Zealand to teach.
* He died in New Zealand.
* http://en.wikipedia.org/wiki/William_Phillips_(economist)
 *
• Australian- Hungarian American Economist and politiccal scientist.
• Born in 1883 and attended University of Vienna.
• It is thought that he was influenced by the Nazis.
• He popularized the term “Creative destruction”
• Became an economist professor in Harvard.
• Australian minister of France
• President of Bidermann Bank
• His views were unlike those of Keynesianism
• President of Econonometric Society (1940-41)
• Tried to intergrate sociological understanding to his theories.
• Claimed to have 3 goals in life:
1.Become the best economist in the world.
2.Best horseman in Austria
3.Best lover in Vienna.
* “Nobel Prize” in Economics for explaining the patterns of international
trade and geographical concentration of wealth.
* Known of International Economics (trade theory, economic geography,
international finance, liquidity traps, and currency crisis).
* Influenced by Keynes
* Favors Free Trade
* Applies New Keynesian theory but has criticized its lack of predictive
power (households and firms have rational expectations, assumes
there is Imperfect competition in price and wage setting/explain why
sticky)
* Politically: liberal
* Professor of Economics and International Affairs at Princeton and a
Centenary professor at London School of Economics

*
* 1881-1973; Austria-Hungarian; University of Vienna
* Considered the father of the Austrian School of Economics
* Ideas:
* Unrestricted laissez-faire: expansion of free markets, division of
labor, private capital investment
* Socialism would be disastrous became absence of private
ownership of goods prevents rational pricing
* Mises Business Cycle Theory
* Self-interest drives the economy

*
 *
* A steady growth in the money supply
* Avoid inflation and deflation
* Monetary policy
* Inflation is stable only at NRU

Keyne’s flaws
• Time lag
• Crowding out
– Investment is crowded out when AD is increased and interest
rate increased
Monetary Policy Rule
• Money supply has a direct relationship to the price level
• MV = PY (M – money supply, V – velocity, P – aggregate price level,
Y – Real GDP)
* Earned Ph.D at the Tepper School of Business of Carnegie Mellon
University.
* Was a co-recipient of the 2004 Nobel Memorial Prize in Economics.
* Currently the Henry Professor of Economics at the University of
California, Santa Barbara.
* His main areas of teaching are: business cycles, monetary and fiscal
policy and labor economics.
* He is a Research Associate for the Federal Reserve Banks of Dallas,
Cleveland,and St.Louis
* He’s a Senior Research Fellow at the IC2 Institute at the University of
Texas.
* Contributions:
* Real Business Cycle Theory: macroeconomic models in which
business cycle fluctuations to a large extent can be accounted for by
real shocks.
* Time consistency in economic policy

*
*
•Born November 11th, 1915 (age 96)
•Field: Monetarism
•Contributions: analysis of money and analysis of banking
•She is more technical, does research, finds data, providing
essential economical information.
•Best known for her collaboration with Milton Friedman on “A
monetary history of the United States, 1867-1960.” In this book it
is noted the importance of monetary policy.
•Paul Krugman said she is “one of the world’s greatest monetary
scholars.”
•She’s past president of the Western Economic Association
•Changed minds over financial regulation as she emphasized
that price level stability is essential for financial system stability
•Economist at the National Bureau of Economic Research
(NBER), which is the largest economics research organization.
 *
Born: September 15 1937
Won a Nobel prize in economics in 1995
Top ten economist in the research paper
Challenged the Keynesian macroeconomic theory

CONTRIBUTIONS:
Lucas Critique is an apparent relationship between inflation and unemployment could
changed in response to changes in economic policy.

Rational Expectations: Agents predictions of the future value of economically relevant

variables are not symmetrically wrong in that all errors are random.

Theory of Supply: People can be tricked by unsystematic monetary policy.

Lucas Paradox: Capital does not flow from developed countries to developing
countries.

Lucas-Uzawa Model: Model of human capital accumulation

Y= Ka(uH)^(1-a) K physical captial, H Human Capital u (Human Capital devoted to Y)
 *
 (1867 – 1947)
 Laid the foundations of Monetarism
 Tuberculosis at age 32
 Inventor and health activist
 Founder of many associations
 Set up successful business and later lost a lot of fortune during the Great
Depression

 Debt-Deflation Theory:
 During deflation lenders win and borrowers lose
 Borrowers cut their spending sharply because their debt burden increased, but
lenders do no increase their spending sharply because the value of their loans
increase
 Overall consumption decreases. Aggregate demand shifts to the right and lowers
GDP
 Fisher equation: real interest rate = nominal interest rate – inflation

 Quantity Theory of Money: MV=PT (M= supply of money V=money velocity

P=aggregate price level T= volume of goods)
*
•Born July 26, 1842 in London. Died July 13, 1924 in Cambridge

• Went to St. John’s College in Cambridge

• Founder of Neoclasical Economics

• He studied human behavior rather than his classical focus on the

market economy

• He popularized the use of supply and demand functions of price

determination

• Took an important role in the idea that consumers attempt to adjust

consumption until marginal utility equals the price

• Was part of the idea of the price elasticity of demand

*
 Born June 16th, 1723 – Died July 17th, 1790
 Classical Economist (Modern Economics)
 Notable ideas – free market, division of labor,
the invisible hand.
 Scottish social philosopher
 Author of The Wealth of Nations
 Described as a prototypical absent-minded
professor.
 Studied at the University of Glasgow and the
University of Oxford
 Father of modern economics and capitalism
 Canadian-American economist born in 1908.
 He was a Keynesian and an institutionalist
 He began to teach at Harvard in his early twenties.
 In 1938 he left Harvard to work in New Deal Washington, he became FDR’s
“price czar” during the war.
 Served in the administration of Franklin D. Roosevelt, Harry S. Truman, John F.
Kennedy & Lyndon B. Johnson.
 Wrote four dozen books and over a thousand articles. In his writing he
introduced the work of John Maynard Keynes to a wide audience.
 He was the proponent of 20th century American Liberalism.
 In 1985 named Humanist of the year.
 He believed that the market power weakened the widely accepted principle of
consumer sovereignty, allowing corporations to be price makers rather than
price takers.
 He believed that market power played a major role in inflation.
 Argued that corporations and trade unions could only increase prices to the
extent that their market power allowed them to.
 Noted that the power of the US firms played a part in the success of the US
economy.
 Born in August 5, 1874
 Study field- Political economics
 Contributions: he had contributed the empirical research on business
cycle, and he also founded the business cycle in 1920 in the National
Bureau of Economics Research.
 He announced the beginnings of recession and expansion (Peak,
Trough)
 He served as chief of the price section of the War Industry Board during
World War I, he was a chairman of president Herbert Hoover's
Research committee on Social Trends, and also as member of the
National Planning Board, and of the National Resource Board.
 His work had greatly influenced the development of quantitative studies
of economic behavior in USA.
 Mitchell also had publications such as Business cycle (1913), The
Problem and Its Setting(1927), The Backward Art of Spending
Money(1937), Measuring business cycle (1946).
 *

• Thomas Robert Malthus was born in Surrey, England

• Widely known for his various theories about population and how it affects
various factors.
• Observed how population is, sooner or later, affected by disease or famine
(An Essay on the Principle of Population)
• He believed that an on-going growth in population would eventually harm
the economy because there are insufficient resources to sustain it forever.
• He proposed 2 types of Checks to hold population within its resource
limits:
1. Positive Checks: These checks raise the death rate and involve situations
such as war, famine, disease, etc.
2. Preventive Checks: These checks lower the birth rate and involve
situations such as an increase in abortion, prostitution, an increase in the
use of contraception, etc.
• Born 1883 in Cambridge, died in 1946
• “In the long run we’re all dead”. Although changes in the money supply
affect aggregate output and prices in the short run, classical economists
used to disregard it and focus in the long run. Keynes focused more on the
short run effects.

• “The General Theory of Employment, Interest, and Money” (1936).

Emphasized short run effects of AD in output instead of long run price level.
Upward sloping SRAS and shifts in the AD curve affect output, employment
and prices.

•Animal spirits: Giving money to the people won’t have the expected effects
all the time. Subjective behavior and consumer decisions control the turns in
the business cycle.

•His views legitimized the macroeconomic policy activism, and supported

fiscal and monetary policy.
 *
 Systemized economics
 Major contribution is the law of comparative advantage; e.g. two countries should trade even if one is richer
in every possible aspect as long as the two have comparative advantage to trade… THIS IS HIS MAJOR
CONTRIBUTION TO "FREE TRADE" ECONOMY.
 VALUE THEORY
 "Labor theory of value": Price ≠ represent value.
 the relative price of two goods is determined by the ratio of the quantities of labor required in their
production.
 3 conditions for this to happen:
1. both sectors have the same wage rate and the same profit rate
2. production periods may differ
3. the two production processes may employ instruments and equipment as capital and not just wages, and
in very different proportions.
 -≥ Value of exchange ≠ value in use
 sum world total of value in exchange is a fixed constant
 due to its effect on value, the growth of wealth of the poor beyond subsistence levels is likely to take from
the overall wealth of the society.
 All economists (neoliberal through progressive) still worry about that and so they weaken the wealth of the
poor to maintain economic growth.
 Ricardo shows this as unnecessary when we measure value in exchange together with the growth of
value-in-riches, rather than by the monopolization value.
 Ricardo is responsible for developing theories of rent, wages, and profits. He defined rent as "the difference
between the produce obtained by the employment of two equal quantities of capital and labor."
* He was born March 6, 1926 in the United States.
* He is Jewish.
* He served as Chairman of the Federal Reserve for 19 years.
* He was also appointed chairman of the United States by
Ronald Reagan.
* As Chairman, he was responsible for directing monetary policy
and other duties.
* He is known for directing a speech in 1996 that questions the
stock market's "irrational exuberance on asset values".
* He won many awards, including the Presidential Medal of
Freedom in 2005
* He describes himself as a libertarian republican.