Edmund S Phelps wins Economics Nobel

09 October 2006

Mumbai: Edmund S Phelps, a professor of economics at the Columbia University, has won this year''s Nobel Prize in economics. Phelps, 73, will receive the $1.37-million prize for his theories on the interplay between inflation expectations and unemployment and future price increases, the Royal Swedish Academy said.

Phelps who developed the theory on unemployment and inflation expectations, known as the ``Phillips Curve,'''' in the late 1960s, has also written frequently on the notion that ``dynamism'''' or the creation and development of new ideas was the key to fostering growth over the long run.

``Phelps challenged the earlier view on the relationship between inflation and unemployment,'''' the Stockholm-based Nobel Foundation said on its Web site. ``He recognised that inflation does not only depend on unemployment but also on the expectations of firms and employees about price and wage increases,'''' it added.

Phelps attributes the strong wave of innovation in the United States and a lack of it in many developing countries, parts of the Far East and Europe to "low employment, low labour participation, relatively low productivity and an unenthusiastic attitude toward work and business.''''

The `Sveriges Riksbank Prize in Economic Sciences'' in Memory of Alfred Nobel, has been given out since 1969 by Sweden''s central bank. Phelps is the first lone winner of the prize since 1999.

Hubert Fromlet, chief economist with Swedbank, said this year''s award has seen some 150 to 200 names and topics bandied about as likely winners.