Thomas Sargent Reviews American Responses for European Union’s Crisis
As the financial world continues to fixate on developments in the European debt crisis saga, a number of commentators have weighed in with their proposed fixes for the troubled monetary union. In a recent interview with The New Yorker, Thomas J. Sargent, William R. Berkley Professor of Economics and Business at the New York University Stern School of Business, observed that the problem with many of these solutions is that “a lot of advice I see in the press is naïve.”
Sargent went on to explain that “many of the recommendations would require that institutions violate the rules and laws under which they were created and are run.” Sargent himself recommends that policymakers in the EU take a look at the early days of the United States for insights into their current dilemma.
Sargent is a senior fellow at the Hoover Institution, as well as a fellow of the National Academy of Sciences and a fellow of the American Academy of Arts and Sciences. He has authored several books, including The Big Problem of Small Change, and continues to author papers on a variety of macroeconomic topics.
In July, Sargent published “Welfare Cost of Business Cycles in Economies with Individual Consumption Risk” with Martin Ellison, “Taxation, redistribution, and debt with aggregate shocks” with Mikhail Golosov, and “Three Types of Ambiguity” with Lars Peter Hansen.
In December 2011, when he received the Nobel Prize in Economics along with Professor Christopher Sims of Princeton University, Sargent’s prize lecture noted the similarities between the ongoing financial crisis currently facing the European Union and the struggles faced by the United States shortly after it won its independence. The presentation, “United States then, Europe Now,” used economic theory to interpret the historical challenges faced by the U.S. Continental Congress as a way to gain insight into the issues that the European Union is currently grappling with.
A video of Sargent’s prize lecture, as well as his slides (PDF) from the event can be found at the Nobel Prize website.
In Singapore, at the 66th CFA Institute Annual Conference, Sargent will discuss policy implications for the global economy, looking at the proper role of government in times of economic crisis and how policymakers should coordinate fiscal and monetary policy, communication, and transparency. You can register to attend the conference and follow this blog for more speaker updates as the event draws closer.
