The Nobel Prize

Ragnar A.K. Frisch (1895–1973)

Ragnar Frisch was born in Oslo, Norway in 1895. Concurrent with an apprenticeship as a goldsmith, he studied economics at the University of Oslo and obtained a BA in 1919. In the early 1920s Frischundertook studies in France and Great Britain, and after completing his dissertation in mathematical statistics was awarded a doctorate from the University of Oslo in 1926. In receipt of a Rockefeller Foundation Fellowship (1926–28) he travelled in the United States before becoming a lecturer at the University of Oslo (1928–29). He subsequently returned to America as a visiting professor at Yale University from 1930 to 1931.
In 1931 Frisch was appointed to the Chair of Economics at the University of Oslo and in 1932 became director of the newly created Institute for Social Economy at the university, posts he held until his retirement in 1965. During the 1930s, and the early postwar period, he was an adviser to the Norwegian Labour Party, and also periodically acted as an adviser to the governments of a number of developing countries, including India (1954–55) and Egypt (1957–64). In 1969 he was awarded, jointly with the Dutch economist Jan Tinbergen, the first Nobel Memorial Prize in Economics ‘for having developed and applied dynamic models for the analysis of economic processes’ (Nobel Foundation, 2004).

Ragnar Frisch is best known for his important contributions in three main areas, namely: econometrics, dynamic economic theory and economic planning. In the first area he contributed to the creation and development of econometrics (a term he coined in 1926) by applying mathematical and statistical methods to economic analysis.
In 1930 he helped found the Econometric Society (see also entry on Tinbergen) and was president of the Society, and chief editor of the Society’s journal Econometrica from 1933 to 1955. He focused his
work on the problems that arise when statistical methods are applied to economic data, including the development of statistical confluence analysis (Frisch, 1934b) and what are now known as the problems of identification and multicollinearity. This pioneering work paved the way for subsequent research in the field and the
development of econometrics as a science.
A second main area of research undertaken by Frisch, and the one for which he is perhaps best known, was his pioneering work in the field of dynamic economic theory, and in particular the development of dynamic models explaining business cycles. He contributed to the concepts in economic dynamics and his article ‘On the Notion of Equilibrium and Disequilibrium’ (Frisch, 1936b) became a classic. Another of Frisch’s most important contributions was ‘Propagation Problems and Impulse Problems in Dynamic Economics’ (Frisch, 1933). In this paper he constructed the first macrodynamic model which simulated business cycles through the solution of an equation. His analysis included an explanation of how random shocks to the economy (both exogenously and endogenously generated) can be transformed into oscillations characteristic of business cycles.
The third main area of Frisch’s research entailed the development of models for economic planning. In an early article, ‘Circulation Planning’ (Frisch, 1934a), he discussed the problem of reviving production and circulation in an economy experiencing a depression due to insufficient demand. From the 1950s onwards he developed ‘decision models’ which were based on input–output analysis and the use of linear and non-linear programming. His work in this field of study, which made an important contribution both to the literature on economic planning, and subsequent research, is reflected in publications such as Planning for India: Selected Explorations in Methodology (Frisch, 1960) and Economic Planning Studies: A Collection of Essays (Frisch, 1976).
In addition to his influential contributions to these three fields of study, Frisch also made important contributions to a number of other areas including: the theory of consumer behaviour (see, for example, Frisch, 1932); the theory of cost of living index numbers (Frisch, 1936a); production theory (see, for example, Frisch, 1965 – a book first published in Norwegian in 1962); and the development of the theory of national income accounting. His lasting impact on economics is even more remarkable when one considers that much of his wide-ranging work has never been published in English.

Main Published Works
(1932), New Methods of Measuring Marginal Utility, Tübingen: Mohr.
(1933), ‘Propagation Problems and Impulse Problems in Dynamic Economics’, in Economic Essays in Honor of Gustav Cassel, London: Allen & Unwin, pp. 171–205; reprinted in R.A. Gordon and L.R. Klein (eds) (1965), Readingsin Business Cycles, Homewood, IL: R.D. Irwin, pp. 155–85 and in O. Bjerkholt (ed.) (1995), Foundations of Modern Econometrics: The Selected Essays of Ragnar Frisch, vol. 2, Aldershot: Edward Elgar, pp. 311–45.
(1934a), ‘Circulation Planning’, Econometrica, 2, July, pp. 258–336 and October, pp. 422–35; pp. 258–336 of the July issue of Econometrica are reprinted in O. Bjerkholt (ed.) (1995), Foundations of Modern Econometrics: The Selected Essays of Ragnar Frisch, vol. 1, Aldershot: Edward Elgar, pp. 360–438.
(1934b), Statistical Confluence Analysis by Means of Complete Regression Systems, Oslo: University Institute of Economics.
(1936a), ‘Annual Survey of General Economic Theory: The Problem of Index Numbers’, Econometrica, 4, January, pp. 1–38; reprinted in O. Bjerkholt (ed.) (1995), Foundations of Modern Econometrics: The Selected Essays of Ragnar Frisch, vol. 1, Aldershot: Edward Elgar, pp. 51–88.
(1936b), ‘On the Notion of Equilibrium and Disequilibrium’, Review of Economic Studies, 3, February, pp. 100–105; reprinted in O. Bjerkholt (ed.) (1995), Foundations of Modern Econometrics: The Selected Essays of RagnarFrisch,vol. 1, Aldershot: Edward Elgar, pp. 454– 9.
(1960), Planning for India: Selected Explorations in Methodology, Calcutta: Indian Statistical Institute.
(1965), Theory of Production, Dordrecht: D. Reidel.
(1966), Maxima and Minima: Theory and Economic Applications, Dordrecht: D. Reidel.
(1976), Economic Planning Studies: A Collection of Essays (ed. F. Long), Dordrecht: D. Reidel.
(1995), Foundations of Modern Econometrics: The Selected Essays of Ragnar Frisch (ed. O. Bjerkholt), 2 vols, Aldershot: Edward Elgar.
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