Joseph Stiglitz

2011 U.S. Debt Ceiling Crisis

Who is Joseph Stiglitz?

Joseph Stiglitz is a New Keynesian American economist and 2001 Nobel Prize winner in economics for his research on information asymmetry. Under the Clinton administration, Stiglitz was president of the Presidential Council of Economic Advisers (CEA). He is also a former senior vice president and chief economist of the World Bank, notably fired for expressing a dissenting opinion on World Bank policy during the 1999 riots at the WTO in Seattle.

Key points to remember

  • Joseph Stiglitz is an American economist and 2001 Nobel Prize winner.
  • As a New Keynesian economist, Stiglitz’s research has contributed to the understanding of how microeconomic phenomena can provide a basis for macroeconomics.
  • Stiglitz’s research includes groundbreaking work on information asymmetry in many different applications, monopolistic competition and risk aversion.

As a young man, Stiglitz was the recipient of the John Bates Clark Medal, an award given to economists under the age of forty who have made substantial contributions to the field of economics in the United States. A notorious critic of the International Monetary Fund (IMF), Stiglitz has the background to support his views in his numerous positions in world economic circles, as well as the numerous articles and books he has written on his experiences with international economic issues.

Understanding Joseph Stiglitz

Born in Indiana in 1943 to an insurance salesman and a schoolteacher, Joseph Stiglitz attended Amherst College in Massachusetts and graduated in 1964. As an elder, he spent a summer at studying at MIT, where he later pursued his graduate studies and served as an assistant. professor. In 1965 he became a researcher and went to the University of Cambridge as a Fulbright fellow. From 1966 to 1970, he studied at Gonville and Caius College in Cambridge and then held teaching positions at Yale, Stanford and Princeton, before moving to Columbia University in the year 2000. Three years later , in 2003, Stiglitz was awarded the title of “University Professor”, Columbia’s highest position, and Stiglitz now teaches and lectures at Columbia, but spends much of his time on international economic issues.

Price

In 1979, Stiglitz was awarded the John Bates Clark Medal for economists under the age of forty who made a significant contribution to the field, based on his work on information asymmetry, risk aversion and imperfectly competitive markets. Later, Stiglitz will be awarded the Nobel Prize in Economics for his work on information asymmetry theory, including the use of filtering by insurance companies to sort customers by type in order to manage the risks. For his work, he received a shared award in 2001 with George Akerlof and Michael Spence.

In 2009, Stiglitz was appointed to the Pontifical Academy of Social Sciences, and that same year, he was appointed president of the United Nations Commission on Reforms of the International Monetary and Financial System by the President of the United Nations. In 2020, Time The magazine named Stiglitz one of the “100 most influential people in the world” and, in the same year, he also became president of the International Economic Association.

Stiglitz has written countless academic articles and school books, as well as some for popular audiences. The latest is: The Big Divide: Unequal Societies and What We Can Do About Them in 2020 and The euro: and its threat to the future of Europe in 2020.

Research

Stiglitz’s list of honors, awards and achievements is staggering, but as a New Keynesian economist, the arc of his writings and teachings focuses on microeconomic phenomena that may provide a basis for some of the macroeconomic theories developed by the Keynesian economy. The implications of his research and the content of his popular writings speak to how government regulation of financial and corporate goals is essential to a free, just and prosperous society.

Information asymmetry

Stiglitz’s most recognized contributions are in the area of ​​information asymmetry. His work on this subject is a major component of his New Keynesian research program, in the sense that he explores the different ways in which imperfections in information shared between market players can lead markets to fail to achieve effective results and competitive. These can be insurance markets, where insurers can use various filtering methods to sort the market by type of consumer; financial asset markets, where even low information costs can allow those who acquire and use information from an investor to make a big splash; and labor markets, where principal-agent relationships between employers and employees can lead to higher wages than those in the market which are effective for both groups, but increase overall unemployment.

Risk aversion

Some of Stiglitz’s early work focused on the concept of risk aversion, that is, when people try to reduce their exposure to uncertainty. His work in this area has contributed to the theoretical definition of risk aversion and the logical consequences of risk aversion for subjects such as individual savings, portfolio investment and business production decisions .

Monopolistic competition

Stiglitz helped create the theory of monopolistic competition, which attempts to account for competitive markets where companies and products can be differentiated from each other. In monopolistic competition, things like advertising, branding and product differentiation can help hinder the entry of new businesses, which violates assumptions of perfect competition and can prevent the market from reaching an economically efficient result.

public finance

Part of Stiglitz’s work is based on the ideas of 19th century economist Henry George. George advocated the application of a single tax, based on the unimproved value of private land, to fund the entire government. Stiglitz mathematically formalized George’s idea to show that because land buyers compete for public goods by obtaining land to which public goods are directed, the market value of the land will reflect the value of public goods and that a single land value tax can provide the optimum amount of public goods demanded by the market.

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