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126-619: In 2000, Stiglitz founded the Initiative for Policy Dialogue (IPD), a think tank on international development based at Columbia University . He has been a member of the Columbia faculty since 2001 and received the university's highest academic rank ( university professor ) in 2003. He was the founding chair of the university's Committee on Global Thought. He also chairs the University of Manchester 's Brooks World Poverty Institute . He

252-641: A blunt demand is questionable – Wolfensohn claims he would "have told him to *** himself". Stiglitz resigned from the World Bank in January 2000, a month before his term expired. The Bank's president , James Wolfensohn, announced Stiglitz's resignation in November 1999 and also announced that Stiglitz would stay on as Special Advisor to the President, and would chair the search committee for

378-578: A clerk in the India Office . He enjoyed his work at first, but by 1908 had become bored and resigned his position to return to Cambridge and work on probability theory , through a lectureship in economics at first funded personally by economists Alfred Marshall and Arthur Pigou ; he became a fellow of King's College in 1909. By 1909 Keynes had also published his first professional economics article in The Economic Journal , about

504-518: A consultant. Keynes had completed his A Treatise on Probability before the war but published it in 1921. The work was a notable contribution to the philosophical and mathematical underpinnings of probability theory , championing the important view that probabilities were no more or less than truth values intermediate between simple truth and falsity. Keynes developed the first upper-lower probabilistic interval approach to probability in chapters 15 and 17 of this book, as well as having developed

630-486: A firm's production decisions. Stiglitz made early contributions to a theory of public finance stating that an optimal supply of local public goods can be funded entirely through capture of the land rents generated by those goods (when population distributions are optimal). Stiglitz dubbed this the ' Henry George theorem ' in reference to the radical classical economist Henry George who famously advocated for land value tax . The explanation behind Stiglitz's finding

756-399: A general equilibrium context. In the opening remarks for his prize acceptance at Aula Magna , Stiglitz said: I hope to show that Information Economics represents a fundamental change in the prevailing paradigm within economics. Problems of information are central to understanding not only market economics but also political economy, and in the last section of this lecture, I explore some of

882-526: A generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable, – abhorrent and detestable, even if it was possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilized life of Europe. Also present was striking imagery such as "year by year Germany must be kept impoverished and her children starved and crippled" along with bold predictions which were later justified by events: If we aim deliberately at

1008-663: A leader of the British delegation, Keynes participated in the design of the international economic institutions established after the end of World War II but was overruled by the American delegation on several aspects. Keynes's influence started to wane in the 1970s, partly as a result of the stagflation that plagued the British and American economies during that decade, and partly because of criticism of Keynesian policies by Milton Friedman and other monetarists , who disputed

1134-520: A level where employers could profitably offer them jobs. An innovation from Keynes was the concept of price stickiness  – the recognition that in reality workers often refuse to lower their wage demands even in cases where a classical economist might argue that it is rational for them to do so. Due in part to price stickiness, it was established that the interaction of " aggregate demand " and " aggregate supply " may lead to stable unemployment equilibria – and in those cases, it

1260-595: A major recession". He argued that Greek debt should be written off. Since March 2012, Stiglitz has been a member of the Scottish Government 's Fiscal Commission Working Group, which oversees the work to establish a fiscal and macroeconomic framework for an independent Scotland on behalf of the Scottish Council of Economic Advisers . Together with Professors Andrew Hughes Hallett , Sir James Mirrlees and Frances Ruane , Stiglitz will "advise on

1386-537: A man of science I have ever read". Mary Paley Marshall was "entranced" by the memorial, while Lytton Strachey rated it as one of Keynes's "best works". In 1922 Keynes continued to advocate reduction of German reparations with A Revision of the Treaty . He attacked the post-World War I deflation policies with A Tract on Monetary Reform in 1923  – a trenchant argument that countries should target stability of domestic prices, avoiding deflation even at

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1512-497: A middle course between deflation and inflation. This novel interpretation was inspired by the desperate search for control over the economy which permeated the academic world after the Depression. The General Theory challenged the earlier neoclassical economic paradigm, which had held that provided it was unfettered by government interference, the market would naturally establish full employment equilibrium. In doing so Keynes

1638-572: A more sustainable and just global economic order ". Its final report was released on September 21, 2009. In 2010, Stiglitz acted as an advisor to the Greek government during the Greek debt crisis . He appeared on Bloomberg TV for an interview on the risks of Greece defaulting, in which he stated that he was very confident that Greece would not default. He went on to say that Greece was under "speculative attack" and though it had "short-term liquidity problems ... and would benefit from Solidarity Bonds",

1764-441: A more democratic discussion of development around the world. The organization's accessibly written publications, research, and public conferences enable more stakeholders to participate effectively in policy debates. IPD encourage public participation and improved access to information by webcasting many of their conferences, inviting civil society and local media, and training journalists in economics reporting. The programs facilitate

1890-626: A net basis, Germany received support equal to four times the amount of the post-Second World War Marshall Plan . Schuker also shows that, in the years after Versailles, Keynes became an informal reparations adviser to the German government, wrote one of the major German reparation notes, and supported hyperinflation on political grounds. Nevertheless, The Economic Consequences of the Peace gained Keynes international fame, even though it also caused him to be regarded as anti-establishment – it

2016-526: A number of policy roles throughout his career. He served in the Clinton administration as the chair of the President's Council of Economic Advisers (1995–1997). At the World Bank , he served as a senior vice-president and the chief economist from 1997 to 2000. He was fired by the World Bank for expressing dissent with its policies. Stiglitz has advised American president Barack Obama , but has criticized

2142-420: A profit. Another key theme of the book is the unreliability of financial indices for representing an accurate – or indeed meaningful – indication of general shifts in purchasing power of currencies over time. In particular, he criticised the justification of Britain's return to the gold standard in 1925 at pre-war valuation by reference to the wholesale price index . He argued that

2268-405: A recession Say's Law suggests government intervention. This government intervention can be used to prevent any further increase in savings in the form of a decreased interest rate. Decreasing the interest rate will encourage people to start spending and investing again, or so it is stated by Say's Law. The reason behind this is that when there is little investing, savings start to accumulate and reach

2394-487: A slump as the present one, so great as to bring production altogether to a standstill." At the height of the Great Depression, in 1933, Keynes published The Means to Prosperity , which contained specific policy recommendations for tackling unemployment in a global recession, chiefly counter-cyclical public spending. The Means to Prosperity contains one of the first mentions of the multiplier effect . While it

2520-426: A society, is defined by the sum of consumption and investment. In a state of unemployment and unused production capacity, one can enhance employment and total income only by first increasing expenditures for either consumption or investment. Without government intervention to increase expenditure, an economy can remain trapped in a low-employment equilibrium. The demonstration of this possibility has been described as

2646-411: A stopping point in the flow of money. During the normal economic activity, it would be justified to have savings because they can be given out as loans but in this case, there is little demand for them, so they are doing no good for the economy. The supply of savings then exceeds the demand for loans and the result is lower prices or lower interest rates. Thus, the idea is that the money that was once saved

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2772-572: A successor. Joseph E. Stiglitz said today [Nov. 24, 1999] that he would resign as the World Bank's chief economist after using the position for nearly three years to raise pointed questions about the effectiveness of conventional approaches to helping poor countries. In this role, he continued criticism of the IMF, and, by implication, the US Treasury Department. In April 2000, in an article for The New Republic , he wrote: They'll say

2898-565: A surgeon and Margaret married the Nobel Prize-winning physiologist Archibald Hill . According to the economic historian and biographer Robert Skidelsky , Keynes's parents were loving and attentive. They attended a Congregational Church and remained in the same house throughout their lives, where the children were always welcome to return. Keynes received considerable support from his father, including expert coaching to help him pass his scholarship exams and financial help both as

3024-426: A talent for arithmetic, but his health was poor leading to several long absences. He was tutored at home by a governess, Beatrice Mackintosh, and his mother. In January 1892, at eight and a half, he started as a day pupil at St Faith's preparatory school. By 1894, Keynes was top of his class and excelling at mathematics. In 1896, St Faith's headmaster, Ralph Goodchild, wrote that Keynes was "head and shoulders above all

3150-433: A tractable model of monopolistic competition that was an alternative to traditional perfect-competition models of general equilibrium . They showed that in the presence of increasing returns to scale, the entry of firms is socially too small. The model was extended to show that when consumers have a preference for diversity, entry can be socially too large. The modeling approach was used by Paul Krugman in his analysis of

3276-477: A variable X being 'more variable' than a variable Y were all equivalent – Y being equal to X plus noise, every risk-averse agent preferring Y to X, and Y having more weight in its tails, and that none of these were always consistent with X having a higher statistical variance than Y – a commonly used definition at the time. In a second paper, they analyzed the theoretical consequences of risk aversion in various circumstances, such as an individual's savings decisions and

3402-520: A way that justifies state action – socialism – as a remedy. The effect of Stiglitz's influence is to make economics even more presumptively interventionist than Samuelson preferred. Samuelson treated market failure as an exception to the general rule of efficient markets. But the Greenwald-Stiglitz theorem posits market failure as the norm, establishing "that government could potentially almost always improve upon

3528-474: A young man and when his assets were nearly wiped out at the onset of Great Depression in 1929. Keynes's mother made her children's interests her own, and according to Skidelsky, "because she could grow up with her children, they never outgrew home". In January 1889, at the age of five and a half, Keynes started at the kindergarten of the Perse School for Girls for five mornings a week. He quickly showed

3654-588: Is also one of the 25 leading figures on the Information and Democracy Commission launched by Reporters Without Borders . According to the Open Syllabus Project , Stiglitz is the fifth most frequently cited author on college syllabi for economics courses. Heterodox Stiglitz was born in Gary, Indiana into a Jewish family. His mother was Charlotte (née Fishman), a schoolteacher, and his father

3780-640: Is an editor of The Economists' Voice journal with J. Bradford DeLong and Aaron Edlin . He teaches classes for a double-degree program between Sciences Po Paris and École Polytechnique in Economics and Public Policy. He has chaired the Brooks World Poverty Institute at the University of Manchester since 2005. Stiglitz is widely considered a New-Keynesian economist, although at least one economics journalist says his work cannot be so clearly categorized. Stiglitz has played

3906-435: Is an opportunity for economic contribution social measures", argued Stiglitz, who made a speech about the way authorities are handling the political exit to the crisis. He encouraged those present to respond to the ideas with good ideas. "This does not work, you have to change it", he said. Stiglitz has been critical of rating agencies , describing them as the "key culprit" in the 2007–2008 financial crisis , noting "they were

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4032-579: Is imperfect information or imperfect risk markets – that is always. The real debate today is about finding the right balance between the market and government. Both are needed. They can each complement each other. This balance will differ from time to time and place to place. In an interview in 2007, Stiglitz explained further: The theories that I (and others) helped develop explained why unfettered markets often not only do not lead to social justice, but do not even produce efficient outcomes. Interestingly, there has been no intellectual challenge to

4158-452: Is introduced, Chicago-school defenders of the market system cannot sustain descriptive claims of the Pareto efficiency of the real world. Thus, Stiglitz's use of rational-expectations equilibrium assumptions to achieve a more realistic understanding of capitalism than is usual among rational-expectations theorists leads, paradoxically, to the conclusion that capitalism deviates from the model in

4284-441: Is no one set of policies that is best for all countries. IPD analyzes the trade-offs associated with different policies and provides governments and civil society with a framework for analysis. The programs improve the information available to the policy community, but leave the final decisions to the country's political process. IPD emphasizes diverse participation and broad civic involvement in economic policymaking, and facilitates

4410-473: Is now re-invested or spent, assuming lower interest rates appeal to consumers. To Keynes, however, this was not always the case, and it couldn't be assumed that lower interest rates would automatically encourage investment and spending again since there is no proven link between the two. The General Theory argues that demand, not supply, is the key variable governing the overall level of economic activity. Aggregate demand, which equals total un-hoarded income in

4536-407: Is on the state, not the market, that economies must depend for their salvation. In contrast, Keynes argued that demand is what creates supply and not the other way around. He questioned Say's Law by asking what would happen if the money that is being given to individuals is not finding its way back into the economy and is saved instead. He suggested the result would be a recession. To tackle the fear of

4662-592: Is precisely with these plants and these men that we shall afford them." The General Theory is often viewed as the foundation of modern macroeconomics . Few senior American economists agreed with Keynes through most of the 1930s. Yet his ideas were soon to achieve widespread acceptance, with eminent American professors such as Alvin Hansen agreeing with the General Theory before the outbreak of World War II. Keynes himself had only limited participation in

4788-438: Is that rivalry for public goods takes place geographically, so competition for access to any beneficial public good will increase land values by at least as much as its outlay cost. Furthermore, Stiglitz shows that a single tax on rents is necessary to provide the optimal supply of local public investment. Stiglitz also shows how the theorem could be used to find the optimal size of a city or firm. Stiglitz's most famous research

4914-697: Is that the magnitude of debt is far greater than the capacity of the economy to service", Stiglitz replied, "That's rather absurd". In 2012, Stiglitz described the European austerity plans as a "suicide-pact". In 2015, he said that the programmer of austerity in Greece had been "an enormous mistake", that the International Monetary Fund, European Central Bank and the European Commission had "criminal responsibility for causing

5040-650: Is the author of several books, the latest being The Road to Freedom (2024), People, Power, and Profits (2019), The Euro: How a Common Currency Threatens the Future of Europe (2016), The Great Divide: Unequal Societies and What We Can Do About Them (2015), Rewriting the Rules of the American Economy: An Agenda for Growth and Shared Prosperity (2015), and Creating a Learning Society: A New Approach to Growth Development and Social Progress (2014). He

5166-851: The North American Free Trade Agreement (NAFTA) had they been aware of stealth provisions, inserted by lobbyists, that they overlooked. In July 2000, Stiglitz founded the Initiative for Policy Dialogue . At the beginning of 2008, Stiglitz chaired the Commission on the Measurement of Economic Performance and Social Progress , also known as the Stiglitz- Sen - Fitoussi Commission, initiated by President Sarkozy of France. The Commission held its first plenary meeting on April 22–23, 2008, in Paris. Its final report

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5292-613: The Obama Administration 's financial-industry rescue plan. He said whoever designed the Obama administration's bank rescue plan is "either in the pocket of the banks or they're incompetent." In October 2008, he was asked by the President of the United Nations General Assembly to chair a commission drafting a report on the reasons for and solutions to the 2007–2008 financial crisis . In response,

5418-459: The Treasury . Among his responsibilities were the design of terms of credit between Britain and its continental allies during the war and the acquisition of scarce currencies. According to economist Robert Lekachman , Keynes's "nerve and mastery became legendary" because of his performance of these duties, as in the case where he managed to assemble a supply of Spanish pesetas . The secretary of

5544-505: The "astronomically" high war compensation they wanted to demand from Germany. Keynes was forced to try to exert influence mostly from behind the scenes. The three principal players at the Paris conferences were Britain's Lloyd George, France's Georges Clemenceau and America's President Woodrow Wilson . It was only Lloyd George to whom Keynes had much direct access; until the 1918 election he had some sympathy with Keynes's view but while campaigning had found his speeches were well received by

5670-460: The 1920s. The work, Treatise on Money , was published in 1930 in two volumes. A central idea of the work was that if the amount of money being saved exceeds the amount being invested – which can happen if interest rates are too high – then unemployment will rise. This is in part a result of people not wanting to spend too high a proportion of what employers pay out, making it difficult, in aggregate, for employers to make

5796-539: The 1930s, Keynes spearheaded a revolution in economic thinking , challenging the ideas of neoclassical economics that held that free markets would, in the short to medium term, automatically provide full employment, as long as workers were flexible in their wage demands. He argued that aggregate demand (total spending in the economy) determined the overall level of economic activity, and that inadequate aggregate demand could lead to prolonged periods of high unemployment, and since wages and labour costs are rigid downwards

5922-438: The 1933 London Economic Conference opinions remained too diverse for a unified course of action to be agreed upon. Keynesian-like policies were adopted by Sweden and Germany, but Sweden was seen as too small to command much attention, and Keynes was deliberately silent about the successful efforts of Germany as he was dismayed by its imperialist ambitions and its treatment of Jews. Apart from Great Britain, Keynes's attention

6048-608: The 2018 mid-term elections in the United States, he wrote a statement about the importance of economic justice to the survival of democracy worldwide. After getting his Ph.D. from M.I.T. in 1967, Stiglitz co-authored one of his first papers with Michael Rothschild for the Journal of Economic Theory in 1970. Stiglitz and Rothschild built upon works by economists such as Robert Solow on the concept of risk aversion . Stiglitz and Rothschild showed three plausible definitions of

6174-532: The Belgian Order of Leopold . Keynes's experience at Versailles was influential in shaping his future outlook, yet it was not a successful one. Keynes's main interest had been in trying to prevent Germany's compensation payments being set so high it would traumatise innocent German people, damage the nation's ability to pay and sharply limit its ability to buy exports from other countries – thus hurting not just Germany's economy but that of

6300-431: The British, while on security grounds, France argued for an even more severe settlement than Britain. Wilson initially favoured relatively lenient treatment of Germany – he feared too harsh conditions could foment the rise of extremism and wanted Germany to be left sufficient capital to pay for imports. To Keynes's dismay, Lloyd George and Clemenceau were able to pressure Wilson to agree to include pensions in

6426-584: The Century in 1999, it reported that "his radical idea that governments should spend money they don't have may have saved capitalism". The Economist has described Keynes as "Britain's most famous 20th-century economist". In addition to being an economist, Keynes was also a civil servant , a director of the Bank of England , and a part of the Bloomsbury Group of intellectuals. John Maynard Keynes

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6552-547: The Ford, Rockefeller, McArthur, and Mott Foundations and the Canadian and Swedish government, to enhance democratic processes for decision making in developing countries, to ensure that a broader range of alternative are on the table and more stakeholders are at the table. The organization is a global network of more than 250 leading economists , political scientists , civil society representatives, and practitioners from all over

6678-540: The Great Depression of the 1930s, that capitalism caused war. He argued that if capitalism were managed domestically and internationally (with coordinated international Keynesian policies, an international monetary system that did not pit the interests of countries against one another, and a high degree of freedom of trade), then this system of managed capitalism could promote peace rather than conflict between countries. His plans during World War II for post-war international economic institutions and policies (which contributed to

6804-448: The IMF is arrogant. They'll say the IMF doesn't really listen to the developing countries it is supposed to help. They'll say the IMF is secretive and insulated from democratic accountability. They'll say the IMF's economic 'remedies' often make things worse – turning slowdowns into recessions and recessions into depressions. And they'll have a point. I was chief economist at the World Bank from 1996 until last November, during

6930-467: The Peace , published in 1919. This work has been described as Keynes's best book, where he was able to bring all his gifts to bear – his passion as well as his skill as an economist. In addition to economic analysis, the book contained appeals to the reader's sense of compassion : I cannot leave this subject as though its just treatment wholly depended either on our pledges or on economic facts. The policy of reducing Germany to servitude for

7056-541: The Treasury was delighted to hear Keynes had amassed enough to provide a temporary solution for the British Government. But Keynes did not hand the pesetas over, choosing instead to sell them all to break the market: his boldness paid off, as pesetas then became much less scarce and expensive. On the introduction of military conscription in 1916, he applied for exemption as a conscientious objector , which

7182-656: The UK and of the Clintonites in the US have been a disappointment." On September 27, 2015, it was announced that he had been appointed to the British Labour Party's Economic Advisory Committee , convened by Shadow Chancellor John McDonnell and reporting to Labour Party Leader Jeremy Corbyn, although he reportedly failed to attend the first meeting. For Stiglitz, there is no such thing as an invisible hand , in

7308-585: The ability of government to favourably regulate the business cycle with fiscal policy . The 2007–2008 financial crisis sparked the 2008–2009 Keynesian resurgence . Keynesian economics provided the theoretical underpinning for economic policies undertaken in response to the 2007–2008 financial crisis by President Barack Obama of the United States, Prime Minister Gordon Brown of the United Kingdom, and other heads of governments. When Time magazine included Keynes among its Most Important People of

7434-468: The causes of business cycles . One of the most influential economists of the 20th century, he produced writings that are the basis for the school of thought known as Keynesian economics , and its various offshoots. His ideas, reformulated as New Keynesianism , are fundamental to mainstream macroeconomics . He is known as the "father of macroeconomics". During the Great Depression of

7560-487: The central issues in contention, as well as the impacts on different groups, the risks associated with each alternative, and an analysis and interpretation of the experiences of those who have tried each. These books are unique in that they are geared toward policymakers and civil society and are written as part of a collaborative process, bringing in voices from both the North and South. The books lay out policy options including

7686-560: The chair of the international Commission on the Measurement of Economic Performance and Social Progress , appointed by the French President Sarkozy , which issued its report in 2010, Mismeasuring our Lives: Why GDP doesn't add up, and currently serves as co-chair of its successor, the High Level Expert Group on the Measurement of Economic Performance and Social Progress. From 2011 to 2014, Stiglitz

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7812-421: The circumstances of its publication were such that his suggestions shaped the course of the 1930s. In addition, Keynes introduced the world to a new interpretation of taxation: since the legal tender is now defined by the state, inflation becomes "taxation by currency depreciation". This hidden tax meant a) that the standard of value should be governed by deliberate decision; and (b) that it was possible to maintain

7938-531: The collapse of the Weimar Republic and the outbreak of the Second World War. However, historian Ruth Henig claims that "most historians of the Paris peace conference now take the view that, in economic terms, the treaty was not unduly harsh on Germany and that, while obligations and damages were inevitably much stressed in the debates at Paris to satisfy electors reading the daily newspapers,

8064-762: The commission produced the Stiglitz Report . On July 25, 2011, Stiglitz participated in the "I Forro Social del 15M" organized in Madrid , expressing his support to the 15M Movement protestors. Stiglitz was the president of the International Economic Association from 2011 to 2014. On September 27, 2015, the United Kingdom Labour Party announced that Stiglitz was to sit on its Economic Advisory Committee along with five other world-leading economists. After

8190-516: The conference was a treaty which disgusted Keynes both on moral and economic grounds and led to his resignation from the Treasury. In June 1919 he turned down an offer to become chairman of the British Bank of Northern Commerce , a job that promised a salary of £2,000 in return for a morning per week of work. Keynes's analysis on the predicted damaging effects of the treaty appeared in the highly influential book, The Economic Consequences of

8316-399: The cost of European reconstruction on the United States. Lloyd George agreed it might be acceptable to the British electorate. However, America was against the plan; the US was then the largest creditor, and by this time Wilson had started to believe in the merits of a harsh peace and thought that his country had already made excessive sacrifices. Hence despite his best efforts, the result of

8442-527: The cost of allowing their currency to depreciate. Britain suffered from high unemployment through most of the 1920s, leading Keynes to recommend the depreciation of sterling to boost jobs by making British exports more affordable. From 1924 he was also advocating a fiscal response, where the government could create jobs by spending on public works. During the 1920s Keynes's pro-stimulus views had only limited effect on policymakers and mainstream academic opinion – according to Hyman Minsky one reason

8568-410: The country was "on track to meet its obligations". The next day, during a BBC interview, Stiglitz stated that "there's no problem of Greece or Spain meeting their interest payments". He argued nonetheless, that it would be desirable and needed for all of Europe to make a clear statement of belief in social solidarity and that they "stand behind Greece". Confronted with the statement: "Greece's difficulty

8694-750: The creation at Bretton Woods of the International Monetary Fund and the World Bank , and later to the creation of the General Agreement on Tariffs and Trade and eventually the World Trade Organization ) were aimed to give effect to this vision. Although Keynes has been widely criticised – especially by members of the Chicago school of economics  – for advocating irresponsible government spending financed by borrowing, in fact he

8820-413: The economy will not automatically rebound to full employment. Keynes advocated the use of fiscal and monetary policies to mitigate the adverse effects of economic recessions and depressions . After the 1929 crisis, Keynes also turned away from a fundamental pillar of neoclassical economics: free trade . He criticized Ricardian comparative advantage theory (the foundation of free trade), considering

8946-734: The effect of a recent global economic downturn on India. He founded the Political Economy Club , a weekly discussion group. Keynes's earnings rose further as he began to take on pupils for private tuition. In 1911 Keynes was made the editor of The Economic Journal . By 1913 he had published his first book, Indian Currency and Finance . He was then appointed to the Royal Commission on Indian Currency and Finance  – the same topic as his book – where Keynes showed considerable talent at applying economic theory to practical problems. His written work

9072-460: The establishment of a credible Fiscal Commission which entrenches financial responsibility and ensures market confidence". In July 2015, Stiglitz endorsed Jeremy Corbyn 's campaign in the Labour Party leadership election . He said: "I am not surprised at all that there is a demand for a strong anti-austerity movement around increased concern about inequality. The promises of New Labour in

9198-502: The exchange of ideas, resulting in more informed dialogue and, they hope, improved economic policymaking. IPD’s primary vehicles for outreach and collaboration are its task force, country dialogue, and journalism training programs. IPD task forces convene experts to study and write policy-oriented publications on complex, controversial economic issues such as transparency, governance, poverty, and environmental economics . IPD has launched over 20 task forces to date. The task forces are in

9324-454: The first decision weight approach with his conventional coefficient of risk and weight, c , in chapter 26. In addition to his academic work, the 1920s saw Keynes active as a journalist selling his work internationally and working in London as a financial consultant. In 1924 Keynes wrote an obituary for his former tutor Alfred Marshall which Joseph Schumpeter called "the most brilliant life of

9450-431: The future Prime Minister Harold Macmillan . Despite his middle-class background, Keynes mixed easily with upper-class pupils. In 1902, Keynes left Eton for King's College, Cambridge , after receiving a scholarship for this also, to read mathematics. Alfred Marshall begged Keynes to become an economist, although Keynes's own inclinations drew him towards philosophy, especially the ethical system of G. E. Moore . Keynes

9576-493: The gathering that Wolfensohn had agreed to fire Stiglitz. Meanwhile, the bank's External Affairs department told the press that Stiglitz had not been fired; his post had merely been abolished. In a September 19, 2008 radio interview, with Aimee Allison and Philip Maldari on Pacifica Radio 's KPFA 94.1 FM in Berkeley , United States, Stiglitz implied that President Clinton and his economic advisors would not have backed

9702-447: The gold standard and in 1925 they were able to convince the then Chancellor Winston Churchill to re-establish it, which had a depressing effect on British industry. Keynes responded by writing The Economic Consequences of Mr. Churchill and continued to argue against the gold standard until Britain finally abandoned it in 1931. Keynes had begun a theoretical work to examine the relationship between unemployment, money and prices back in

9828-407: The government), rather than deficit spending , to avoid inflation. Compulsory saving would act to dampen domestic demand, assist in channelling additional output towards the war efforts, would be fairer than punitive taxation and would have the advantage of helping to avoid a post-war slump by boosting demand once workers were allowed to withdraw their savings. In September 1941 he was proposed to fill

9954-431: The gravest global economic crisis in a half-century. I saw how the IMF, in tandem with the U.S. Treasury Department, responded. And I was appalled. Stiglitz's protector-of-sorts at the World Bank, Wolfensohn, had privately empathized with Stiglitz's views, but was worried for his second term, which Summers had threatened to veto. Stanley Fischer, deputy managing director of the IMF, called a special staff meeting and informed

10080-476: The host country and improve the quality of official decision-making on economic policy issues. The IPD journalism program helps strengthen journalists' economic literacy and equips them to report and write about the major economic issues confronting developing economies. With enhanced reporting and information, civil society is able to participate more effectively in the policymaking process. IPD books delve deeper into alternatives for prevailing issues by examining

10206-520: The implications of information imperfections for political processes. On July 25, 2011, Stiglitz participated in the "I Forro Social del 15M" organized in Madrid (Spain) expressing his support for the anti-austerity movement in Spain . During an informal speech, he made a brief review of some of the problems in Europe and in the United States, the serious unemployment rate and the situation in Greece. "This

10332-431: The impoverishment of Central Europe, vengeance, I dare predict, will not limp. Nothing can then delay for very long that final war between the forces of Reaction and the despairing convulsions of Revolution, before which the horrors of the late German war will fade into nothing. Keynes's followers assert that his predictions of disaster were borne out when the German economy suffered the hyperinflation of 1923 , and again by

10458-451: The index understated the effects of changes in the costs of services and labour. Keynes was deeply critical of the British government's austerity measures during the Great Depression . He believed that budget deficits during recessions were a good thing and a natural product of an economic slump. He wrote, "For Government borrowing of one kind or another is nature's remedy, so to speak, for preventing business losses from being, in so severe

10584-518: The intention was quietly to give Germany substantial help towards paying her bills, and to meet many of the German objections by amendments to the way the reparations schedule was in practice carried out". Only a small fraction of reparations was ever paid. In fact, historian Stephen A. Schuker demonstrates in American 'Reparations' to Germany, 1919–33 , that the capital inflow from American loans substantially exceeded German out payments so that, on

10710-489: The market's resource allocation." And the Sappington-Stiglitz theorem "establishes that an ideal government could do better running an enterprise itself than it could through privatization" As David L. Prychitko discusses in his "critique" to Whither Socialism? , he thought that Stiglitz seems generally correct, though it still leaves how the coercive institutions of the government should be constrained and what

10836-480: The non-comparative advantage trading patterns. Stiglitz also did research on efficiency wages , and helped create what became known as the "Shapiro–Stiglitz model" to explain why there is unemployment even in equilibrium, why wages are not bid down sufficiently by job seekers (in the absence of minimum wages) so that everyone who wants a job finds one, and to question whether the neoclassical paradigm could explain involuntary unemployment . An answer to these puzzles

10962-765: The optimal level, even in a competitive market. Stiglitz and Rothschild showed that in an insurance market, firms have an incentive to undermine a 'pooling equilibrium', where all agents are offered the same full-insurance policy, by offering cheaper partial insurance that would only be attractive to the low-risk types, meaning that a competitive market can only achieve partial coverage of agents. Stiglitz and Grossman showed that trivially small information acquisition costs prevent financial markets from achieving complete informational efficiency, since agents will have an incentive to free-ride on others' information acquisition, and acquire this information indirectly by observing market prices. Stiglitz, together with Avinash Dixit , created

11088-538: The other boys in the school" and was confident that Keynes could get a scholarship to Eton. In 1897, Keynes won a King's Scholarship to Eton College , where he displayed talent in a wide range of subjects, particularly mathematics, classics and history: in 1901, he was awarded the Tomline Prize for mathematics. At Eton, Keynes experienced the first "love of his life" in Dan Macmillan, older brother of

11214-433: The particular style of MIT economics suited him well, describing it as "simple and concrete models, directed at answering important and relevant questions." From 1966 to 1970 he was a research fellow at the University of Cambridge . Stiglitz initially arrived at Fitzwilliam College, Cambridge as a Fulbright Scholar in 1965, and he later won a Tapp Junior Research Fellowship at Gonville and Caius College, Cambridge which

11340-479: The party that performed the alchemy that converted the securities from F-rated to A-rated. The banks could not have done what they did without the complicity of the rating agencies." Initiative for Policy Dialogue The Initiative for Policy Dialogue ( IPD ) is a non-profit organization based at Columbia University in the United States. IPD was founded in July 2000 by Joseph E. Stiglitz , with support of

11466-470: The process of publishing overview chapters written for policymakers as part of a book series with Oxford University Press and Columbia University Press. IPD country dialogues allow IPD to bring its task force work directly to developing countries. Country dialogues foster an open and inclusive dialogue by convening diverse stakeholders such as senior government officials, opposition parties, NGO representatives, and academics to discuss economic policy options in

11592-480: The public only if he promised to harshly punish Germany, and had therefore committed his delegation to extracting high payments. Lloyd George did, however, win some loyalty from Keynes with his actions at the Paris conference by intervening against the French to ensure the dispatch of much-needed food supplies to German civilians. Clemenceau also pushed for substantial reparations, though not as high as those proposed by

11718-512: The refutation of Adam Smith's invisible hand: individuals and firms, in the pursuit of their self-interest , are not necessarily, or in general, led as if by an invisible hand, to economic efficiency. The preceding claim is based on Stiglitz's 1986 paper, "Externalities in Economies with Imperfect Information and Incomplete Markets ", which describes a general methodology to deal with externalities and for calculating optimal corrective taxes in

11844-703: The relation is between the government and civil society. Stiglitz joined the Clinton Administration in 1993, serving first as a member during 1993–1995, and was then appointed Chairman of the Council of Economic Advisers on June 28, 1995. Stiglitz always had a poor relationship with Treasury Secretary Lawrence Summers . In 2000, Summers successfully petitioned for Stiglitz's removal, supposedly in exchange for World Bank President James Wolfensohn 's re-appointment – an exchange that Wolfensohn denies took place. Whether Summers ever made such

11970-410: The reparations bill. Towards the end of the conference, Keynes came up with a plan that he argued would not only help Germany and other impoverished central European powers but also be good for the world economy as a whole. It involved the radical writing down of war debts, which would have had the possible effect of increasing international trade all round, but at the same time thrown over two-thirds of

12096-497: The rest of his life his professional energies were directed largely towards the practical side of economics: the problems of ensuring optimum allocation of resources for the war efforts, post-war negotiations with America, and the new international financial order that was presented at the Bretton Woods Conference . In the General Theory and later, Keynes responded to the socialists who argued, especially during

12222-401: The revolutionary formal achievement of the work. The book advocated activist economic policy by government to stimulate demand in times of high unemployment, for example by spending on public works . "Let us be up and doing, using our idle resources to increase our wealth," he wrote in 1928. "With men and plants unemployed, it is ridiculous to say that we cannot afford these new developments. It

12348-499: The risks and trade offs inherent in each that allow for a more meaningful discourse. Keynes Heterodox John Maynard Keynes, 1st Baron Keynes CB , FBA ( / k eɪ n z / KAYNZ ; 5 June 1883 – 21 April 1946), was an English economist and philosopher whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in mathematics, he built on and greatly refined earlier work on

12474-412: The sense that free markets lead to efficiency as if guided by unseen forces. According to Stiglitz: Whenever there are " externalities " – where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated – markets will not work well. But recent research has shown that these externalities are pervasive, whenever there

12600-420: The subject. He took civil service exams in 1906. The economist Harry Johnson wrote that the optimism imparted by Keynes's early life is a key to understanding his later thinking. Keynes was always confident he could find a solution to whatever problem he turned his attention to and retained a lasting faith in the ability of government officials to do good. Keynes's optimism was also cultural, in two senses: he

12726-515: The suspension of specie payments – the gold equivalent of banknotes  – but with Keynes's help, the Chancellor of the Exchequer (then Lloyd George ) was persuaded that this would be a bad idea, as it would hurt the future reputation of the city if payments were suspended before it was necessary. In January 1915 Keynes took up an official government position at

12852-542: The theoretical debates that followed the publication of the General Theory as he suffered a heart attack in 1937, requiring him to take long periods of rest. Among others, Hyman Minsky and Post-Keynesian economists have argued that as a result, Keynes's ideas were diluted by those keen to compromise with classical economists or to render his concepts with mathematical models like the IS–LM model (which, they argue, distort Keynes's ideas). Keynes began to recover in 1939, but for

12978-426: The theory's initial assumptions unrealistic, and became definitively protectionist. He detailed these ideas in his magnum opus, The General Theory of Employment, Interest and Money , published in early 1936. By the late 1930s, leading Western economies had begun adopting Keynes's policy recommendations. Almost all capitalist governments had done so by the end of the two decades following Keynes's death in 1946. As

13104-473: The wider world. Unfortunately for Keynes, conservative powers in the coalition that emerged from the 1918 coupon election were able to ensure that both Keynes himself and the Treasury were largely excluded from formal high-level talks concerning reparations. Their place was taken by the Heavenly Twins  – the judge Lord Sumner and the banker Lord Cunliffe , whose nickname derived from

13230-506: The world with diverse backgrounds and views. IPD intends to help countries find solutions to pressing problems, and strengthen their institutions and civil societies. IPD helps developing countries explore the full range of economic solutions and move beyond the narrow range of policy alternatives currently at the center of international debate. The organization's approach is based on the recognition that all economic policies entail trade-offs that benefit some groups more than others, and there

13356-681: Was Nathaniel David Stiglitz, an insurance salesman. Stiglitz attended Amherst College , where he was a National Merit Scholar , active on the debate team, and president of the student government. During his senior year at Amherst College, he studied at the Massachusetts Institute of Technology (MIT), where he later pursued graduate work. In Summer 1965, he moved to the University of Chicago to do research under Hirofumi Uzawa who had received an NSF grant. He studied for his PhD from MIT from 1966 to 1967, during which time he also held an MIT assistant professorship. Stiglitz stated that

13482-599: Was a firm believer in balanced budgets and regarded the proposals for programmes of public works during the Great Depression as an exceptional measure to meet the needs of exceptional circumstances. During the Second World War , Keynes argued in How to Pay for the War , published in 1940, that the war effort should be largely financed by higher taxation and especially by compulsory saving (essentially workers lending money to

13608-708: Was a member of the Pontifical Academy of Social Sciences . In 2009, the President of the United Nations General Assembly Miguel d'Escoto Brockmann , appointed Stiglitz as the chairman of the U.N. Commission on Reforms of the International Monetary and Financial System, where he oversaw suggested proposals and commissioned a report on reforming the international monetary and financial system. He served as

13734-453: Was addressed chiefly to the British Government, it also contained advice for other nations affected by the global recession. A copy was sent to the newly elected President Franklin D. Roosevelt and other world leaders. The work was taken seriously by both the American and British governments, and according to Robert Skidelsky , helped pave the way for the later acceptance of Keynesian ideas, though it had little immediate practical influence. In

13860-588: Was born in Cambridge , England, in June 1883 to an upper-middle-class family. His father, John Neville Keynes , was an economist and a lecturer in moral sciences at the University of Cambridge and his mother, Florence Ada Keynes , a local social reformer. Keynes was the firstborn and was followed by two more children – Margaret Neville Keynes in 1885 and Geoffrey Keynes in 1887. Geoffrey became

13986-526: Was effectively granted conditional upon continuing his government work. In the 1917 King's Birthday Honours , Keynes was appointed Companion of the Order of the Bath for his wartime work, and his success led to the appointment that had a huge effect on Keynes's life and career; Keynes was appointed financial representative for the Treasury to the 1919 Versailles peace conference . He was also appointed Officer of

14112-593: Was elected to the University Pitt Club and was an active member of the semi-secretive Cambridge Apostles society, a debating club largely reserved for the brightest students. Like many members, Keynes retained a bond to the club after graduating and continued to attend occasional meetings throughout his life. Before leaving Cambridge, Keynes became the president of the Cambridge Union Society and Cambridge University Liberal Club . He

14238-618: Was instrumental in shaping his understanding of Keynes and macroeconomic theory . In subsequent years, he held academic positions at Yale , Stanford , Oxford —where he was Drummond Professor of Political Economy —and Princeton . Since 2001, Stiglitz has been a professor at Columbia University , with appointments at the Business School , the Department of Economics and the School of International and Public Affairs (SIPA), and

14364-462: Was made public on September 14, 2009. In 2009, Stiglitz chaired the Commission of Experts on Reforms of the International Monetary and Financial System which was convened by the President of the United Nations General Assembly "to review the workings of the global financial system , including major bodies such as the World Bank and the IMF , and to suggest steps to be taken by Member States to secure

14490-403: Was not until after the outbreak of the Second World War that Keynes was offered a directorship of a major British Bank, or an acceptable offer to return to government with a formal job. However, Keynes was still able to influence government policy-making through his network of contacts, his published works and by serving on government committees; this included attending high-level policy meetings as

14616-640: Was of the last generation raised by an empire still at the height of its power and was also of the last generation who felt entitled to govern by culture, rather than by expertise. According to Skidelsky , the sense of cultural unity current in Britain from the 19th century to the end of World War I provided a framework with which the well-educated could set various spheres of knowledge in relation to each other and life, enabling them to confidently draw from different fields when addressing practical problems. In October 1906 Keynes began his Civil Service career as

14742-858: Was on screening , a technique used by one economic agent to extract otherwise private information from another. It was for this contribution to the theory of information asymmetry that he shared the Nobel Memorial Prize in Economics with George A. Akerlof and A. Michael Spence in 2001 "for laying the foundations for the theory of markets with asymmetric information ". Much of Stiglitz's work on information economics demonstrates situations in which incomplete information prevents markets from achieving social efficiency. His paper with Andrew Weiss showed that if banks use interest rates to infer information about borrowers' types (adverse selection effect), or to encourage their actions following borrowing (incentive effect), then credit will be rationed below

14868-484: Was partly setting himself against his former teachers Marshall and Pigou. Keynes believed the classical theory was a "special case" that applied only to the particular conditions present in the 19th century, his theory being the general one. Classical economists had believed in Say's law , which, simply put, states that " supply creates its demand ", and that in a free-market workers would always be willing to lower their wages to

14994-420: Was persuaded by Felix Frankfurter to address President Roosevelt directly, which he did by letters and face-to-face in 1934, after which the two men spoke highly of each other. However, according to Skidelsky, the consensus is that Keynes's efforts began to have a more than marginal influence on US economic policy only after 1939. Keynes's magnum opus , The General Theory of Employment, Interest and Money

15120-469: Was primarily focused on the United States. In 1931, he received considerable support for his views on counter-cyclical public spending in Chicago, then America's foremost center for economic views alternative to the mainstream. However, orthodox economic opinion remained generally hostile regarding fiscal intervention to mitigate the depression , until just before the outbreak of war . In late 1933 Keynes

15246-509: Was proposed by Shapiro and Stiglitz in 1984: "Unemployment is driven by the information structure of employment". Two basic observations undergird their analysis: Some key implications of this model are: The outcome is never Pareto efficient . The practical implications of Stiglitz's work in political economy and their economic policy implications have been subject to debate. Stiglitz himself has evolved his political-economic discourse over time. Once incomplete and imperfect information

15372-406: Was published in 1936. It was researched and indexed by one of Keynes's favourite students, and later economist, David Bensusan-Butt . The work served as a theoretical justification for the interventionist policies Keynes favoured for tackling a recession. Although Keynes stated in his preface that his General Theory was only secondarily concerned with the "applications of this theory to practice,"

15498-509: Was published under the name "J M Keynes", though to his family and friends he was known as Maynard. (His father, John Neville Keynes, was also always known by his middle name). The British Government called on Keynes's expertise during the First World War . While he did not formally rejoin the civil service in 1914, Keynes travelled to London at the government's request a few days before hostilities started. Bankers had been pushing for

15624-416: Was said to be an atheist. In May 1904, he received a first-class BA in mathematics. Aside from a few months spent on holidays with family and friends, Keynes continued to involve himself with the university over the next two years. He took part in debates, further studied philosophy and attended economics lectures informally as a graduate student for one term, which constituted his only formal education in

15750-512: Was that at this time his theoretical justification was "muddled". The Tract had also called for an end to the gold standard. Keynes advised it was no longer a net benefit for countries such as Britain to participate in the gold standard , as it ran counter to the need for domestic policy autonomy. It could force countries to pursue deflationary policies at exactly the time when expansionary measures were called for to address rising unemployment. The Treasury and Bank of England were still in favour of

15876-693: Was the president of the International Economic Association (IEA). He presided over the organization of the IEA triennial world congress held near the Dead Sea in Jordan in June 2014. In 2011, Stiglitz was named as one of the 100 most influential people in the world by Time magazine. Stiglitz's work focuses on income distribution from a Georgist perspective, asset risk management, corporate governance, and international trade. He

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