Ned Phelps Wins Today's Nobel-Like Prize in Economics

A good pick for the economics Nobel-like prize. Tyler Cowen comments:

Marginal Revolution: Today's Nobel Prize in economics: Edmund Phelps.... He was born in Chicago in 1933 and now teaches at Columbia.... His main contribution is a better understanding of the Phillips curve and the dynamics of short-run unemployment and the concept of the natural rate of unemployment. He gave the Phillips curve microfoundations and developed the "expectations-augmented Phillips curve." As the name suggests, the level of inflationary expectations matter for how money will influence output....

His most influential 1960s work suggested that economies possess a natural rate of unemployment, monetary policy can reduce unemployment only temporarily (NB: in his view this is a conclusion, and should not be an axiom in economic models), monetary policy can reduce unemployment temporarily, and Keynesian economics should not treat the rate of unemployment as arbitrarily at the whim of monetary and fiscal policy. He was also concerned with how the natural rate of employment can change over time.... The evolution of Phelps's thought on how money can matter is complex. His later work stresses monetary non-neutrality, mostly through non-rational expectations and non-synchronized wage and price setting. His work in the 1980s focused on what the concept of rational expectations means in such complex environments.

Do not assume that early Phelps and late Phelps are saying the same things or arguing against the same opponents. Sometimes it is argued that he redefined macroeconomics twice. After criticizing Keynesianism, he later turned against the "rational expectations" point of view. He is a complex thinker, although it can be hard to divine his "bottom line." He fails to fit inside the "macroeconomics boxes" that have developed since the early 1980s, namely real business cycle theory vs. neo-Keynesianism....

My take: It is hard to argue with this pick. It is a good selection. His 1960s macro work was true, important, and extremely influential. The capital theory work endures and provides a foundation for subsequent theory. The overall scope is impressive, and Phelps's concerns never strayed far from the real world....

What this Prize means: The big questions still matter. Unemployment, economic growth, labor markets, capital accumulation, fairness, discrimination, and justice across the generations are indeed worthy of economic attention. Phelps contributed to all of those areas. Normative questions matter. Relevance and breadth triumph over narrow technical skill.