He is currently serving as an economist at the Minneapolis branch of the Federal Reserve and Arizona State University and is a major figure in macroeconomics, especially the theories of business cycles and general equilibrium. In his "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," published in "The Journal of Political Economy" in 1977 with Finn E. Kydland, he analyzed whether central banks should have strict numerical targets or be allowed to use their discretion in setting monetary policy. He is also well known for his work on the Hodrick-Prescott Filter, used to smooth fluctuations in a time series.
Prescott, Edward C. Prescott, Edward C., born in 1940, Nobel Prize-winning economist noted for his contributions to macroeconomics, notably his theories regarding the business cycle and how fluctuations in short-term economic policies can negatively impact long-term goals.
Instead, Prescott and Kydland put forward the theory that demand is constant and that the business cycle is due to changes that affect supply, such as a sharp decrease in the oil supply, leading to recession, or a technological innovation that boosts productivity, leading to growth.
Prescott and Kydland argued that government institutions, ranging from patent offices to central banks, need to be consistent in their policies over time so that long-term goals, such as controlling inflation, can be achieved.
EdwardPrescott, the W. Carey Chair in Economics at ASU, was named winner of the 2004 Nobel Prize in economic sciences Oct. 11.
Prescott, known for his work on growth theory and time inconsistency, is one of a small circle of scholars who have altered the course of macroeconomic thinking in the past three decades.
Prescott was on the faculty at the University of Minnesota for two decades, where he was a Regents Professor and McKnight Presidential Endowed Professor in Economics before coming to ASU.
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