Lawrence Klein | |
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| Born | (1920-09-14)September 14, 1920 Omaha, Nebraska, U.S. |
| Died | October 20, 2013(2013-10-20) (aged 93) Gladwyne, Pennsylvania, U.S. |
| Academic career | |
| Field | Macroeconomics Econometrics |
| Institution | University of Pennsylvania University of Oxford University of Michigan NBER Cowles Commission University of Chicago |
| School or tradition | Neo-Keynesian economics |
| Alma mater | Massachusetts Institute of Technology (PhD) University of California, Berkeley (BA) Los Angeles City College (AA) |
| Doctoral advisor | Paul Samuelson |
| Doctoral students | Arthur Goldberger Bennett Harrison Ignazio Visco E. Roy Weintraub Vishwanath Pandit |
| Influences | Jan Tinbergen |
| Contributions | Macroeconometric forecasting models |
| Awards | John Bates Clark Medal (1959) Nobel Memorial Prize in Economic Sciences (1980) |
| Information atIDEAS / RePEc | |
Lawrence Robert Klein (September 14, 1920 – October 20, 2013) was an Americaneconomist. For his work in creatingcomputer models to forecasteconomic trends in the field ofeconometrics in the Department of Economics at theUniversity of Pennsylvania, he was awarded theNobel Memorial Prize in Economic Sciences in 1980 specifically "for the creation of econometric models and their application to the analysis of economic fluctuations and economic policies." Due to his efforts, such models have become widespread amongeconomists.Harvard University professorMartin Feldstein told theWall Street Journal that Klein "was the first to create the statistical models that embodiedKeynesian economics," tools still used by theFederal Reserve Bank and other central banks.[1]
Klein was born inOmaha, Nebraska, the son of Blanche (née Monheit) and Leo Byron Klein.[2] He went on to graduate fromLos Angeles City College, where he learnedcalculus; theUniversity of California, Berkeley, where he began hiscomputer modeling and earned aBA in Economics in 1942; he earned hisPhD in Economics at theMassachusetts Institute of Technology (MIT) in 1944, where he wasPaul Samuelson's first doctoral student.[3][4]
Klein then moved to theCowles Commission for Research in Economics, which was then at theUniversity of Chicago, now theCowles Foundation. There he built a model of theUnited States economy to forecast the development of business fluctuations and to study the effects of government economic-political policy. AfterWorld War II Klein used his model to correctly predict, against the prevailing expectation, that there would be an economic upturn rather than adepression due to increasing consumer demand from returning servicemen.[1] Similarly, he correctly predicted a mildrecession at the end of theKorean War.[citation needed]
Klein briefly joined theCommunist Party during the 1940s, which led to trouble years later.
At theUniversity of Michigan, Klein developed enhancedmacroeconomic models, in particular the famousKlein–Goldberger model withArthur Goldberger, which was based on foundations laid byJan Tinbergen of theNetherlands, later winner of the first economics prize in 1969. Klein differed from Tinbergen in using an alternativeeconomic theory and a differentstatistical technique.[5]
In 1954, Klein's brief membership in the Communist Party was made public[1] and he was denied tenure at the University of Michigan, in the wake of theMcCarthy era. Klein moved to theUniversity of Oxford, and developed an economic model of theUnited Kingdom known as theOxford model withSir James Ball. Additionally, at the Institute of Statistics, Klein assisted with the creation of theBritish Savings Surveys, based upon the Michigan Surveys.
In 1958 Klein returned to the U.S. to join the Department of Economics at theUniversity of Pennsylvania. In 1959 he was awarded theJohn Bates Clark Medal, one of the two most prestigious awards in the field of economics. In 1968 he became theBenjamin Franklin Professor of Economics and Finance at Penn.
In the early 1960s Klein became the leader of the major "Brookings-SSRC Project" to construct a detailedeconometric model to forecast the short-term development of the U.S. economy.
Later in the '60s, Klein constructed theWharton Econometric Forecasting Model. This model, considerably smaller than the Brookings model, achieved a very good reputation for its analysis of business conditions, used to forecast fluctuations including national product, exports, investments, and consumption, and to study the effect on them of changes in taxation, public expenditure, oil price, etc.
In 1969 Klein foundedWharton Econometric Forecasting Associates or WEFA (nowIHS Global Insight), launching the econometric forecasting industry in the United States. Among his clients wereGeneral Electric Company,IBM, andBethlehem Steel Corporation. He was the initiator of, and an active research leader in theirLINK project, a consortium of model builders from many countries, which was also mentioned in his Nobel citation. The aim was to produce the world's first global economic model, linking models of many of the world's countries so that the effect of changes in the economy of one country are reflected in the other. LINK, which is now operated by the United Nations, is still meeting regularly, most recently in September 2018 in Santiago, Chile.
Klein served as a thesis advisor for numerous well-known economists includingE. Roy Weintraub in the late 1960s.[citation needed]
During the1976 United States presidential election, Klein coordinatedJimmy Carter's economic task force. He declined an invitation to join Carter's administration. Klein has also been president of theEconometric Society, the International Atlantic Economic Society (1989–1990), and theAmerican Economic Association (in 1977).
His Nobel citation concludes that "few, if any, research workers in the empirical field of economic science, have had so many successors and such a large impact as Lawrence Klein". However,Christopher Sims has criticized the assumptions underlying large macro-econometric models built by Klein (Sims, 1980). Also, many economists have questioned the suitability of estimation methods employed by large structural models and the usefulness of simple autoregressive models for approximating economic systems.
In his final years, he was constructing short range "current quarter models" that use current economic indicators to get a handle on the rate of economic growth during the current and next quarter. In contrast to earlier efforts to model the economy structurally and to use constant adjustments and judgmental estimates for the exogenous variables, these systems are deliberately automatic and mechanical, simply translating available information into a statistically best estimate of current conditions. This represents a very different tradition from his earlier model building and applications.
After formal retirement and until his death he was engaged in macro econometric model building high-frequency models that project the economy within a short timeframe (e.g., monthly or quarterly). A publication on high frequency model containing regions such as US,China,Russia,India,Brazil,Mexico,Korea andHong Kong was expected in 2008.
Klein was a founding trustee ofEconomists for Peace and Security. He was also a member of theAmerican Academy of Arts and Sciences,[6] theAmerican Philosophical Society,[7] and the United StatesNational Academy of Sciences.[8]
He died at the age of 93 in his home on October 20, 2013.[9]
, accessed 11 October 2020
| Awards | ||
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| Preceded by | Laureate of the Nobel Memorial Prize in Economics 1980 | Succeeded by |
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