Monday, October 11, 2004

Time to build Nobel winners 

Finn Kydland and Ed Prescott will share this year's Nobel Prize for their work on business cycles and time inconsistency. The Mises blog has some criticisms; it reminds me of once attending a Minnesota Economics Association meeting at which Prescott described their "time-to-build" model. I commented that the model looked Hayekian to me, insofar as capital seemed to have vintages (think of replacing a 1998 Pentium with a 2004 Pentium -- not the same thing at all). He was mildly annoyed, arguing that he could write the model down in a way that previous writers could not.

This makes this article look prescient.

UPDATE: Hope you didn't take this advice.