Masters of Economics

Thomas J. Sargent (2011 Nobel Laureate in Economics)

Thomas J. Sargent

Thomas J. Sargent is renowned for his expertise in macroeconomics, monetary economics, and time series analysis. Alongside with Neil Wallace, he developed the saddle path stability characterization of the rational expectations equilibrium and the policy ineffectiveness proposition.

Christopher A. Sims (2011 Nobel Laureate in Economics)

Christopher A. Sims

Christopher A. Sims introduced the Vector Autoregression (VAR) method to analyze how macroeconomic variables are influenced by temporary changes in economic policy and other factors. This approach has been instrumental in studying the effects of central bank interest rate adjustments on the economy.

Peter A. Diamond (2010 Nobel Laureate in Economics)

Peter A. Diamond

Peter A. Diamond is an exceptionally active and influential scholar who had long been regarded as a potential Nobel Prize winner. Over his more than forty-year academic career, he has led the research trends in macroeconomics, continuously pioneering new areas of study and setting research standards and directions for other economists.

Diamond’s academic achievements are vast. He was the first to introduce the Overlapping Generations Model (OLG)—initially proposed by Paul Samuelson in 1958—into a neoclassical growth framework with capital accumulation. Using this approach, he explored issues related to public debt. His contributions are particularly significant in the fields of public policy, including social security, pensions, and taxation.

Dale T. Mortensen (2010 Nobel Laureate in Economics)

Dale T. Mortensen

Dale T. Mortensen, in addition to his work in labor economics, also conducted research in macroeconomics and economic theory. Mortensen is best known for his pioneering research on the theory of frictional unemployment. Building on this work, he further explored issues such as labor turnover and worker reallocation.

Christopher A. Pissarides (2010 Nobel Laureate in Economics)

Christopher A. Pissarides

Christopher A. Pissarides focuses his research on various areas of macroeconomics, with particular emphasis on labor markets, economic growth, and economic policy. Pissarides’ academic thinking was primarily influenced by Michio Morishima and Dale Mortensen, the latter of whom was also a co-recipient of the 2010 Nobel Prize in Economics.

Pissarides’ major academic contributions include the Search and Matching Theory in macroeconomics, based on the unemployment matching function, as well as research on structural economic growth. He is currently a professor of economics at the London School of Economics. Pissarides was awarded the Nobel Prize in Economics for his work on search friction theory and his significant contributions to macroeconomics.

Elinor Ostrom (2009 Nobel Laureate in Economics)

Elinor Ostrom

Elinor Ostrom was the first woman in history to receive the Nobel Prize in Economics. Her research is characterized by extensive and in-depth empirical studies grounded in systematic theoretical frameworks. She focused primarily on applying public choice theory and institutional analysis to public affairs, especially in areas such as police services and the self-governance of common-pool resources. Ostrom made outstanding contributions to the development of theories and methods in public choice and institutional analysis, as well as to public policy research and the study of new political economy. She was awarded the prize for “her analysis of economic governance, especially the governance of common-pool resources.”

Oliver E. Williamson (2009 Nobel Laureate in Economics)

Oliver E. Williamson

Oliver E. Williamson was a prominent scholar in New Institutional Economics. His research demonstrated that markets and hierarchical organizations (e.g., firms) represent different governance structures, each employing different methods to resolve conflicts of interest. Williamson was awarded the Nobel Prize for his contributions to institutional economics, particularly his groundbreaking work on the boundaries of enterprises.

Paul Krugman (2008 Nobel Laureate in Economics)

Paul Krugman

Paul Krugman, an economist at Princeton University, made significant contributions to the analysis of international trade patterns and the spatial analysis of economic activity. His primary research areas include international trade, international finance, currency crises, and exchange rate theory. Krugman developed the new trade theory, which analyzes and explains the effects of income growth and imperfect competition on international trade. His theoretical insights are highly original, often identifying critical economic issues before others and constructing profound yet elegantly simple models for further research. Krugman is regarded as one of the most prominent trade theorists in the world today. His accurate prediction of the Asian financial crisis in 1994 further solidified his reputation on the global economic stage. Krugman currently serves as an economic policy advisor to various countries and regions.

Leonid Hurwicz (2007 Nobel Laureate in Economics)

Leonid Hurwicz

Leonid Hurwicz’s most significant contribution was founding the Mechanism Design Theory. His theory incorporates Information Theory and Incentive Theory, providing convincing explanations using economic models. The Mechanism Design Theory consists of four components: (1) the economic environment, (2) descriptions of self-interested behavior, (3) desired social objectives, and (4) allocation mechanisms (including information spaces and allocation rules). Hurwicz and his collaborators demonstrated that no economic mechanism has a lower information space dimension than the competitive market mechanism while achieving Pareto efficiency. Together with Eric S. Maskin and Roger B. Myerson, Hurwicz laid the foundation for Mechanism Design Theory, and the three jointly shared the 2007 Nobel Prize in Economics.

Eric S. Maskin (2007 Nobel Laureate in Economics)

Eric S. Maskin

Eric S. Maskin made outstanding contributions to fundamental areas of modern economics, including Public Choice Theory, Game Theory, Incentive Theory, Information Theory, and Mechanism Design. He also mentored many elite economists active worldwide. Maskin is highly respected for his profound theoretical contributions, rigorous scholarship, and exceptional dedication to cultivating top-tier talent in economics, making him one of the most esteemed economic theorists of our time.

Roger Myerson (2007 Nobel Laureate in Economics)

Roger Myerson

Roger B. Myerson made significant contributions to Mechanism Design Theory, particularly in situations involving asymmetric information. Mechanism Design addresses how a principal (e.g., an employer) can create incentive structures (typically a combination of rewards and resource allocations) to maximize their utility while ensuring that the agent (e.g., an employee) truthfully reveals their information. Myerson generalized the Revelation Principle to handle incomplete information about individual “types” (adverse selection) and individual “actions” (moral hazard). This greatly expanded the scope of Mechanism Design Theory to include issues such as government regulation. Myerson’s Revenue Equivalence Theorem is also widely applied in auction theory.

Edmund S. Phelps (2006 Nobel Laureate in Economics)

Edmund S. Phelps

Edmund S. Phelps, a U.S. economist, is renowned for his contributions to Economic Growth Theory. Following Robert M. Solow’s work, Phelps analyzed the dynamic optimization path of economic growth and proposed the famous “Golden Rule of Economic Growth” (Phelps’ Golden Rule), formally establishing the theory of economic growth. He is regarded as a “founder of modern macroeconomics” and one of the most influential figures in the development of economic thought. Phelps also made significant contributions to understanding the relationship between inflation and unemployment expectations.

Robert J. Aumann (2005 Nobel Laureate in Economics)

Robert J. Aumann

Robert J. Aumann, building on Thomas C. Schelling’s work, used mathematical analysis to explore the strategic choices available to nations in conflicts. Aumann was the first to develop the analysis of infinitely repeated games, which helps explain why cooperation between certain individuals or groups is more sustainable. Together with Schelling, Aumann’s game-theoretic analysis enhanced understanding of cooperation and conflict. Their theories are widely applied in explaining conflicts, trade disputes, price competition, and patterns of long-term cooperation.

Thomas C. Schelling (2005 Nobel Laureate in Economics)

Thomas C. Schelling

Thomas C. Schelling applied Game Theory to explain why some individuals or nations cooperate while others engage in conflict. By analyzing interactive decision-making situations, Schelling’s theories have been used to explain a wide range of conflicts and cooperation scenarios, such as trade disputes, gang crimes, political decisions, and labor negotiations. During the Cold War, Schelling developed these theories to address critical global issues, including security and arms races. He argued that retaliatory capabilities are more effective than defensive measures and emphasized the importance of keeping retaliation strategies ambiguous to deter aggression. The Nobel Committee recognized Schelling’s insights as key contributions to conflict resolution and war prevention.

Finn E. Kydland (2004 Nobel Laureate in Economics)

Finn E. Kydland

Finn E. Kydland’s research focused on Business Cycles, Monetary and Fiscal Policy, and Labor Economics. He was awarded the Nobel Prize for his groundbreaking work on the Time Consistency of Economic Policy and the driving forces behind business cycles.

Edward C. Prescott (2004 Nobel Laureate in Economics)

Edward C. Prescott

Edward C. Prescott has published extensively on topics such as business cycles, economic growth, econometrics, general equilibrium theory, and monetary policy. Prescott’s current research addresses major issues like Chinese economic history and the Great Depression. Together with Kydland, Prescott’s work focuses on the challenges of time consistency in macroeconomic policy and the factors influencing business cycles.

Robert F. Engle III (2003 Nobel Laureate in Economics)

Robert F. Engle III

Robert F. Engle’s contributions lie in developing key concepts for describing time-varying volatility in economic time series data, particularly through the AutoRegressive Conditional Heteroskedasticity (ARCH) model. He also developed a series of volatility models and statistical analysis methods. Engle’s work provides essential tools for researchers and financial analysts in asset pricing, portfolio allocation, and risk assessment.

Clive W.J. Granger (2003 Nobel Laureate in Economics)

Clive W.J. Granger

Clive W.J. Granger’s research interests were primarily in statistics and econometrics, with a focus on time series analysis, forecasting, finance, demographics, and methodology. Granger was an immensely influential scholar in the field of time series econometrics, with his papers covering nearly all major advancements in the field over the past 40 years. Without Granger’s analytical methods, conducting empirical analysis in time series econometrics would be nearly impossible.

The academic community has often praised his work, describing him as a brilliant researcher and writer. The Nobel Committee noted that Granger’s work revolutionized the way economists handle time series data, offering significant insights into relationships such as wealth and consumption, exchange rates and prices, and short-term and long-term interest rates. Today, Granger’s methods are widely utilized by the U.S. Federal Reserve and central banks in many countries for evaluations and forecasting.

Daniel Kahneman (2002 Nobel Laureate in Economics)

Daniel Kahneman

Daniel Kahneman integrated psychological analysis into economic research, laying the foundation for a new field of economic study. Before his contributions, economics and psychology had vastly different approaches to studying human decision-making. Economics focused on external incentives as the drivers of behavior, while psychology emphasized internal motivations.

Kahneman, in the process of continuously revising the “economic man” assumption, identified the limitations of the premise of economic rationality. He demonstrated that purely external factors could not fully explain the complexity of decision-making behavior. As a result, he formally introduced psychology’s internal perspective and research methods into economics. Kahneman’s most significant achievement lies in his research on human decision-making under uncertainty. He showed how human decision-making systematically deviates from the outcomes predicted by standard economic theory.

Vernon L. Smith (2002 Nobel Laureate in Economics)

Vernon L. Smith

Vernon L. Smith pioneered a series of experimental methods, establishing standards for conducting reliable economic research through experiments. He designed a systematic approach for experimental economics, enabling the study and analysis of economic theories and hypotheses within laboratory settings by simulating real-world market mechanisms.For his groundbreaking contributions, Smith has been honored by the academic community as the “Father of Experimental Economics.”

George Akerlof (2001 Nobel Laureate in Economics)

George Akerlof

George A. Akerlof’s primary contribution lies in his analysis of market equilibrium under asymmetric information. One of his most famous models is the “lemons market” (used car market). Akerlof argued that when sellers possess more information about the quality of used cars than buyers do—creating a situation of asymmetric information—buyers may lack confidence and assume that most cars on the market are of poor quality. As a result, they are unwilling to pay high prices. Consequently, owners of high-quality cars may refrain from selling, leading to a scenario where “bad money drives out good money.” This results in market failure, where no transactions occur. Akerlof’s theory has been widely applied to various fields, including insurance markets, financial markets, and labor markets.

Michael Spence (2001 Nobel Laureate in Economics)

Michael Spence

A. Michael Spence is best known for his signaling theory. In the labor market, since employers are uncertain about the abilities of job seekers, education levels serve as a means of signaling. High-ability individuals can obtain higher education at a lower cost (possibly due to their greater intelligence and aptitude). As a result, they use higher educational qualifications to distinguish themselves from lower-ability individuals. Employers, in turn, are willing to offer higher salaries to those with higher education. The signaling theory has been widely applied, particularly in contract theory.

Joseph E. Stiglitz (2001 Nobel Laureate in Economics)

Joseph E. Stiglitz

Joseph E. Stiglitz, is one of the world’s most renowned experts in the field of public economics. His textbooks are among the most widely used worldwide and have been translated into multiple languages. Professor Stiglitz is the author and editor of hundreds of academic papers and books, including the highly popular undergraduate textbook Economics of the Public Sector (published by Norton) and Lectures on Public Economics, co-authored with Anthony Atkinson. In 1987, he founded The Journal of Economic Perspectives, which lowered the barriers to specialization set by other major economic journals.

James J. Heckman (2000 Nobel Laureate in Economics)

James J. Heckman

One of the winners of the 2000 Nobel Prize in Economics, American economist James J. Heckman, was awarded for his contributions to microeconometrics, specifically for developing principles and methods for analyzing selective sampling. Most individual-level data is collected under conditions that are not entirely random, leading to a loss of randomness in sampling. This results in collected samples failing to fully represent the population, and if empirical findings are generalized without considering this, it leads to the fallacy of overgeneralization—known as “Selection Bias”.  

Heckman’s greatest contribution was identifying this problem and providing econometric methods to address it. His analysis of selection bias not only influenced economics but also fundamentally changed empirical research in many other social sciences. Notably, Heckman pioneered the use of microeconomic theory to explain sample selection issues in individual data. Since microeconomics itself is the science of analyzing how economic agents make choices, applying microeconomic theory to sample selection problems was a natural approach. Heckman was the first to rigorously and precisely articulate this perspective.

Daniel L. McFadden (2000 Nobel Laureate in Economics)

Daniel L. McFadden

One of the winners of the 2000 Nobel Prize in Economics, American economist Daniel L. McFadden, made outstanding contributions to microeconometrics and was awarded the Nobel Prize for his development of the principles and methods of discrete choice analysis.

McFadden’s discrete choice analysis focuses on how individuals make decisions when selecting from a limited set of alternatives. Examples include choices regarding occupation, place of residence, mode of transportation, and other similar decisions. His theory is rooted in classical microeconomics, where individuals are assumed to have a utility function based on available alternatives, and they make choices to maximize their utility. However, because not all factors influencing decision-making can be observed, statistical data often contain biases.

McFadden recognized that even among individuals with identical observed characteristics, there are still random variations affecting choices. He addressed this issue in his models, enabling the prediction of the proportion of a population selecting different alternatives. One of McFadden’s most systematic contributions was the development of the conditional logit model, a key advancement in discrete choice analysis.

James Mirrlees (1996 Nobel Laureate in Economics)

James Mirrlees

One of the winners of the 1996 Nobel Prize in Economics, James Mirrlees, laid the theoretical foundation for analyzing economic incentives in the presence of asymmetric information, known as the principal-agent model.

Mirrlees developed key concepts such as the revelation principle and the single crossing condition, which have become fundamental tools for addressing principal-agent problems. In addition, considering both the need to provide sufficient work incentives for taxpayers and the asymmetry of information between the government and individuals regarding their abilities, Mirrlees proposed his optimal income taxation theory. He argued that the optimal income tax rate should not exceed 20%. His work sparked extensive discussions in the field of public economics regarding optimal income taxation, significantly shaping subsequent research and policy debates.

Robert E. Lucas Jr. (1995 Nobel Laureate in Economics)

Robert E. Lucas Jr.

The 1995 Nobel Prize in Economics was awarded to Robert E. Lucas Jr., who, starting in the early 1970s, was a pioneer in successfully applying the rational expectations hypothesis to macroeconomic analysis. He founded and led a new school of macroeconomics—the Rational Expectations School, also known as New Classical Economics. Even before receiving the Nobel Prize, Lucas had made outstanding contributions in macroeconomic model construction, econometric methods, dynamic economic analysis, and international capital flow analysis. He was a key advocate for the development of rational expectations theory, which posits that economic agents, in order to minimize losses and maximize benefits, utilize all available information to make the most accurate possible forecasts of future economic variables.

Using this framework, Lucas demonstrated that when governments attempt to use expansionary monetary policy to raise inflation and reduce unemployment (as suggested by the Phillips curve), rational individuals will anticipate future inflation and adjust their behavior accordingly. As a result, monetary policy ultimately becomes ineffective, meaning the trade-off depicted by the Phillips curve does not hold. This insight, known as the Lucas critique, profoundly challenged the macroeconomic consensus at the time, significantly influencing empirical macroeconomic modeling and shaping fiscal and monetary policy debates.

John Harsanyi (1994 Nobel Laureate in Economics)

Robert E. Lucas Jr.

John Harsanyi, made significant contributions to the analysis of non-cooperative game theory under incomplete information. Harsanyi introduced a neutral participant, called nature, to model games with incomplete information. This innovation transformed an incomplete information game into a game of complete but imperfect information, a method now known as the Harsanyi transformation. This approach has become the standard framework for handling non-cooperative games under incomplete information. The equilibrium derived from this method is known as the Bayesian-Nash equilibrium, a fundamental concept in modern game theory.

Gary S. Becker (1992 Nobel Laureate in Economics)

Gary S. Becker

The 1992 Nobel Prize in Economics was awarded to Gary S. Becker for his pioneering application of economic theory to the study of human behavior, significantly deepening the understanding of economic policy and offering unique insights into business cycle theory.

Becker was one of the most innovative thinkers in modern Western economics. He extended economic analysis beyond traditional markets to areas previously considered unrelated to economic forces, such as sociology, political science, demography, criminology, and biology. His work expanded the boundaries of economics, making him a trailblazer in applying economic reasoning to diverse aspects of human behavior. His contributions set him apart from other economists and helped establish new academic fields within economics.

Ronald H. Coase (1991 Nobel Laureate in Economics)

Ronald H. Coase

The 1991 Nobel Prize in Economics was awarded to Ronald H. Coase for his groundbreaking work in identifying and explaining the role of transaction costs and property rights in economic organization and institutional structures. Transaction costs refer to the costs of using the market exchange mechanism, including the costs of obtaining price information, bargaining, and drafting and enforcing contracts. Coase argued that when market transaction costs exceed the internal management and coordination costs within a firm, firms emerge as a more efficient means of organizing economic activity. Firms exist to reduce transaction costs by replacing costly market exchanges with lower-cost internal transactions. The expansion of a firm continues until the marginal cost of internal coordination equals the marginal cost of market transactions.

Coase also reexamined contractual behavior under the assumption of zero transaction costs. He found that if transaction costs are zero and property rights are clearly defined, legal rules do not affect the outcome of contractual agreements—the optimal allocation of resources remains unchanged regardless of how property rights are initially assigned. This insight is the foundation of what became known as the Coase Theorem, a principle later summarized by George J. Stigler (1982 Nobel laureate) as “Under perfect competition, private costs equal social costs.” Coase’s work laid the foundation for New Institutional Economics, making him one of the most influential figures in the field. 

Robert M. Solow (1987 Nobel Laureate in Economics)

Robert M. Solow

The 1987 Nobel Prize in Economics was awarded to Robert M. Solow for his contributions to growth theory. Solow demonstrated that long-term economic growth is primarily driven by technological progress, rather than merely by capital and labor inputs. Due to Solow’s pioneering work, the Neoclassical Growth Model is often referred to as the Solow Growth Model. This model remains a fundamental component of economic growth theory today. In the Solow model, economic growth is attributed to three factors: labor, capital, and technological progress. The model assumes a constant-returns-to-scale production function with diminishing marginal productivity, a fixed savings rate, and exogenous technological progress. Based on these assumptions, Solow concluded that government policies have no long-term effect on economic growth.

While some critics view the model’s restrictive assumptions and the conclusion that government policy is ineffective as overly pessimistic, it provided a stabilizing perspective at a time when the Harrod-Domar growth model suggested that long-term economic growth under capitalism was inherently unstable. Solow’s model offered reassurance by showing that, over time, capital accumulation would lead the economy to converge to a steady-state growth path. This insight had a profound impact on economic thought and policy discussions regarding long-term growth.

Milton Friedman (1976 Nobel Laureate in Economics)

Milton Friedman

The 1976 Nobel Prize in Economics was awarded to Milton Friedman for his contributions to monetary theory and policy. His work is characterized by two key principles: a strong advocacy for economic freedom and an emphasis on the role of money in the economy. Friedman was a vocal critic of Keynesian economics, particularly government intervention in markets. He argued that market mechanisms naturally lead to full employment, though adjustments in wages and prices may take time. Excessive government intervention, he claimed, disrupts market efficiency, hinders economic growth, and can even lead to greater instability.

Friedman also strongly opposed Keynesian fiscal policy, arguing that when the government increases spending without increasing the money supply, interest rates rise, leading to reduced private investment and consumption—a phenomenon known as the crowding-out effect. As a result, he believed monetary policy, not fiscal policy, should be the primary tool for economic stabilization. Friedman was the founder of Monetarism, a school of thought that emphasizes the control of money supply to regulate economic stability. He also developed the Permanent Income Hypothesis, which suggests that individuals base their consumption decisions on long-term expected income rather than short-term fluctuations. His ideas had a profound impact on economic policy worldwide, influencing central banks and shaping modern monetary policy.

Kenneth J. Arrow (1972 Nobel Laureate in Economics)

Kenneth J. Arrow

One of the winners of the 1972 Nobel Prize in Economics, Kenneth J. Arrow, made significant contributions to individual economics, public economics, and is considered one of the founders of neoclassical economics. In addition to his work in general equilibrium theory, Arrow also made creative contributions in the areas of risk decision-making, organizational economics, welfare economics, and political democracy theory. He was a pioneer in the development of the economics of uncertainty, information economics, insurance economics, and communication economics.

Arrow’s most famous result, Arrow’s Impossibility Theorem, presented in his doctoral dissertation, rigorously demonstrated that there is no perfect method to establish a social preference ordering. In other words, it is impossible to design a social decision-making system that satisfies a set of reasonable conditions. Arrow shared the 1972 Nobel Prize in Economics with John R. Hicks for their outstanding contributions to general equilibrium theory. Arrow’s work remains foundational in economic theory, particularly in understanding how markets and social welfare interact.

Paul A. Samuelson (1970 Nobel Laureate in Economics)

Paul A. Samuelson

The 1970 Nobel Prize in Economics was awarded to Paul A. Samuelson for his development of mathematical and dynamic economic theory, which elevated economic science to new levels. His research spanned virtually every area of economics. While classical consumer theory explained consumption behavior based on individual preferences, Samuelson took a reverse approach, deducing individual preferences from observed consumption behavior. He used partial differential equations to derive the conditions for these inferences, providing an excellent foundation for empirical research for future scholars.Samuelson also made significant contributions to classical international trade theory, particularly in his work on the relationship between factor prices and division of labor, becoming one of the foundational figures in contemporary trade theory. He was the first to propose a theoretical model for the provision of public goods, making him one of the pioneers of modern fiscal theory. His contributions to financial market efficiency theory were substantial, and his work in this area would arguably have warranted a Nobel in Finance. Samuelson also made important contributions to the fields of welfare economics, population economics, and general equilibrium dynamics, earning recognition as a key figure in each of these areas. Lastly, his 1958 Overlapping Generations (OLG) Model, while not directly a macroeconomic study, laid the foundation for vast amounts of modern macroeconomic literature. This model has spawned thousands of subsequent papers and is considered a cornerstone in the field of macroeconomics.