[Singapore, 28 May 2014 (Wednesday)] – The Singapore Management University (SMU) is pleased to announce the appointment of Professor Thomas J. Sargent as Distinguished Term Professor of Economics at SMU’s School of Economics (SOE) for a three-year term from 1 January 2015.
Professor Sargent was awarded the 2011 Nobel Prize in Economic Sciences with Professor Christopher Sims for their empirical research on cause and effect in the macroeconomy. They developed methods to analyse the causal relationship between economic policy and key macroeconomic variables such as GDP, inflation, employment and investment. Today, these methods are essential tools in macroeconomic analysis.
The ‘rational expectations’ theory of the cause-and-effect relationship between the economy and policy instruments propounds that the influences between expectations and outcomes flow both ways. In forming their expectations, people try to forecast what will actually occur. They have strong incentives to use forecasting rules that work well because greater benefits accrue to someone who acts on the basis of better forecasts. The concept of rational expectations asserts that outcomes do not differ systematically (i.e., regularly or predictably) from what people expected them to be. Economists have used the concept to understand a variety of situations in which speculation about the future is a crucial factor in determining current action.
Professor Sargent is known for his research on coordinating monetary and fiscal policy, stabilising inflation and fighting unemployment. His research interests also extend to the study of the foundations and limits of rationality, and to economic history, including monetary standards and international episodes of inflation.
His ground-breaking studies are widely recognised as having revolutionalised both the field of economics and economic strategy, influencing policy-making of central banks and governments around the world.
Professor Bryce Hool, Dean of SOE, said “Professor Sargent’s appointment will give our faculty and students an exceptional opportunity to interact with and learn from one of today’s most influential economists. He is a pioneer of the rational expectations school of macroeconomics and continues to investigate the foundations of expectations formation and its implications for macroeconomic policy.”
Professor Sargent is no stranger to SMU. In May 2013 he gave a public lecture on ‘Model Uncertainty in Macroeconomics’ hosted by the Sim Kee Boon Institute for Financial Economics, and he delivered the keynote address on ‘Guidance about Central Bank Forward Guidance’ at the 4th Annual Sovereign Wealth Fund Conference held at SMU in December 2013.
Professor Sargent graduated with a Bachelor of Arts from the University of California at Berkeley in 1964, and completed his PhD in Economics from Harvard University in 1968. He is currently the William R. Berkley Professor of Economics and Business at New York University, and a senior fellow at the Hoover Institution. Prior to this, Professor Sargent was a professor of economics at the University of Minnesota from 1975 to 1987, the David Rockefeller Professor at the University of Chicago from 1992 to 1998 and the Donald Lucas Professor of Economics at Stanford University from 1998 to 2002.
Professor Sargent was elected a fellow of the National Academy of Sciences and a fellow of the American Academy of Arts and Sciences, both in 1983, and has been accorded numerous other honours. He is past president of the Econometric Society, the American Economic Association, and the Society for Economic Dynamics and Control.
He is the author of many significant books and articles, including two leading economics textbooks, Macroeconomic Theory and Dynamic Macroeconomic Theory.
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