LAWRENCE R. KLEIN

Lawrence R. Klein

Lawrence R. Klein

Introduction

This survey was originally prepared at the request of the Prize Committee for the Nobel Prize in Economics.** It constitutes a record and assessment of the work and influence of Lawrence Klein. Rather than simply attempting to catalogue his work seriatim, it is divided into three main sections. Section I looks at his work as a chronological story which is intended to put into historical context the vast list of his published work. In Section II his contributions to economics are reviewed under three headings of economic theory, statistical methods and econometric model building. Finally, Section III attempts a broader assessment of his influence on the economics profession.

Historical Development

Lawrence Klein first made his mark in the economics profession as a graduate student under Paul Samuelson at MIT. Before he completed his PhD in 1944, he had already produced one serious publication in Econometrica on estimating investment functions. Samuelson at the time was only about two years older than Klein. This association as pupil and teacher led Klein into the heart of Keynesian economics and to his first major works for which he began to become internationally known, namely his article on theories of effective demand which appeared in the Journal of Political Eoenomy in 1947, and the subsequent major work that included it. The Keynesian Revolution that was published in 1949. The latter became to the non-specialist econometrician or statistical economist perhaps the best known of Klein's works over many years.

After graduating from M.I.T., Klein went as a research associate to the Cowles Commission. As one might have expected, this was an important and formative period of his life, when his interest in the economics of Keynes began to be translated into applied econometric work. The major thrust of the Cowles Commission at that time was, of course, predominantly theoretical with a star studded cast, including Anderson, Rubin, Girschick, Haavelmo, Koopmans, etc. Klein's experience in those heady days at the Commission marked him in two ways. Firstly, while the others concentrated more on the theoretical aspects of an emerging econometrics, he carved out for himself a special interest in translating these theoretical developments into applied work, which is best exempliEied by the second major work that drew him to pubhc attention, his book on Economic Fluctuations in the United States, 1921-42, which was published in 1950. Secondly, the association with his colleagues at the Commission deepened his interest in problems of statistical estimation, in particular the problem of simultaneous estimation in econometric systems, an interest that he has maintained through the years. His work there imbued in him an attention to detail in estimation in empirical work that few economists have emulated and a continued belief in the value of 'high technology' estimation procedures at all times. After leaving the Cowles Commission, EUein spent some time at the National Bureau and a year in Norway before coming to rest for a considerable period at the Survey Research Centre at ...