UNIVERSITY OF CALIFORNIA, BERKELEY The Econ Exchange NEWS AND NOTES FROM THE DEPARTMENT OF ECONOMICS VOLUME EIGHT, NUMBER ONE SPRING 2005 Gerard Debreu dies at 83: First of four Berkeley economists to win Nobel Prize over 18-year span By Noel Gallagher, equilibrium in an economy. Arrow reading a book that described the Public Affairs warmly remembered how they mathematical theory of general 12 January 2005 collaborated on the paper. economic equilibrium, established “It was a wonderful experience; he by Leon Walras in the 1870s. (printed with permission of UC Berkeley Public Affairs) was just so brilliant to work with,” Arrow said. “One of us would say a “During that period, I was an Nobel Prize winner Gerard Debreu, single word, and the other would Attaché de Recherches [research emeritus professor of economics associate] of the Centre National and mathematics, died Dec. 31 in de la Recherche Scientifique, which Paris of natural causes. He was 83. showed an impressive tolerance for the absence of tangible results Debreu won the Nobel Memorial associated with the change from Prize in Economic Sciences in 1983 one field to another distant field,” for applying mathematical rigor to Debreu dryly noted in an the fundamental theory of supply autobiography he prepared for the and demand in economics. The law Nobel Foundation. of supply and demand dates back to the 18th century, but Debreu’s Prior to his almost-30-year tenure mathematical models provided at Berkeley, Debreu worked from proof of how prices affect the 1950 to 1960 at the University of supplies of goods bought and sold. Chicago and Yale University for the Through the work of Debreu and Cowles Commission for Research in others, the conditions of the Economics, and at Stanford’s Center “invisible hand” in the marketplace for Advanced Study in the were clarified. Behavioral Sciences from 1960 to 1961. A native of Calais, France, Debreu also was an officer of the French just understand immediately. I Debreu joined the Berkeley faculty Legion of Honor and a commander learned quite a bit from him.” of the French National Order of in 1962, at a time when the Merit. Debreu was born on July 4, 1921. economics department was He broke off his studies in pointedly building up its staff and Fellow Nobel laureate and Stanford mathematics as a young man to would soon be recognized as the University economics professor enlist in the French Army after D- pre-eminent economics department Kenneth Arrow said he and Debreu Day, serving briefly in the French in the academic world. Debreu’s found themselves independently occupational forces in Germany Nobel was the first in a string of researching similar economic ideas until July 1945. He resumed his four Nobel Prizes in economics won in the early 1950s, which studies after the war, shifting his by Berkeley faculty. John Harsanyi eventually led to a joint paper in focus to economics, a subject in won in 1994, Daniel McFadden in 1954 on the existence of which he became interested after 2000, and George Akerlof in 2001. See DEBREU page 10 Writing this note to you is one of my final which has garnered over $500,000 — from alumni, acts as Chair of the Department of department faculty, parents of recent graduates, Economics. I stepped down on June 30th, and friends. after three very busy and exciting years as Chair. Ben Hermalin, Professor of Economics During my term as Chair, the Department and Willis H. Booth Professor of Banking and rededicated itself to reaching out to alumni and Finance at the Haas School of Business, friends through symposia such as “California’s succeeded me as Chair on July 1st. Fiscal Crisis” and “Prescriptions for Social Security Reform”, which addressed urgent matters in our On May 19th we celebrated the Department’s lives and involved some of the leading thinkers on 102nd Commencement in an outdoor these issues. I would like to thank Professor Alan ceremony at the Greek Theater, and for the Auerbach, who organized both of these symposia, first time in our institutional memory, it for his great community spirit and enthusiasm. In rained! But it didn’t dampen the the last three years, we also opened The Econ enthusiasm. It was an uplifting event that Exchange to more input from alumni, which gives was much appreciated by everyone. Bill me great satisfaction, and I hope to see even more Dudley, the Chief Economist at Goldman alumni-generated items in future issues. Sachs and a 1980 Ph.D. from our Department, gave the Commencement Since I never miss an opportunity to laud the Address. Bill’s dissertation research was in Department’s many successes, let me give you a microeconomics, but he evolved into one of brief overview of where we stand as I exit from the the most influential macroeconomists in the Chairmanship. We added ten new professors to our business community. It is a great career faculty in the past four years, and will welcome story. Bill joked that his transformation into one more—econometrician Bryan Graham from a macroeconomist was an effort to prove Harvard University—this summer. A number of our himself to George Akerlof, who had given junior hires have been selected for the Review of him his only “B” in graduate school—in Economic Studies tour, which sends the cream of a macroeconomics no less! In all, 400 given year’s Ph.D.s on a lecture tour of European undergraduates and 14 Ph.D. candidates universities to represent the best new research in were awarded their degrees this year. the field. This is a great, great honor and I am proud of our success in attracting the very best Looking back, one of my first acts as Chair junior faculty to Cal. was to preside over the Department’s Centennial Celebration in November, 2002. Last semester the Department underwent a formal It was an honor to do so, and it gave me a review conducted by a team of distinguished great opportunity to meet a substantial economists from other universities with support number of alumni and friends under such from the Berkeley administration and the Academic exhilarating circumstances, as we marked the Senate. The last department review of this extent Department’s hundredth anniversary with occurred in 1988. The review concluded that our testaments to the Department’s many past Department has been extraordinarily successful successes, intellectual excellence, and future over the past fifteen years and praised our efforts potential. The gathering was a vivid to create a productive and congenial environment demonstration of the many people in the for research and teaching, despite having too few economics profession who made their start faculty to meet instructional demand and or advanced their careers at Berkeley. The inadequate resources to support our graduate day included amusing memories as well as students. The review remarked emotionally moving moments and led to the favorably on the level of creation of the Economics Centennial Fund, professionalism in our See CHAIR, page 10 Former PUC Chair (and Economics alum) Donald Vial Dies From Chair Richard Gilbert: I am saddened to report that Don Vial passed away recently. Don was a Berkeley graduate (’49, ‘52) and a long-time friend of the Department. He served the State as member and President of the California Public Utilities Commission and as Chairman of the Board of Directors of the California Foundation on the Environment and the Economy. The Peevey/Vial Chair is a source of support for the Center for Labor Economics. Clair Brown and Michael Reich presented a recognition award to Don Vial at our Centennial Celebration [in 2002], and spoke eloquently of his dedication to the University. ~~~A Note from Chair Richard J. Gilbert~~~ Chair Richard ~~~A Note from 2 THE ECON EXCHANGE, SPRING 2005 Alumni Updates Alumni Exchange Muge Adalet (Ph.D., ’04) recently received the European Association for Banking History’s 2005 “Young Thank You to Our Friends Scholar Prize” for best dissertation in the field for “Capital Flows and The Department of Economics gratefully acknowledges the alumni, friends, Financial Crises: A Historical and organizations who have made pledges and donations to the Economics Perspective”. Annual Fund, Centennial Fund, Grace Katagiri Fund, and other initiatives, from December 2004 through May 2005: Chian Choo (B.A., ’02), now a bank associate in Singapore, has won the 2003-04 essay Economics Centennial Fund: Economics Annual Fund: competition, organized by the Monetary Authority of Singapore Millennial Circle and the Economic Society of 3COM Corporation Singapore, on the theme “How Can Terry ’64 & Michele ’64 Aldrich Gold Bennett Cera & Sidener LLP Singapore Remain Competitive in a James Beck ‘83 Globalising World Economy?” He Steven Sidener ‘82 & Susan Leong particularly enjoyed applying both Frazer Burkart ‘98 theory and empirical research learnt Platinum Circle Charles Byce ’73 & Laura Powell and carried out at UC Berkeley, in a Ronald Clark ‘97 context relevant to Singapore. Leonard ’77 & Jenny Cheng Daniele Facchini ’84 & Miguel Fuentes (Ph.D., ’04) has Mark Desoer ‘74 Suzanne Palmer returned to his home in Chile to William Dudley ’80 & Ann Darby Benjamin Garosi ‘02 take up his position as Assistant Carl Shapiro ‘77 Professor of Economics at the Myron Harpole ‘47 Pontifical Catholic University of Gold Circle Davin Miyoshi ‘95 Chile. Lawrence Muilenberg ‘53 Kenneth N. Kuttner (B.A., ’82) George ’72 & Polly Abed Yoshiko Okamoto ‘99 was recently appointed to the John ’42 & Agnes ’43 Alden Nandita Raghavan ‘03 Danforth-Lewis Chair in Economics Joseph ’67 & Anna Amundsen Clinton ’65 & Petchsuporn Rapley at Oberlin College. Prior to joining Marcus Berliant ’81 & Clara Asnes Clark ‘75 & Marcia Silcox Oberlin, Ken worked at the Federal Phillip ’61 & Gale ’66 Brownell Reserve Banks of New York and Wayne Campbell ‘80 Craig Sundstrom ‘85 Chicago, and held visiting teaching positions at Columbia Philip Chan ‘93 Eric Swanson ‘76 Business School, New York Brian ’72 & Jennifer Cilker Alden Yan ‘98 University, and the University of Norman ’54 & Cynthia ’58 Dyer Wisconsin at Madison.