Nobel economist brings perspective to UC

Finn Erling Kydland, one of the joint winners of the 2004 Nobel Memorial Prize in Economic Sciences, presented his take on the economy to a full house at the University of Cincinnati’s Zimmer Hall Thursday, Oct. 22.

As part of the James C. Kautz Lecture Series, the Norwegian-born macroeconomist explained the current economic state, using a slideshow to compare countries around the world. Kydland ended the event by answering audience-provided questions.

James Kautz, the lecture series’ namesake introduced Kydland, who is the Jeffrey Henley professor of economics at the University of California, Santa Barbara.

Kydland’s speech, titled “Policy Consistency and Economic Growth” revolved around how a country’s policies might directly affect its economic welfare.

“What matters most to a nation is what happens in the long run,” Kydland said. “Sometimes things done in this short run hurts what’s done in the long run.”

Although Kydland won the Nobel Memorial Prize, he emphasized how much the global economy can fluctuate and how his expertise does not include everything involved in the workings of the economic situation.

“I always get nervous if I venture too far from my research,” Kydland said.

Despite his apprehension, Kydland went on to explain how actions taken by U.S. banking authorities mirror things that happened in Chile. While the Chilean government took over its country’s banks for a short period of time, it re-privatized and recovered. The Mexican government – which faced a similar crisis – nationalized banks and prospered to a greater degree.

“Which of these look like what the Obama administration is trying to do?” Kydland asked.

Although most of his presentation revolved around international economics, Kydland had an opinion about the American economy.

“Banks in the last 10 years were reckless,” Kydland said. “Government policy can be a factor positively or negatively.”

Kydland also explained how the magnitude of the U.S. recession might not seem as devastating compared to other countries, although domestically it’s a big hit. While Kydland mentioned the carelessness of banks, he was quick to clear the U.S. government of blame.

“People start wondering, ‘What will the government do next?’” Kydland said. “Worrying about the government is unnecessary. We have enough worry in the world.”

Audience members asked many questions regarding the current U.S. financial situation, despite his insistence of staying away from the microeconomics side of the discipline. However, he did make a comment about insurance.

“With insurance in any form,” Kydland said, “regulation is necessary.”

Buck Niehoff, chairman of the UC Board of Trustees, said he learned a lot from Kydland’s presentation. Kydland’s presence at UC was something to be proud of, he said.

“[Kydland’s speech was] outstanding,” Niehoff said. “It’s very exciting for a Nobel laureate to come to the university. It says a lot about our academics to have him come here.”