2012년 2월 17일 금요일

Some readings about Paul Samuelson

자료 1: Remembering Paul Samuelson (The Economist, Dec 14th 2009)


자료 2: Paul Samuelson, R.I.P., December 13, 2009 ( Paul Krugman )
It’s hard to convey the full extent of Samuelson’s greatness. Most economists would love to have written even one seminal paper — a paper that fundamentally changes the way people think about some issue. Samuelson wrote dozens: from international trade to finance to growth theory to speculation to well, just about everything, underlying much of what we know is a key Samuelson paper that set the agenda for generations of scholars.
(...)
One of the things Robin Wells and I did when writing our principles of economics textbook was to acquire and study a copy of the original, 1948 edition of Samuelson’s textbook. It’s an extraordinary work: lucid, accessible without being condescending, and deeply insightful. His discussions of speculation and monetary policy are particularly striking: they run quite contrary to much of what was being taught just a few years ago, but they ring completely true in the current crisis. And he was, of course, the man who truly brought Keynesian economics to America — a contribution that now seems more relevant than ever.
자료 3: New York Times obituary, December 13, 2009( MICHAEL M. WEINSTEIN )

( ... ... ) Mr. Samuelson wrote one of the most widely used college textbooks in the history of American education. The book, “Economics,” first published in 1948, was the nation’s best-selling textbook for nearly 30 years. Translated into 20 languages, it was selling 50,000 copies a year a half century after it first appeared.

“I don’t care who writes a nation’s laws — or crafts its advanced treatises — if I can write its economics textbooks,” Mr. Samuelson said.

His textbook taught college students how to think about economics. His technical work — especially his discipline-shattering Ph.D. thesis, immodestly titled “The Foundations of Economic Analysis” — taught professional economists how to ply their trade. Between the two books, Mr. Samuelson redefined modern economics.

The textbook introduced generations of students to the revolutionary ideas of John Maynard Keynes, the British economist who in the 1930s developed the theory that modern market economies could become trapped in depression and would then need a strong push from government spending or tax cuts, in addition to lenient monetary policy, to restore them. Many economics students would never again rest comfortably with the 19th-century view that private markets would cure unemployment without need of government intervention.

That lesson was reinforced in 2008, when the international economy slipped into the steepest downturn since the Great Depression, when Keynesian economics was born. When the Depression began, governments stood pat or made matters worse by trying to balance fiscal budgets and erecting trade barriers. But 80 years later, having absorbed the Keynesian teaching of Mr. Samuelson and his followers, most industrialized countries took corrective action, raising government spending, cutting taxes, keeping exports and imports flowing and driving short-term interest rates to near zero.

Lessons for Kennedy: (...) His most influential student was John F. Kennedy, whose first 40-minute class with Mr. Samuelson, after the 1960 election, was conducted on a rock by the beach at the family compound at Hyannis Port, Mass. (...) As a member of the Kennedy campaign brain trust, Mr. Samuelson headed an economic task force for the candidate and held several private sessions on economics with him. Many would have a bearing on decisions made during the Kennedy administration.

Though Mr. Samuelson was President Kennedy’s first choice to become chairman of the Council of Economic Advisers, he refused, on principle, to take any government office because, he said, he did not want to put himself in a position in which he could not say and write what he believed. Kennedy was shocked. “I’ve just campaigned on a platform of fiscal responsibility and balanced budgets and here you are telling me that the first thing I should do in office is to cut taxes?” Mr. Samuelson recalled, quoting the president. Kennedy eventually accepted the professor’s advice and signaled his willingness to cut taxes, but he was assassinated before he could take action. His successor, Lyndon B. Johnson, carried out the plan, however, and the economy bounced back.

the multiplier-accelerator model (...)

Stolper-Samuelson theorem: he and a co-author showed that competition from imports of clothes and similar goods from underdeveloped countries, where producers rely on unskilled workers, could drive down the wages of low-paid workers in industrialized countries.

The theorem provided the intellectual scaffold for opponents of free trade. And late in his career, Mr. Samuelson set off an intellectual commotion by pointing out that the economy of a country like the United States could be hurt if productivity rose among the economies with which it traded. Yet Mr. Samuelson, like most academic economists, remained an advocate of open trade. Trade, he taught, raises average living standards enough to allow the workers and consumers who benefit to compensate those who suffer, and still have some extra income left over. Protectionism would not help, but higher productivity would.

Mr. Samuelson also formulated a theory of public goods (...), “correspondence principle” (...) overlapping generations model (...)

But beyond his astonishing array of scientific theorems and conclusions, Mr. Samuelson wedded Keynesian thought to conventional economics. He developed what he called the Neoclassical Synthesis.

  1. The neoclassical economists in the late 19th century showed how forces of supply and demand generate equilibrium in the market for apples, shoes and all other consumer goods and services. The standard analysis had held that market economies, left to their own devices, gravitated naturally toward full employment. 
  2. Economists clung to this theory even in the wake of the Depression of the 1930s. But the need to explain the market collapse, as well as unemployment rates that soared to 25 percent, gave rise to a contrary strain of thought associated with Keynes.
  3. Mr. Samuelson’s resulting “synthesis” amounted to the notion that economists could use the neoclassical apparatus to analyze economies operating near full employment, but switch over to Keynesian analysis when the economy turned sour
  4. (... ...) The University of Chicago developed the century’s leading conservative economic theorists, under the later guidance of Milton Friedman. But Mr. Samuelson regarded the teaching at Chicago as “schizophrenic.” This was at the height of the Depression, and courses about the business cycle naturally talked about unemployment, he said. But in economic-theory classes, joblessness was not mentioned.

    “The niceties of existence were not a matter of concern,” he recalled, “yet everything around was closed down most of the time. If you lived in a middle-class community in Chicago, children and adults came daily to the door saying, ‘We are starving, how about a potato?’ I speak from poignant memory.”

After receiving his bachelor’s degree from Chicago in 1935, he went to Harvard, where he was attracted to the ideas of the Harvard professor Alvin Hansen, the leading exponent of Keynesian theory in America. As a student at Chicago and later at Cambridge, Mr. Samuelson had at first reacted negatively to Keynes. “What I resisted most was the notion that there could be equilibrium unemployment” — that some level of unemployment would be impossible to eliminate and have to be tolerated. ( ... )

At Harvard, as at Chicago, he was not shy about criticizing his professors — “respecting neither age nor rank,” according to James Tobin, a Nobel laureate of Yale University. The young Mr. Samuelson’s chief complaint against economists was that they preoccupied themselves with finer economic principles while all around them people were being thrown into bread lines.

(... ...) In 1940, Harvard offered him an instructorship, which he accepted, but a month later M.I.T. invited him to become an assistant professor. Harvard made no attempt to keep him, even though he had by then developed an international following. Mr. Solow said of the Harvard economics department at the time: “You could be disqualified for a job if you were either smart or Jewish or Keynesian. So what chance did this smart, Jewish, Keynesian have?”

(... ...) It would be difficult to overestimate the influence of “Economics.” Business Week, taking note of the textbook’s publication in Greek, Punjabi, Hebrew, Russian, Serbo-Croatian and other languages, once said that it had “gone a long way in giving the world a common economic language.” Students were attracted to its lively prose and relevance to their everyday lives. Many textbook authors began to copy its presentation.

(... ...) But, he said, no serious political or economic thinker would reject the fundamental Keynesian idea that a benevolent democratic government must do what it can to avert economic trouble in areas the free markets cannot. Neither government alone nor the markets alone, he said, could serve the public welfare without help from the other.

자료 4: Paul Samuelson 1915-2009 ( Avinash Dixit )

Alexander Pope composed the following epitaph for Isaac Newton:
Nature and Nature's Laws lay hid in night:
God said, "Let Newton be!" and all was light.
The same could be said of Paul Samuelson. He took numerous principles of economics that were hidden in obscure verbiage by previous generations, and reformulated them with crystal clarity in the language of mathematics. (...) He molded several generarions of graduate students at MIT and researchers throughout the profession. His introductory textbook shaped (...) all the textbooks that followed. (...) More than anyone else in the latter half of the 20th century, Samuelson changed the way economists think and write.

In the 1930s Samuelson was still under 25[, ...] he gave us:
  1. the foundations of modern consumer theory[:] "A note on the pure theory of consumer's behavior" and "The empirical implications of utility analysis"; 
  2. clear statements of very general relationships among intertemporal prices and interest rates: "Some aspects of the pure theory of capital} and "The rate of interest under ideal conditions" 
  3. The first general statements and proofs of "The gains from international trade" 
  4. The first workhorse model of business cycles in "Interactions between mutiplier analysis and the principle of acceleration."
The 1940s brought a culmination of the work on consumer theory in ^The Foundations of Economic Analysis^ and in more articles. Concepts that have become ingrained in our thinking and our modeling, such as revealed preference and intergrability, the correspondence principle of constrained optimization and comparative statics, the envelope theorem, the Le Chartelier Principle, and maximization of a (Bergson-Samuelson) welfare function implying the marginal confidions of Pareto optimality, all date from this period.

In international trade we got the Stolpher-Samuelson theorem and the conditions for factor price equalization. Various papers on stability condtions, arising from the work in consumer theory, equilibrium theory, and the multiplier-accelerator model, also belong to this decade. Finally, the masterful RAND memo, "Market Mechanisms and Maximization," elucidated many of the themes of competitive equilibrium and Pareto efficiency that were generalized and aximatized by Arrow and Debreu.

The 1960s should be remembered most of all for this contributions to financial theory. He gave rigorous analyses of the benefit of diversification and of the random walk hypothesis, and the model of warrant pricing that in the hands of his student Robert Merton, and Fischer Black, Myron Scholes and others, brought us the general theory of pricing of derivative securities (like it or not!). As an incidental appendix to the warrant pricing paper, he developed the mathematics of the higher order contact or smooth pasting condition that is now an important part of stochastic optimization. The 60s also brought his paper with Solow on the Philips Curve, which was much more cautious about its policy implications than the literature that followed.

In the early 1970s, Samuelson turned to international trade again and produced two more highly influential models. In "An Ricardo-Hume model" and "Ohlin was right!" he introduced the sector-specific capital(Ricardo-Viner) model, and (with Rudiger Dornbusch and Stanley Fischer) he published a pair of Ricardian and Hecksher-Ohlin models with a continuum of goods.

In 1980 [he] was 65, (...) Samuelson remained energetic and active in research (...)
  • In papers like "A case at last for age-phased reduction in equity" and "Why we should not make mean log of wealth big though years to act are long," he debunked some common beliefs about superiority of equities over bonds, and about maximization of the expected geometric rate of growth of wealth. 
  • In "Where Ricardo and Mill rebut and confirm arguments of mainstream economists supporting globalization," he showed that innovation can have perverse effects on wages and total output, and that foreign technical progress can lower domestic welfare in a trading economy, although this does not support protectionists who tried to hijacked his arguments to their own ends.
Most modern economists are disdainful of the history of thought in their subject, often because they are ignorant of it. Samuelson had not only respect for the ancients, but healthy scientific curiosity about how their arguments would translate and how far they would survice in the modern mathematical language. (... ...)

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자료 ??: Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization ( Paul A. Samuelson, Journal of Economic Perspectives, Summer 2004 )

자료 ??: Comments ( Avinash Dixit, Gene Grossman, Journal of Economic Perspectives, Summer 2005 )

자료 ??: Defunct Economists ( William Greider, The Nation, 3 Dec 2004 )

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