Cambridge Faculty of Economics Alumni Newsletter
Welcome Royal Economic Society Applied Economics FROM ANDREW HARVEY Conference
he fifth Alumni newsletter number of exciting initiatives in contains pieces on the Applied Economics are under TMarshall and Stone lectures, A development in the Faculty. new arrivals, conferences, distinguished alumni and visiting Newly launched following a generous professors. The Marshall lectures benefaction, the Keynes Fund for Applied were given by Peter Diamond, a Economics will provide grants for research, distinguished economic theorist fellowships and teaching at the intersection who was awarded the Nobel of financial markets with the real economy. Prize 2010. The Stone lecturer was Susan Athey of Harvard University The Faculty is also engaged in discussions and Microsoft. with the New York-based Institute for New Economic Thinking to undertake Richard Smith, our Professor of a fundamental research programme in Econometric Theory and Economic economics at Cambridge. The initial focus Statistics, took over as Chair of the will involve the themes: Networks, Crowds Faculty last September. He is still and Markets; Transmission Mechanisms and surviving! (Indeed he sometimes Economic Policy; Information, Uncertainty admits that he enjoys certain aspects and Incentives and Empirical Analysis of of the job, despite the attendant Financial Markets. frustrations). t’s over twenty years since the The Faculty also wishes to establish a Chair The annual garden party for staff Royal Economic Society annual in Applied Economics to replace Professor and graduate students took place in I conference was last held in David Newbery FBA CBE who retired in the grounds of Newnham College Cambridge. This year it returned and 2010. and was blessed with sunshine, a local organisers Pramila Krishnan and somewhat unusual occurrence for Solomos Solomou (pictured above For more information on these initiatives, please this rain-soaked year. The occasion in a planning session) worked hard get in touch or visit our website, www.econ. cam.ac.uk provided the opportunity to say to make it a success. Another of farewell to Hashem Pesaran and Willy our Faculty, Chryssi Giannitsarou, Brown, at least as full-time members played an important role on the Staff Comings and Goings of the Faculty. Hashem will continue programme committee. The to work at the University of Southern conference featured a distinguished California. Willy is retiring not only line up of invited speakers, including: Guilherme Carmona has left the Faculty to from the Faculty but also from the Elhanan Helpman, Harvard; Nancy Mastership of Darwin and from take up a Chair at The University of Surrey. Stokey, Chicago; Ariel Pakes, Harvard; his spell as Chair of the School of We thank him for his contributions to the Ken Rogoff, Harvard; Guillermo Humanities and the Social Sciences. Faculty’s teaching and research. Calvo, Columbia; and Lorenzo Bini However, he will doubtless continue to be involved in the University. Smaghi, currently a Visiting Scholar The Faculty would like to welcome Edoardo at Harvard's Weatherhead Center for Gallo who joined us early this year from Finally a reminder that the Alumni International Affairs. Topics covered in The University of Oxford. Dr Gallo’s research Weekend will, as usual, take place in the conference sessions ranged from focuses on Networks, Microeconomics and September, 21-23rd to be precise. The the crisis in the euro to modelling Experimental Economics. He is currently Phillips machine will again be coaxed drug related crime in London contributing to the faculty’s teaching in into action. boroughs. Political Economy.
Issue number 5 Autumn 2012 Robert Chote and the Dog that Barks (sometimes)
arlier this year, amid fears of a the sustainability of the public finances. has been charged to assess whether double-dip recession, stuttering It also scrutinises the Treasury’s costing the government is on course to hit Etax receipts, and policy disarray in of Budget measures. In addition it the budget balance and public debt the euro area, Robert Chote, Chairman publishes briefing and working papers targets that it has set itself. It also uses of the Office for Budget Responsibility on these and allied topics. sensitivity tests and scenario analyses to (OBR), the coalition government’s fiscal judge how wrong the central forecast watchdog, was unperturbed. OBR For its analyses and forecasts, the would have to be – and in what ways – reckoned at the time that, in spite of OBR uses the large macroeconomic for the government no longer to be on everything, the government had a model that was used for many years course to hits its targets. For example, better than evens chance of meeting its by the Treasury and which the two what difference would it make if the self-imposed targets, when looking five organisations now maintain jointly. This recovery was faster or slower, or if more years ahead, of bringing the cyclically- model is relatively ‘old fashioned’ (for banking and financial problems spilled adjusted current budget into balance example compared to those used by over from the eurozone? and of having public sector net debt the Bank of England), with its structure falling as a share of GDP by 2015-16. determined less by the dictates of But while the OBR looks at lots of different potential forecast outcomes, Parliament has instructed it not to speculate about possible future policy initiatives (such as any Plan B). The OBR’s assessments have to be made in the context of the coalition’s current measures and policies.This leaves hanging the question of whether public debate and the quality of policy would be improved if the OBR were able to look at alternatives.
So far the main criticism of the OBR’s forecasts has focused not on their predictions for the public finances but on their inability to foresee how weak the recovery would be from late 2010 onwards. Acknowledging the inevitability of error and of criticism, Robert wryly comments that economic forecasting ‘is God’s way of making you look foolish’.
Robert’s team of around twenty people is small by any standards and Chote (Economics, Queens’, 1986-9) microeconomic foundations than by certainly by comparison with the was appointed Chairman of the OBR what seems to fit the data. The model human and technical resources available in October 2010, following eight years also generates a more detailed medium- to OBR’s American counterpart, the as Director of the highly-regarded term breakdown of national income Congressional Budget Office. Inevitably, Institute for Fiscal Studies (IFS), the and expenditure than most forecasters this raises the question of whether OBR independent research institute that need, as the OBR requires a large is still, in effect, the creature of the has long been a thorn in the side of number of economic determinants to Treasury. In spite of the government successive governments through its forecast the various tax and spending nominating him and some of his rigorous analyses of the public finances streams that make up the public colleagues, Robert answers robustly, and of micro-economic policy measures. finances. These disaggregated revenue on three main grounds. First, the He firmly rejects the suggestion that and spending forecasts are prepared OBR has statutory direct access to the one motive behind his selection and using a variety of tailor-made models, outturns and projections it needs from appointment as OBR Director was to usually with the help of analysts at other government departments, in muzzle the IFS. He points out that IFS, HM Revenue & Customs and the particular HM Revenue and Customs led by Paul Johnson, his successor, is Department for Work and Pensions. and the Department for Work and more than able to look after itself in As with all forecasts, judgement plays Pensions. Second, the OBR staff robust policy debates. a key role alongside the models and combines outsiders with analysts who the OBR has to take full responsibility have previously been Treasury officials OBR reports at regular intervals on the for the ultimate outputs. Based on and enjoy challenging their former economic and fiscal outlook, and on its ‘best guess’ forecast, the OBR employer. And third, the Chancellor
2 Robert Chote and the Dog that Barks (sometimes) Hashem Pesaran
cannot hire or fire the OBR’s key conometrics seminars in officials without the approval of the Cambridge will never be the formidable Treasury select committee. Esame again – Hashem Pesaran Robert has long experience of retired from his post in the Faculty commenting effectively on economic this summer. This news may come and financial matters. Before his time as a relief to speakers scheduled with IFS he worked at the International to appear this year, since very few Monetary Fund in Washington D.C. people have given a talk here without with first, Stanley Fischer and then Hashem pointing out the error of their Anne Krueger, both Deputy Managing ways. Not that his interventions are Directors, writing and advising on a necessarily unwelcome. He is usually wide range of issues including reform right (correction from Hashem – always of the international financial system and right) and the scope and depth of his globalization. This was after his earlier knowledge of econometrics means that career in journalism, at first with The his comments are invariably constructive Independent and later as economics and to the point. Everybody learns editor of the Financial Times. something – even other Cambridge professors of econometrics. Robert says that although he has spent many years looking at the public Part of the reason for Hashem’s finances and microeconomic issues, amazing knowledge of econometrics comes from his editorial handing of being responsible for macroeconomic papers for the Journal of Applied forecasting has taken some adjusting Econometrics. He founded the to. This leads him, with some hint of Journal in 1986 because he felt, inevitability, to look back on his time as quite correctly, that there was no real an undergraduate in Cambridge in the outlet for first-rate applied work that 1980s. Then, reflecting the Economics employed state of the art econometric Faculty’s appetite for particular techniques. Furthermore he instituted paradigms and the tensions of the the idea of contributors providing in the 1980s and challenged the current time, the first year of the Tripos was their data to enable replication of orthodoxy. This was a brave move: entirely devoid of microeconomics. How results, thereby enhancing scientific he was actually warned that it might things have changed! Macroeconomics credibility. The Journal now enjoys an stop him ever getting a job in America. teaching was shared between Frank excellent reputation and all those in But of course he was right: although Hahn and Geoff Harcourt, two excellent the profession appreciate the debt they rational expectations provides important lecturers teaching the same syllabus and owe to Hashem for having the foresight insights into economic behaviour, it reaching entirely different conclusions. and drive to establish it. can, when taken to extremes, become Mathematics teaching, he recalls, was intellectually indefensible if not plain uniformly bad. Later in the Tripos, under Hashem came to England in the 1960s silly. Unfortunately, despite Hashem’s the eagle eyes of Ajit Singh and Andy on a scholarship from the Central efforts, far too much of modern Cosh at Queens’, Robert chose optional Bank of Iran. He took his first degree macroeconomics still takes rational papers in Industry and in Labour, largely at Salford and then moved on to expectations too seriously and the folly eschewing – perhaps oddly given Cambridge where he was awarded his of assuming that financial markets are his subsequent career – monetary, PhD in 1972. He was a Junior Research efficient and self-regulating has been international and public economics. Officer at the DAE and a Lektor at exposed by the events of recent years. Trinity College before returning to Hashem is planning to spend most of Robert will have to call on all his Iran in 1973. By 1978 he was Under- his time in Southern California. This accumulated skills in economics and Secretary of the Ministry of Education, seems like a good move given this politics in testing and monitoring but then had to leave Iran because of year’s awful English summer. However, the evolution of the coalition’s fiscal the regime change. He was welcomed he won’t be spending his time lounging strategy over the period to 2015 back by Trinity College and the Faculty by the swimming pool as he has been and perhaps beyond. But, with his of Economics and the rest, as they say, appointed to a Chair at the University determination and tenacity, there can is history. of Southern California, where he will be little doubt that if deviations from be directing a new Centre in Financial the chosen fiscal path start to appear, Hashem has produced a wide range of Economics. But hopefully he will the watchdog will bark. publications and many students and be back in Cambridge from time to research officers here have benefited time. He may even attend the odd Tony Cockerill from working with him. Of his works, seminar…… my personal favourite is The Limits to * Interview took place on 30 May 2012. Rational Expectations, which appeared Andrew Harvey
Economics 3 Cambridge of incomes policy, and the extent and consequences of low pay.
This work has led onto a second labour market theme – how to protect the weak and disadvantaged? Willy was a member of the Low Pay Commission between 1997 and 2007 and played an important part in the introduction of the National Minimum Wage in 1999. He is pleased with the success of this measure, noting that, in its present form, it has so far prevented the exploitation of workers whose bargaining power is low without significantly reducing the number of jobs or setting up barriers to entry into employment.
Willy’s third research theme has an international dimension – industrial conflict resolution in China and the relevance to it, if any, of the types of process in use in western-style economies. He notes the issues and challenges that are now associated with the fast pace of economic and social change in China, particularly increasing inequalities in income and wealth. As Chair of the School of Humanities and Social Sciences, Willy has encouraged growth, development and co-ordination among the diverse set of faculties, departments and institutes that make it up. Expanding graduate education, taught Masters’ programmes in particular, has been an important part of this. He welcomes the internationalisation of the student body that this is making possible, as well as the benefits for the University’s income, but he recognises also the increasing financial difficulties that UK-based students are facing.
Willy Brown Being Master of Darwin College has given Willy the most pleasure and satisfaction since coming to Cambridge. He has presided over a constantly illy Brown retires from the market works, not only in Britain changing complement of about 600 Montague Burton Chair but also internationally. Against this graduate students from around the W of Industrial Relations in background, his work has followed world, many of whom are working on the Economics Faculty and from three main themes. One theme is the cutting-edge research. the Mastership of Darwin College decline of bilateral collective bargaining in September this year. He came to over pay and conditions of employment Looking ahead, he is planning to write Cambridge from Warwick in 1985. He between groups of employers and a book on the introduction of the was Chair of the Economics Faculty workers’ representatives, and with national minimum wage, and also to from 1992 to 1996 and has twice been it the role and influence of trades do more work on industrial relations in Chair of the School of Humanities and unions. Employment contracts have China. He also intends to keep up his Social Sciences, most recently from become individualised, fragmented and practical involvement with industrial 2008 to 2012. differentiated. This raises important dispute resolution through his work questions about labour market with the Advisory, Conciliation and Willy’s research in Industrial Relations efficiency and equity. Willy’s work has Arbitration Service (ACAS). has been during a period of profound examined how closely wage differentials change in the way in which the labour reflect productivity differences, the role Tony Cockerill
4 the flow of aggregate spending in The Marshall Lectures the economy in the short-to-medium term, whilst at the same time putting measures in place for the longer term to deal with budget imbalances. Seeking eter Diamond, best known for fiscal balance ahead of reducing his work with James Mirrlees on unemployment is, he argues, to get P optimal taxation and the theory things precisely the wrong way round. of the second best, started the first But can the problem of total Federal of his two Marshall Lectures with Government debt, which presently the overall title ‘Time Matters’, on represents more than 100% of US familiar ground for his audience – the annual GDP, be ignored? Diamond problem of market failure. He focused claims that concern is overdone. achieving financial stability within the on the limitations of microeconomic Federal Government debt held by the framework of the effective regulation of models that assume that markets clear, public is around 70% of GDP. This banks. But comprehensive measures to based on the Arrow-Debreu General is the proportion which needs to be gauge the risks of failure, to offset the Equilibrium Model (GEM) which shows rolled over, and so is most relevant impact on the wider economy, and to how Adam Smith’s freely-functioning for the continuing ability to borrow allow orderly liquidation of banks must markets can lead to a socially optimal without a significant sovereign risk be in place. allocation of resources. The GEM was premium. Evidence shows this to be the starting point of Diamond’s odyssey a manageable burden that does not Skilfully taking the argument back to in Economics. Trying to make the impair the growth rate of the economy. his starting point, Diamond stresses GEM ‘dynamic’ – that is, attempting that however good monetary and fiscal to model systematically the processes The problem with this part of the policies and the associated regulation of adjustment to macroeconomic debt is not in the short term, as the may be, markets will still be incomplete. shocks – carries with it all the concerns funds are being raised easily and at So for levels of economic and social and criticisms that he has about low cost at present thanks to the low welfare to be improved and sustained, methodology. Empirically it is clear yield on government bonds as a result externalities (spillovers from economic that patterns of adjustment, and their of the Federal Reserve’s monetary activity that can have both positive and attendant problems, are different measures and international investors’ negative effects on welfare) will still between boom and slump. Economic perceptions of $-denominated assets have to be addressed by policymakers. crises come in different forms. No as a safe haven. Rather it is in the He sees the challenges ahead for single model will suffice. At this point, long run that the problem exists, since economic analysis and for fiscal and he reached appropriately towards pension entitlements in particular are monetary policy as intense, unremitting Marshall, citing his insights into those incompletely funded and health care – and fascinating. impairments that ‘spoil the market’. costs are projected to rise greatly. The pension crisis, which an ageing ------Diamond notes here that search theory, population will bring about, will not which helps to explain how certain be until after 2035 when on present Peter Diamond was awarded the market forms adjust and which has polices there will be an exhaustion of Nobel Prize for Economics in 2010 formed a large part of his research the trust fund. But recognising and for his work on search theory. He is interests and output, has contributed dealing with this challenge should be Emeritus Professor of Economics at the only a limited amount to this analysis. done in a way that does not get in Massachusetts Institute of Technology It works best for labour markets and, the way of tackling the economic and (MIT) where he has been since 1966. to a lesser extent, for housing markets. social problems arising from the present A Yale mathematician, he moved to But it has contributed very little to chronic lack of aggregate demand. MIT for doctoral work in Economics. understanding adjustment through Afterwards he spent three years in consumer markets in the economy as a These current issues of fiscal and California at Berkeley before returning whole. monetary policy form the bridge to the to MIT for a series of Faculty positions. second lecture – a review of the global He has held a number of visiting Reflecting on the current global financial crisis. Diamond’s starting point appointments, in the US and abroad, recession and the slow adaptation of in the first lecture was to ask: What has including at Churchill College in 1965- the US economy, Diamond stresses been learnt, if anything, from previous 66. that the failure to reduce structural and crises? He gave two examples: the Reminiscing during his visit to give secular unemployment imposes a high stagflation of the 1970s and the end of the Marshall Lectures about the first price on society through the harm done communism in some countries. time he came to Cambridge, rather to building human capital, particularly surprisingly Peter recalls it to have been among those hoping to enter the Regarding changes in bank regulatory a relatively unproductive and frustrating labour market: experience is lost and policy, he points out that, prior to the period in his career. He goes on to lifetime earnings’ expectations are crisis, central banks typically made explain that he was finishing papers damaged. sure that banks were sound financially. on uncertainty and the role of the Macroprudential concerns were not stock market in a General Equilibrium He looks to government to ease this part of the regulatory framework. In Model. At the time, he was given no problem, emphasising the importance dealing with the aftermath of the crisis, teaching other than a lecture series on of first stabilising and then maintaining Diamond stresses the importance of uncertainty, and supervisions – but the
Economics 5 Cambridge upside of this was that he had Tony Atkinson and Geoff Heal as students. Richard Stone Lecture Cliff Pratten (1934–2011) Like so many, his main experience of the Economics Faculty was in the Coffee Room. There he saw the giants he fourth in the series of the Centre of the time, Nicholas Kaldor and Joan for Research in Microeconomics Robinson in particular. He did try to T(CReMic) Sir Richard Stone Annual engage with Mrs Robinson. After an Lectures at the University of Cambridge exchange of notes about the marginal was held on 10 May 2012 in the productivity of capital, he stopped Bateman Auditorium at Gonville and responding. When challenged about Caius College. The Lecture provides that at coffee, he explained that ‘there an opportunity for a leading scholar to was nothing to respond to’, which led present and discuss issues of particular to a face-to-face discussion. But his current research interest. The Lecture evolving work on public debt did win also honours Sir Richard Stone, the him an invitation to give a paper at the founding Director of the Department of ‘secret seminar’. Applied Economics in the University of Cambridge. It was his work on pubic finance that n the late 1960s, Cliff Pratten and led to his collaboration with James The Lecture, entitled “Online Markets I were working simultaneously but Mirrlees, starting the following year Using Theory, Structural Models, and separately on empirical estimates of during a summertime return visit, in I Field Experiments”, was delivered by the sources and extent of economies of which they demonstrated that taxes Susan Athey, Professor of Economics at scale in British manufacturing industry. should fall on final prices and not on Harvard University and Chief Economist at At the time, the idea that firms in production or intermediate costs if Microsoft. The central concern addressed Britain suffered a lack of international maximum economic efficiency is to be by Susan was the appropriate design of competitiveness because they were achieved. auction-based marketplaces. Her Lecture too small was driving both corporate What has followed includes work on emphasised the essential and necessary strategy and industrial policy. social benefits and on the optimal complementarity of theory, structural way in which they can be adjusted modelling and experimentation for Once we had met one another, I had to the age at which they start for any efficient market design. The economic the opportunity to come to Cambridge individual. Peter has been in demand theoretic literature on auctions to which to work alongside him on the industrial to give advice on this to the Federal Susan has made a number of significant structure and scale project that Aubrey government as it tries to address the contributions provides a conceptual Silberston was leading. From the start, persistent and accelerating rise in framework for the analysis of empirical I benefited from Cliff’s technical and spending on benefits. research and practice. Consequent empirical knowledge, his wisdom, structural models incorporating theory and his constructive support and As the Marshall Lectures made clear, the are essential to enable market design and advice. During my job interview, he global financial crisis has led Peter to associated algorithms to be evaluated raised his eyebrows discreetly when, examine the importance of externalities in terms of welfare, efficiency and under (gentle) interrogation by Brian in the operation of financial markets revenue trade-offs and also enable other Reddaway, I gave the wrong answer to and in their correction or compensation. possible designs not currently in use to a question. To get operational insights into all this, be considered. Field experiments play a he has become a Visiting Scholar at the critical rôle permitting the comparison This anecdote about Cliff’s selfless Boston Fed. of rival market designs, structural ability and thoughtfulness says it all. model estimation and empirical model His technical skills in Economics drew The wide span of Peter’s research and validation. Susan discussed how online on his initial training as a Chartered publication shows that he is driven implementation of structural models Accountant, which he followed by by what is interesting. For those who and field experiments can avoid many studying for an Economics degree at would follow in his path, he stresses of the problems associated with offline Bristol. After National Service – he the importance of teaching as a approaches. She also emphasised how was a Flt. Lieutenant in the RAF, being prime stimulus to research. And he these various different strands yield and posted for a period to Libya – he joined emphasises rigorous analysis. He used are necessary for useful and practical the Economics Faculty in Cambridge to say: ‘Methodology is for old guys insights for market design. An extensive in 1960 as a Research Assistant in who have nothing better to do’. Now, discussion of timber auctions and auction- the former Department of Applied as an Emeritus Professor, he extols its based platforms for internet search Economics (DAE). He spent more than virtues. advertising based both on her theoretical forty years in the DAE, progressing to and empirical research and rôle as Senior Research Officer, but always Tony Cockerill Chief Economist at Microsoft provided living on the precarious edge of having empirically-based illustrations of current to find external research funding to * Videos of the 2011-12 Marshall Lectures keep his post. are at: practice.
www.econ.cam.ac.uk/news/notices/ Further details may be found at www.econ. Many of Cliff’s publications were as DAE marshlec11-12.htm cam.ac.uk/cremic/news/stone.html monographs and occasional papers.
6 The wide range of his work mirrors and balanced approach were a much the policy issues of the time – most of Phyllis Dean needed Godsend. As a result she did far which are still relevant. The economies (1918–2012) more than her fair share of committee of scale enquiries found that, for the work in the Faculty. same industries, manufacturing plant and firm sizes were generally below As a scholar her contributions were highly original, pioneering, and those in the United States and that extremely wide ranging – regional these differences could be expected development in Africa, using social to impede both efficiency and output accounting structures, United Kingdom growth. Yet Cliff’s study of the economic history, the history of competitiveness of small firms found economic ideas and institutions. Phyllis that they were increasing their share was unassuming, never one to blow her of output in many industries. This led own trumpet or fight for a place in the on to cross-country comparisons of sun. When I told her that Bob Fogel and productivity, which brought out the Doug North had won the Nobel Prize complexity of the factors that affect for their contributions to economic efficiency and competitiveness. Later his history, she was over the moon interests turned to assessing the quality because, she said, it was at last proper recognition of their and her subject; to of industrial skills training in the UK and th which, I add, she had made such major the implications for youth employment. was very sad to learn today (7 pioneering contributions. For example, August 2012) that my dear friend part of the citation on Phyllis’s election The one area of his work that now I and long-time colleague, Phyllis as the 2010 Distinguished Fellow of seems somewhat remote in policy terms Deane, had died. She and I were the History of Economics Society (USA) is the question of the impact of balance colleagues in the Cambridge Faculty states: “It is difficult to over-estimate of payments current account deficits in the 1960s. She supervised my Part I the significance of [her best known on the UK’s holding of foreign assets. Trinity Hall pupils in economic history work, British Economic Growth, 1688- Conventionally, a current account deficit and I supervised her Part II Newnham 1959: Trends and Structure (1962, pupils for the principles and applications was thought to require a liquidation written with Max Cole)] in twentieth- papers in Part II. When I returned of foreign investments, so as to give a century economic history. It represented permanently to Cambridge in 1982 (I the foundation of British quantitative symmetrical surplus on the balance of had been there on leave in 1972-73 and payments’ capital account. But building economic history and guided and in 1980), Phyllis had just retired from inspired a generation of economic on Reddaway’s earlier work, Cliff’s her Personal Chair. We shared a room contribution was to show that if the historians.” So, in my and the view of together in the Faculty. Shamefully, many others, she should have received stock of assets is calculated at market, I cumulatively overflowed, as is my the prize herself. rather than book values, capital gains wont, onto her desk and she tactfully (assuming a rising market) can in part withdrew after a few years. I read a When Nick Crafts’ celebrated volume offset the current account deficit and number of her later books in draft – I with Oxford, British Economic Growth so reduce the need for deflationary especially remember The State and the during the Industrial Revolution, Crafts measures to be applied to the home Economic System: An Introduction to (1985), came out, she told me that she economy. the History of Political Economy (1989). was delighted that her much earlier Peter Kriesler commented to me that estimates had now been superseded. the book “was excellent in showing Cliff’s talents as an educator came how economists’ views on the role In what was to prove to be my last through his Fellowship at Trinity of the state and economic policy are Hall, where he was Director of conversation with her, I phoned to tell strongly tied to their overall economic her she had been elected the 2010 Studies in Economics, and through outlook, to their underlying economic his well-received textbook. Applied Distinguished Fellow. Her comment: theory. [It emphasised] the fundamental “How ridiculous!” Macroeconomics (OUP 2nd edition 1990) nature of the relationship between brought Keynesian and monetarist theory and policy”. I went in the Phyllis came to Cambridge in the late analysis together at a time of intense 1970s to the lectures that became The 1940s, invited by Dick Stone in the dispute and debate about the nature of Evolution of Economic Ideas (1975). For early years of his Directorship of the economic systems and the appropriate many years, Maurice Dobb had lectured Department of Applied Economics policy prescriptions. on the history of economic thought and (1945-55). She worked on regional Phyllis’s lectures continued this tradition. social accounts. She became a His academic work and insights I loved Phyllis’s last major book, her University Lecturer in 1961. She did reinforced his active, and successful, biography of J.N. Keynes, The Life and sterling work as an editor of the stock market investments and also Times of J. Neville Keynes: A Beacon in Economic Journal (1967-75), working the Tempest (2001), one of the finest his business interests. These include with her great friend and mentor, jewels in the crown of our profession. Austin Robinson, and also with David residential property investments and Phyllis much admired Neville Keynes for management, and a commercial Champernowne and Brian Reddaway. his integrity, hard work and good sense, In my view these were some of the orchard in the fens, activities that two like calling to like, I think. of his sons are continuing. A third son greatest years of the Journal. That the Journal no longer contains either is following in his father’s footsteps as a Phyllis was both respected and liked by reviews (other than the excellent review successful applied economist. everyone in Cambridge’s deeply divided articles of outstanding books in the Faculty. Her own views were explicit Tony Cockerill and clear and her fair mindedness Continued overleaf
Economics 7 Cambridge Features issues) or book notes, or Guillebaud drove me out to visit even obituaries, is a sad reflection on Phyllis in her last home, Cottenham Staff Successes it not being what it used to be. Court in Cottenham village. We had a pleasant time but it was clear 2012 has been a great year for the Faculty Phyllis was beloved by her pupils that she was withdrawing. That she of Economics. Faculty Chair Richard and her colleagues in Newnham. died peacefully in her sleep was an Smith was invited to speak at the Delhi She followed her pupils’ subsequent appropriate last blessing. School of Economics’ Winter School. careers with pride and enjoyment. Richard also delivered the plenary lecture She was an outgoing and caring It was one of the greatest privileges at the 7th Annual Conference on Economic person, combining an admirable of my life to have known Phyllis. I Growth and Development at the Indian moral outlook with quiet anger have often been thinking about her Statistical Institute. at injustice and/or stupidity, and in recent days and I wonder now informed, down-to-earth criticism of whether this was a premonition of economic and social happenings. her coming death. Her legacy of fine Professor Sir Partha Dasgupta delivered scholarship and the fond memories the Humanitas Lecture in Economic Phyllis and Joan Porter, her of her many friends remain. Ideas as the Inaugural Humanitas Visiting inseparable companion of over Professor in Economic Ideas at the 50 years who was noted for her G.C. Harcourt University of Oxford. Partha was also down-to-earth wisdom, set up a invited to deliver the annual Kenneth combined home for their aging I am much indebted for comments on a Arrow Lecture at the Hebrew University of widowed fathers in Cambridge and draft of the memoir to Robert Cord, Jane Jerusalem. Partha’s work was also recently they continued to live there after Humphries, Prue Kerr, Peter Kriesler, John covered by The Economist (‘The real their fathers died. Jane Humphries Nevile, David Newbery, and Vela Velupillai. wealth of nations’, 30 Jun 2012). reminded me of the beloved Norwich terriers who guarded the home and Sriya Iyer was invited to participate in the who grew “even more plump on Time Series Econometrics: Keynote Address Panel of the Association a conference in honour of the doggie chocolate drops they for the Study of Religion, Economics and earned for shutting the door”. Andrew Harvey Culture 2012 Annual Conference. Other Whenever our mutual friend Mark Perlman visited Cambridge, Joan speakers included Nobel Laureate Vernon (Harcourt) and I could be asked to Smith, Larry Lannaccone and Roger Finke. this comfortable home in Stukeley t the end of June a conference Close for wonderful lunches – old- was held at the Oxford-Man As concern about industrial unrest grows fashioned British fare served with A Institute of Quantitative in China, Willy Brown co-organised an Finance to celebrate Andrew international symposium on Collective excellent wines. The conversation th would be lively and wide-ranging, Harvey’s 65 year. The conference Labour Dispute Resolution and Regulation with much good natured gossip and was organised by two of Andrew’s at Beijing’s Renmin University. Opened by anecdotes thrown in, usually from best-known doctoral students, Siem- the Head of the Labour Ministry, the event Mark’s encyclopaedic knowledge Jan Koopman, now Professor of brought together experts from across of what was happening or had Econometrics at the Free University China and the world. happened to whom in our trade, but of Amsterdam and Neil Shephard, an Oxford Economics professor and with plenty of room for others to Emeritus Professor David Newbery chip in. former director of the Man Institute (hence the location). was awarded a CBE in the Queen’s 2012 Birthday Honours for services Joan Porter’s death following years of ill health was a great blow to Phyllis A distinguished line-up of speakers to economics. David was also elected – she told me that until it happened included many of Andrew’s former President-elect of the International she reckoned she had led a charmed students and collaborators. Andrew Association for Energy Economics. Finally life. I don’t think she ever fully has played a prominent role in David has been appointed as a half-time recovered from it and she gradually the development of unobserved Research Fellow in the Control and Power withdrew as increasing lameness and components in economic and Research Group at the Department of age made it more difficult for her to financial time series modelling and Electrical and Electronic Engineering, get out. A few years ago Philomena many of the talks were on this topic. Imperial College London.
Editorial Team: Faculty of Economics, University of Cambridge, Austin Robinson Building, Sidgwick Avenue, Cambridge CB3 9DD Andrew Harvey, Tony Cockerill, William Peterson, Marie Butcher, Yvonne Gibbs, James Allen-Robertson www.econ.cam.ac.uk