Lawrence Klein

Lawrence Robert Klein (born September 14, 1920) is an American economist.

Klein was born in Omaha, Nebraska. 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 Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel in 1980. Specifically "for the creation of economic models and their application to the analysis of economic fluctuations and economic policies." Thanks to his work such models became widespread among economists.

Development of business forecasting model

Professor Klein is a graduate of 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 PhD 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.

McCarthyism and move to England

Klein moved to England in 1954. This was prompted by Senator Joseph McCarthy's anti-communist "witch-hunt", and the denial of his continuing tenure at Michigan. In England, Klein developed a model of the United Kingdom economy at the University of Oxford, before returning to the US in 1958 to join the Department of Economics at the University of Pennsylvania. He became "Benjamin Franklin Professor of Economics and Finance" at their Wharton Business School in 1968.

Return to America at Wharton

In the early 1960s Klein became the leader of the major "Brookings-SSRC Project", to construct a detailed econometric model to forecast the short-term development of the American economy.

Later in the 60's, 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.

Professor Klein founded Wharton Econometric Forecasting Associates or WEFA, (now Global Insight). At the end of the 1960s he was the initiator of, and an active research leader in, their LINK project, 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.

Klein served as a thesis advisor for E. Roy Weintraub in the late 1960s.

Later career

In 1976 Klein was coordinator of Jimmy Carter's economic task force before the US presidential election. 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

Publications

Klein's publications include:

• An essay on the theory of economic prediction (With Jaime Marquez, ????) ISBN 0-8410-2005-1
• Economic Fluctuations in the United States, 1921-41 (1950)
• An Econometric Model of the United States, 1929-52 (with AS Goldberger, 1955)
• The Keynesian Revolution (1946) 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

See also

• List of economists

External link

• Lawrence Klein