Edmund S. Phelps

Biography

Edmund Strother Phelps was born on July 26, 1933, in Evanston, Illinois. An American economist, Phelps became one of the leading macroeconomic theorists of the late 20th century. He studied at Amherst College for his undergraduate degree and then earned a doctorate from Yale University. He also spent time at the University of Pennsylvania, where he later became a faculty member.

Early in his career at Yale's Cowles Foundation in the early 1960s, Phelps made significant contributions to economic growth theory. His work on the golden rule savings rate, building on John von Neumann's earlier research, sparked interest in how much a nation should consume now versus save and invest for the future.

Phelps worked at several major universities, including the University of Pennsylvania from 1966 to 1971, before joining Columbia University in 1971. At Columbia, he was the McVickar Professor of Political Economy from 1982 until he became McVickar Professor Emeritus in 2021. His most important contributions involved adding microeconomic foundations based on imperfect information and incomplete knowledge into macroeconomic models of employment and price dynamics.

The development of the natural rate of unemployment theory is one of Phelps's key achievements. This work changed economists' understanding of labor markets by showing that a natural equilibrium level of unemployment exists due to structural factors in the economy. Attempts to reduce unemployment below this natural rate using monetary policy would ultimately lead to inflation. In the early 2000s, Phelps turned his research toward understanding business innovation and entrepreneurship.

Phelps won the Nobel Memorial Prize in Economic Sciences in 2006 for his analysis of tradeoffs in macroeconomic policy. His other honors include a Guggenheim Fellowship in 1978, the Global Economy Prize in 2008, and being named a Knight of the Legion of Honour in 2008. He was elected a Fellow of the American Academy of Arts and Sciences, a Distinguished Fellow of the American Economic Association, and a Fellow of the Econometric Society since 1967. Since 2001, he has been the founding director of Columbia's Center on Capitalism and Society, focusing on the relationship between economic systems and social outcomes.