The Nobel Prize is a sign of the future

The Nobel Prize is a sign of the future

Edward C. Prescott, 81, Dies; Won Nobel for Studying Business Cycles


Published: December 10, 1990

At his home here two weeks ago, his wife, Mary, gave Mr. Prescott the news he had been waiting for. A plaque was on the wall of his office overlooking the Hudson River in Manhattan. It was the first sign from the Nobel committee in Oslo, Sweden, where the prize was awarded to the University of Wisconsin economists Eugene Rosa of the Bureau of Economic Literature and Robert Shiller of Yale University.

”I had been working with Robert for many, many years, and we had no idea what he would do with his Nobel money,” Mr. Prescott said. ”So when I got the phone call, I was excited. But I had to come back and tell Mary right away. We didn’t want to get her hopes up.”

Mr. Prescott, a former chief executive of the Union Carbide Corp., is the co-author, with Mr. Shiller, of ”The Upshot: An Inquiry into the Economic Nature of History.” It has been used by college professors, Wall Street CEOs and Wall Street Journal reporters to probe how economic fluctuations can affect the stock market and the economy as a whole and, in Mr. Prescott’s words, ”how the ups and downs of business cycles are related to human decisions.”

But he was a student of business cycles as well.

”My father was an IBM man. Later, he went to work for General Electric. We moved around. My mother had the only television in the house. So I spent a lot of the time looking at the commercials and I learned a lot about how business is done.”

It was not only business that interested him. Mr. Prescott’s studies of the weather and the stock market have helped him to understand that there is much more going on in the economy than the stock market and that there is a lot more that markets can do to help people and to solve problems. The ups and downs of business cycles do not affect them.

Mr. Prescott was born in

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