October 20, 2006

Economist Wins Nobel Prize for Describing Key Roles of Long-Term Expectations

By DAVID GLENN

Edmund S. Phelps, a professor of political economy at Columbia University, will receive this year's Nobel Memorial Prize in Economic Science for his insights about how long-term expectations shape national economic conditions.

In three papers, written from 1967 to 1970, Mr. Phelps transformed the standard understanding of the trade-off between unemployment and inflation. During much of the 1960s, influenced by what is known as the Phillips Curve, policy makers had assumed that there