Lawrence Klein
Encyclopedia
Lawrence Robert Klein is an American economist
. For his work in creating computer models to forecast economic trends in the field of econometrics
at the Wharton School of the University of Pennsylvania
, he was awarded the Nobel Memorial Prize in Economic Sciences
in 1980. Specifically "for the creation of economic models and their application to the analysis of economic fluctuations and economic policies." Due to his efforts, such models have become widespread among economist
s.
and went on to graduate from Los Angeles City College
, where he learned calculus
; the University of California, Berkeley
, where he began his computer modeling and earned a B.A.
in Economics in 1942; he earned his Ph.D.
in Economics at the Massachusetts Institute of Technology
(MIT) in 1944.
Klein then moved to the Cowles Commission for Research in Economics, which was then at the University of Chicago
, now the Cowles Foundation
. There he built a model of the United States economy to forecast the development of business fluctuations and to study the effects of government economic-political policy. After World War II
Klein used his model to correctly predict, against the prevailing expectation, that there would be an economic upturn rather than a depression
. Similarly, he correctly predicted a mild recession
at the end of the Korean War
.
In 1959 Klein was awarded the John Bates Clark Medal
, one of the two most prestigious awards in the field of economics.
At the University of Michigan
, Klein developed enhanced macroeconomic models, in particular the famous Klein-Goldberger model with Arthur Goldberger
, which was based on foundations laid by Professor
Jan Tinbergen
of the Netherlands
, later winner of the first economics prize in 1969. Klein differed from Tinbergen by using an alternative economic theory and a different statistical
technique.
in 1954 in the wake of the McCarthy era
and the denial of tenure at Michigan
. In England, Klein developed a model of the United Kingdom
known as the 'Oxford model' with Sir James Ball. Additionally, at the Institute of Statistics Klein assisted with the creation of the British
Savings Surveys, based upon the Michigan Surveys.
Klein returned to the United States in 1958 to join the Department of Economics at the University of Pennsylvania
. He became the Benjamin Franklin
Professor of Economics and Finance at the Wharton School in 1968.
to forecast the short-term development of the American economy.
Later in the '60s, Klein constructed the Wharton Econometric Forecasting Model. This model, considerably smaller than the Brookings model, achieved a very good reputation for its analysis of business conditions, used to forecast fluctuations including national product, exports, investments, and consumption, and to study the effect on them of changes in taxation, public expenditure, oil price, etc.
Klein founded Wharton Econometric Forecasting Associates
or WEFA, (now IHS Global Insight). At the end of the 1960s he was the initiator of, and an active research leader in, their LINK project, a consortium of model builders from many countries, which was also mentioned in his Nobel citation. The aim of this was to produce the world's first global economic model, linking models of many of the world's countries so that the effect of changes in the economy of one country are reflected in other countries. LINK, which is now operated by the United Nations, is still meeting regularly, most recently in October, 2009 in Bangkok.
Klein served as a thesis advisor for numerous well known economists including E. Roy Weintraub
in the late 1960s.
, Klein coordinated Jimmy Carter
's economic task force. He declined an invitation to join Carter's administration. Klein has also been president of the Econometric Society
and the American Economic Association
(in 1977).
His Nobel citation concludes that "few, if any, research workers in the empirical field of economic science, have had so many successors and such a large impact as Lawrence Klein".
In recent years, he has been constructing short range "current quarter models" that use current economic indicators to get a handle on the rate of economic growth during the current and next quarter. In contrast to earlier efforts to model the economy structurally and to use constant adjustments and judgmental estimates for the exogenous variables, these systems are deliberately automatic and mechanical, simply translating available information into a statistically best estimate of current conditions. This represents a very different tradition from his earlier model building and applications.
Now in Emeritus
status, he is still engaged in macro econometric model building. Mainly, he is involved in building high frequency models that projects the economy in a monthly, quarterly frame. A publication on high frequency model containing countries such as US, China
, Russia
, India
, Brazil
, Mexico
, Korea
and Hong Kong
was expected in 2008.
Klein was a founding trustee of Economists for Peace and Security
.
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
. For his work in creating computer models to forecast economic trends in the field of econometrics
Econometrics
Econometrics has been defined as "the application of mathematics and statistical methods to economic data" and described as the branch of economics "that aims to give empirical content to economic relations." More precisely, it is "the quantitative analysis of actual economic phenomena based on...
at the Wharton School of the University of Pennsylvania
University of Pennsylvania
The University of Pennsylvania is a private, Ivy League university located in Philadelphia, Pennsylvania, United States. Penn is the fourth-oldest institution of higher education in the United States,Penn is the fourth-oldest using the founding dates claimed by each institution...
, he was awarded the Nobel Memorial Prize in Economic Sciences
Nobel Memorial Prize in Economic Sciences
The Nobel Memorial Prize in Economic Sciences, commonly referred to as the Nobel Prize in Economics, but officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel , is an award for outstanding contributions to the field of economics, generally regarded as one of the...
in 1980. Specifically "for the creation of economic models and their application to the analysis of economic fluctuations and economic policies." Due to his efforts, such models have become widespread among economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
s.
Biography
Klein was born in Omaha, NebraskaOmaha, Nebraska
Omaha is the largest city in the state of Nebraska, United States, and is the county seat of Douglas County. It is located in the Midwestern United States on the Missouri River, about 20 miles north of the mouth of the Platte River...
and went on to graduate from Los Angeles City College
Los Angeles City College
Los Angeles City College, known as LACC, is a public community college in the East Hollywood section of Los Angeles, California. A part of the Los Angeles Community College District, it is located on Vermont Avenue south of Santa Monica Boulevard...
, where he learned calculus
Calculus
Calculus is a branch of mathematics focused on limits, functions, derivatives, integrals, and infinite series. This subject constitutes a major part of modern mathematics education. It has two major branches, differential calculus and integral calculus, which are related by the fundamental theorem...
; the University of California, Berkeley
University of California, Berkeley
The University of California, Berkeley , is a teaching and research university established in 1868 and located in Berkeley, California, USA...
, where he began his computer modeling and earned a B.A.
Bachelor of Arts
A Bachelor of Arts , from the Latin artium baccalaureus, is a bachelor's degree awarded for an undergraduate course or program in either the liberal arts, the sciences, or both...
in Economics in 1942; he earned his Ph.D.
Ph.D.
A Ph.D. is a Doctor of Philosophy, an academic degree.Ph.D. may also refer to:* Ph.D. , a 1980s British group*Piled Higher and Deeper, a web comic strip*PhD: Phantasy Degree, a Korean comic series* PhD Docbook renderer, an XML renderer...
in Economics at the Massachusetts Institute of Technology
Massachusetts Institute of Technology
The Massachusetts Institute of Technology is a private research university located in Cambridge, Massachusetts. MIT has five schools and one college, containing a total of 32 academic departments, with a strong emphasis on scientific and technological education and research.Founded in 1861 in...
(MIT) in 1944.
Klein then moved to the Cowles Commission for Research in Economics, which was then at the University of Chicago
University of Chicago
The University of Chicago is a private research university in Chicago, Illinois, USA. It was founded by the American Baptist Education Society with a donation from oil magnate and philanthropist John D. Rockefeller and incorporated in 1890...
, now the Cowles Foundation
Cowles Foundation
The Cowles Commission for Research in Economics is an economic research institute, founded in Colorado Springs in 1932 by Alfred Cowles, a businessman and economist. In 1939, the Cowles Commission moved to the University of Chicago under the directorship of Theodore O. Yntema. Jacob Marschak took...
. There he built a model of the United States economy to forecast the development of business fluctuations and to study the effects of government economic-political policy. After World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
Klein used his model to correctly predict, against the prevailing expectation, that there would be an economic upturn rather than a depression
Depression (economics)
In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe downturn than a recession, which is seen by some economists as part of the modern business cycle....
. Similarly, he correctly predicted a mild recession
Recession
In economics, a recession is a business cycle contraction, a general slowdown in economic activity. During recessions, many macroeconomic indicators vary in a similar way...
at the end of the Korean War
Korean War
The Korean War was a conventional war between South Korea, supported by the United Nations, and North Korea, supported by the People's Republic of China , with military material aid from the Soviet Union...
.
In 1959 Klein was awarded the John Bates Clark Medal
John Bates Clark Medal
The John Bates Clark Medal is awarded by the American Economic Association to "that American economist under the age of forty who is adjudged to have made a significant contribution to economic thought and knowledge"...
, one of the two most prestigious awards in the field of economics.
At the University of Michigan
University of Michigan
The University of Michigan is a public research university located in Ann Arbor, Michigan in the United States. It is the state's oldest university and the flagship campus of the University of Michigan...
, Klein developed enhanced macroeconomic models, in particular the famous Klein-Goldberger model with Arthur Goldberger
Arthur Goldberger
Arthur Stanley Goldberger was an econometrician and an economist. He worked with Nobel Prize winner Lawrence Klein on the development of the famous Klein–Goldberger macroeconomic computer model at the University of Michigan...
, which was based on foundations laid by Professor
Professor
A professor is a scholarly teacher; the precise meaning of the term varies by country. Literally, professor derives from Latin as a "person who professes" being usually an expert in arts or sciences; a teacher of high rank...
Jan Tinbergen
Jan Tinbergen
Jan Tinbergen , was a Dutch economist. He was awarded the first Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel in 1969, which he shared with Ragnar Frisch for having developed and applied dynamic models for the analysis of economic processes...
of the Netherlands
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
, later winner of the first economics prize in 1969. Klein differed from Tinbergen by using an alternative economic theory and a different statistical
Statistics
Statistics is the study of the collection, organization, analysis, and interpretation of data. It deals with all aspects of this, including the planning of data collection in terms of the design of surveys and experiments....
technique.
McCarthyism and move to England
Klein moved to OxfordUniversity of Oxford
The University of Oxford is a university located in Oxford, United Kingdom. It is the second-oldest surviving university in the world and the oldest in the English-speaking world. Although its exact date of foundation is unclear, there is evidence of teaching as far back as 1096...
in 1954 in the wake of the McCarthy era
McCarthyism
McCarthyism is the practice of making accusations of disloyalty, subversion, or treason without proper regard for evidence. The term has its origins in the period in the United States known as the Second Red Scare, lasting roughly from the late 1940s to the late 1950s and characterized by...
and the denial of tenure at Michigan
Michigan
Michigan is a U.S. state located in the Great Lakes Region of the United States of America. The name Michigan is the French form of the Ojibwa word mishigamaa, meaning "large water" or "large lake"....
. In England, Klein developed a model of the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
known as the 'Oxford model' with Sir James Ball. Additionally, at the Institute of Statistics Klein assisted with the creation of the British
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
Savings Surveys, based upon the Michigan Surveys.
Klein returned to the United States in 1958 to join the Department of Economics at the University of Pennsylvania
University of Pennsylvania
The University of Pennsylvania is a private, Ivy League university located in Philadelphia, Pennsylvania, United States. Penn is the fourth-oldest institution of higher education in the United States,Penn is the fourth-oldest using the founding dates claimed by each institution...
. He became the Benjamin Franklin
Benjamin Franklin
Dr. Benjamin Franklin was one of the Founding Fathers of the United States. A noted polymath, Franklin was a leading author, printer, political theorist, politician, postmaster, scientist, musician, inventor, satirist, civic activist, statesman, and diplomat...
Professor of Economics and Finance at the Wharton School in 1968.
Return to America
In the early 1960s Klein became the leader of the major "Brookings-SSRC Project", to construct a detailed econometric modelEconometric model
Econometric models are statistical models used in econometrics. An econometric model specifies the statistical relationship that is believed to hold between the various economic quantities pertaining to a particular economic phenomenon under study...
to forecast the short-term development of the American economy.
Later in the '60s, Klein constructed the Wharton Econometric Forecasting Model. This model, considerably smaller than the Brookings model, achieved a very good reputation for its analysis of business conditions, used to forecast fluctuations including national product, exports, investments, and consumption, and to study the effect on them of changes in taxation, public expenditure, oil price, etc.
Klein founded Wharton Econometric Forecasting Associates
Wharton Econometric Forecasting Associates
Wharton Econometric Forecasting Associates, Inc was a world-leading economics forecasting and consulting organisation founded by Nobel Prize winner Dr. Lawrence R. Klein....
or WEFA, (now IHS Global Insight). At the end of the 1960s he was the initiator of, and an active research leader in, their LINK project, a consortium of model builders from many countries, which was also mentioned in his Nobel citation. The aim of this was to produce the world's first global economic model, linking models of many of the world's countries so that the effect of changes in the economy of one country are reflected in other countries. LINK, which is now operated by the United Nations, is still meeting regularly, most recently in October, 2009 in Bangkok.
Klein served as a thesis advisor for numerous well known economists including E. Roy Weintraub
E. Roy Weintraub
E. Roy Weintraub is an American economist and mathematician. He works as a Professor of Economics in Duke University.Weintraub was trained as a mathematician though his professional career has been as an economist. In recent years his research and teaching activities have focused upon the history...
in the late 1960s.
Later career
During the United States presidential election, 1976United States presidential election, 1976
The United States presidential election of 1976 followed the resignation of President Richard Nixon in the wake of the Watergate scandal. It pitted incumbent President Gerald Ford, the Republican candidate, against the relatively unknown former governor of Georgia, Jimmy Carter, the Democratic...
, Klein coordinated Jimmy Carter
Jimmy Carter
James Earl "Jimmy" Carter, Jr. is an American politician who served as the 39th President of the United States and was the recipient of the 2002 Nobel Peace Prize, the only U.S. President to have received the Prize after leaving office...
's economic task force. He declined an invitation to join Carter's administration. Klein has also been president of the Econometric Society
Econometric Society
The Econometric Society is an international society for the advancement of economic theory in its relation with statistics and mathematics. It was founded on December 29, 1930 at the Stalton Hotel in Cleveland, Ohio....
and the American Economic Association
American Economic Association
The American Economic Association, or AEA, is a learned society in the field of economics, headquartered in Nashville, Tennessee. It publishes one of the most prestigious academic journals in economics: the American Economic Review...
(in 1977).
His Nobel citation concludes that "few, if any, research workers in the empirical field of economic science, have had so many successors and such a large impact as Lawrence Klein".
In recent years, he has been constructing short range "current quarter models" that use current economic indicators to get a handle on the rate of economic growth during the current and next quarter. In contrast to earlier efforts to model the economy structurally and to use constant adjustments and judgmental estimates for the exogenous variables, these systems are deliberately automatic and mechanical, simply translating available information into a statistically best estimate of current conditions. This represents a very different tradition from his earlier model building and applications.
Now in Emeritus
Emeritus
Emeritus is a post-positive adjective that is used to designate a retired professor, bishop, or other professional or as a title. The female equivalent emerita is also sometimes used.-History:...
status, he is still engaged in macro econometric model building. Mainly, he is involved in building high frequency models that projects the economy in a monthly, quarterly frame. A publication on high frequency model containing countries such as US, China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
, Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
, India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
, Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
, Mexico
Mexico
The United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...
, Korea
Korea
Korea ) is an East Asian geographic region that is currently divided into two separate sovereign states — North Korea and South Korea. Located on the Korean Peninsula, Korea is bordered by the People's Republic of China to the northwest, Russia to the northeast, and is separated from Japan to the...
and Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
was expected in 2008.
Klein was a founding trustee of Economists for Peace and Security
Economists for Peace and Security
Economists for Peace and Security is a United Nations-registered, New York-based NGO which links economists interested in peace and security issues. Inspired by International Physicians for the Prevention of Nuclear War, it was founded in 1989 as Economists Against the Arms Race , before becoming...
.
Publications
Klein's publications include:- Economic Fluctuations in the United States, 1921-41 (1950)
- An Econometric Model of the United States, 1929-52 (with AS Goldberger, 1955)
- The Keynesian RevolutionKeynesian RevolutionThe Keynesian Revolution was a fundamental reworking of economic theory concerning the factors determining employment levels in the overall economy. The revolution was set against the then orthodox economic framework: neoclassical economics....
(1947) ISBN 0-333-08131-5 - The Wharton Econometric Forecasting Model (with MK Evans, 1967)
- A Textbook of Econometrics (1973) ISBN 0-13-912832-8
- The Brookings Model (With Gary Fromm. 1975)
- Econometric Model Performance (1976)
- An Introduction to Econometric Forecasting and Forecasting Models (1980) ISBN 0-669-02896-7
- Econometric Models As Guides for Decision Making (1982) ISBN 0-02-917430-9
- The Economics of Supply and Demand 1983
- Economics, Econometrics and The LINK (with M Dutta, 1995) ISBN 0-444-81787-5