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Paul Samuelson Outline: 1. Paul Samuelson's professional positions 2. Samuelson's contributions in various fields of economics: 2. 1 Mathematical economics; 2. 2 Public finance theory; 2. 3 International economics; 2. 4 Macroeconomics; 2. 5 Consumer theory; 2. 6 Public goods theory. 3. Books and articles publicized by Samuelson. Paul Samuelson is one of the outstanding economists of our time. He is famous for his contribution in many fields of modern economics.
Samuelson received such notable awards as the John Bates Clark Medal in 1947 and Alfred Nobel Memorial Award in Economics in 1970. In 1944 he was appointed as an associate professor at the Massachusetts Institute of Technology, later in 1966 he became institute professor (the highest professorial title at the school). Samuelson has held a variety of governmental positions. He worked for the National Resources Planning Board from 1941 - 1943; the War Production Board and Office of War Mobilization and Reconstruction in 1945 (economic and general planning program); the United States Treasury, 1945 - 1952; the Bureau of the Budget in 1952; the Research Advisory Panel to the Presidents National Goals Commission from 1959 - 1960; the Research Advisory Board Committee for Economic Development in 1960. He was a member of the National Task Force on Economic Education from 1960 - 1961 and has been a consultant to the Rand Corporation since 1949. He is an informal consultant for the United States Treasury and the Council of Economic Advisors.
He is also a consultant to the Federal Reserve Bank. He was Economic Advisor to Senator, candidate, and President-elect Kennedy and was the author of the January 5, 1961 "Samuelson Report on the State of the American Economy to President-elect Kennedy. " His consultation for the government has brought him national recognition as an economic advisor. In 1965 he was elected president of the International Economic Association. Paul Samuelson made a valuable contribution in such fields like: - Mathematical economics; - Public finance theory; - International economics; - Macroeconomics; - Consumer theory; - Public goods theory. 1. Mathematical economics implies the application of mathematical methods to represent economic theory or analyze economical problems.
Paul Samuelson in his work Foundations of Economic Analysis written in 1947 defines a common mathematical structure across multiple fields in the subject. More than any other economist, Paul Samuelson raised the level of mathematical analysis in the profession. For example, swedish economist Berlin Ohlin had argued that international trade would tend to equalize the prices of factors of production. Trade between India and the United States, for example, would narrow wage-rate differentials between the two countries. Samuelson, using mathematical tools, showed the conditions under which the differentials would be driven to zero.
The theorem he proved is called the Factor Price Equalization Theorem. In his latest book Linear Programming and Economic Analysis, written in collaboration with Robert Dorfman and Robert M. Solow mathematical economics is applied to practical problems in international trade, transportation and marketing, competitive strategy in business and government, industrial production, and defense planning. All these complex problems of choice can now be analysed by the mathematical economics developed by Samuelson. 2. At the age of fifty Samuelson took up the finance theory.
He did some of the initial work that showed that properly expected futures prices should fluctuate randomly. Then he did an important work in capital theory. 3. In international economics Samuelson influenced the development of two important international trade models: the Balassa-Samuelson effect (BS-effect depends on inter-country differences in the relative productivity of the tradable and non-tradable sectors) and the Heckscher-Ohlin model (with the Stopped-Samuelson theorem). 4. In macroeconomics Samuelson demonstrated how combining the accelerator theory of investment with the Keynesian income determination model explains the cyclical nature of business cycles. He also introduced the concept of the neoclassical synthesis a synthesis of the old neoclassical microeconomics and the new Keynesian macroeconomics.
Samuelson affirmed that government intervention through fiscal and monetary policy was able to achieve full employment. At full employment the market works well, except at providing public goods and handling problems of appearance. In 1958 Samuelson popularized the overlapping generations (OLG) model, which had been devised by Maurice Always in 1947. It was supposed to become a way of simplifying monetary economics and macroeconomics models and serve as a method of analyzing economic agents behavior across multiple periods of time. An overlapping generations model is a type of economic model in which there is an infinite number of agents who live a limited length of time but long enough to endure into at least one period of the next generations lives. Essentially, because there is an infinite number of agents in the economy (over time) there is no prior restriction on the differential equation that relates the capital stock to investment.
Two important aspects of the overlapping generations model are that, different from the Ramsey growth model the steady state level of capital need not be unique nor efficient. Besides, it is possible that over saving can happen, but this situation can be improved upon by a social planner. As there is an unlimited number of generations, a social planner can transfer some consumption from one generation to the previous one, compensate the first generation with a transfer from the next and so on, into infinity. Another fundamental contribution of OLG models is that they justify existence of money as a medium of exchange. In an OLG model, money is a welfare-improving innovation. 5. Samuelson's contribution to the consumer theory is mainly in his pioneering the Revealed Preference Theory, which is a method by which it is possible to discern the best possible option, and thus define consumer's utility functions, by observing the consumer behaviour.
Substantially, this means that the preferences of consumers can be revealed by their purchasing habits. Revealed preference theory appeared because the theories of consumer demand were based on a diminishing marginal rate of substitution. This diminishing marginal rate of substitution in its turn is based on the assumption that consumers make consumption decisions thinking of how to maximize their utility. While utility maximization was not a questionable assumption, the underlying utility functions could not be measured with great certainty. Revealed preference theory was a means to reconcile demand theory by creating a means to define utility functions by observing behavior. 6. Paul A.
Samuelson is also known as the first economist who developed the theory of public goods. In his classic 1954 paper The Pure Theory of Public Expenditure, he gave a definition of a public good, or as he called it in the paper a "collective consumption good." According to Samuelson public goods are goods which all enjoy in common in the sense that each individuals consumption of such a good leads to no subtractions from any other individuals consumption of that good... Economists for a long time believed that there were goods that would be hard for the private sector to provide because it would be difficult to charge people who benefit from them. National defense is one of the best examples of such a good. Samuelson, in a 1954 article, was the first to attempt a rigorous definition of a public good. In welfare economics Samuelson popularized the Lindahl-Bowen-Samuelson condition, which is a criteria for the efficient providing of public goods.
When satisfied, the Samuelson condition implies that further substituting private goods provision for public goods provision (or vice versa) would result in a decrease of social utility. Paul Samuelson is one of the most productive modern economists. He wrote a lot of books and articles. His Economics: An Introductory Analysis, first published in 1948, has become the best selling economics textbook of all time. It has been sold in more than a million copies and has been translated into French, German, Italian, Hungarian, Polish, Korean, Portuguese, Spanish and Arabic. In 1959 Business Week wrote: The books emphasis on different themes has changed with the changing of the nations economic problems.
The first edition was dominated by the postwar worry that widespread unemployment would return. Later editions put growing stress on fiscal and monetary controls over inflation. In the later editions Samuelson has worked toward what he calls a neoclassical synthesis of ancient and modern economic findings. Briefly, his synthesis is that nations today can successfully control either depression or inflation by fiscal and monetary policies. There are economists that call this Samuelson's book his greatest contribution in economics. In 1955 he became co-author of Readings in Economics, and has co-authored many other works in the field.
Samuelson is the author of hundreds of articles in journals and magazines. The contribution of Paul Samuelson in economics can hardly be overestimated. He has done a great amount of work for various fields of Economics and methodology, so that the economists of today still apply his methods and approaches and students continue studying by books written by Samuelson. Bibliography /reference list Paul A.
Samuelson, 1915 -, The History of Economic Thought Website, Department of Economics of the New School for Social Research, retrieved 27 Apr 2008, web Paul A. Samuelson Biography, Nobel prize. org, From Nobel Lectures, Economics 1969 - 1980, Editor Asian Lindbeck, World Scientific Publishing Co. , Singapore, 1992, retrieved 26 Apr 2008 web Paul Anthony Samuelson, Biography, The Concise Encyclopedia of Economics, retrieved 26 Apr 2008 web Paul A. Samuelson, High Beam Encyclopedia, From The Columbia Encyclopedia, Sixth Edition, 2008, retrieved 27 Apr 2008, web Paul Samuelson, Wikipedia, the free encyclopedia, retrieved 26 Apr 2008 web
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Research essay sample on Paul Samuelson Public Goods
