PENN'S KLEIN CAPTURES NOBEL ECONOMICS PRIZE

Author: Associated Press

Date: Wednesday, October 15, 1980
Page: ?????
Section: RUN OF PAPER

The announcement completed a near sweep of the 1980 Nobel Prizes by Americans; they won or shared five out of the six awards.

Klein, an economic adviser to Jimmy Carter during his 1976 presidential campaign, was cited by the Swedish Academy of Sciences "for the creation of econometric models and their application to the analysis of economic fluctuations and economic policies."

Klein, 60, has served as an unofficial adviser to Carter but never joined the Administration, in part because of a youthful association with the American Communist Party, sources said. He was a Communist Party member from 1946-1947, while a researcher at the University of Chicago. He left the United States for a time in the 1950s, during Sen. Joe McCarthy's hearings into alleged communist connections of a number of prominent Americans.

Klein said during the campaign that his Communist Party affiliation was more than 20 years ago and was the result of youthful naivete.

The academy said in awarding the prize that Klein's work "will improve the possibilities to analyze the spread of business fluctuations between different countries and to make forecasts of international trade and capital movements."

A native of Omaha, Neb., Klein earned his doctorate in 1944 at the Massachusetts Institute of Technology and has been at Penn since 1958, currently as Benjamin Franklin Professor of Economics and Finance.

The awarding body cited as one example of his work a study of how an increase in the price of oil influences inflation, employment and trade
balances in different countries.

During the last three decades, Klein has proved to be the leading researcher within the field of analysis of business fluctuations, the awarding body said.

Klein's most famous model was built in collaboration with American colleague Arthur Goldberger. They followed up work initiated by Dutch professor Jan Tinbergen, one of the first economics prizewinners, in the 1930s.

"Thanks to Klein's contributions, the building of econometric models has attained widespread, not to say universal use. It is now to be found all through the world, not only at scientific institutions, but also in public administration, political organizations and large enterprises," the Swedish Academy said. "Few, if any, research workers in the empirical field of economic science have had so many successes and such a large impact as Lawrence Klein."

Klein, unlike Tinbergen, who had primarily aimed at the analysis of business conditions, above all wanted to make an instrument for forecasting the development of business fluctuations and for studying the effects of economic-political measures, Swedish economists said.

"In the course of the 1950s his USA models became firmly established as a successful instrument for short-term forecasts. He furthermore collaborated in the construction of econometric models in several countries, among them the United Kingdom and Canada. As a link in this aim at the beginning of the 1960s he became the leader of an extensive research project, "The Brookings-SSRC project," the academy release stated.

The aim of this large project was to construct a detailed econometric model and to use it for forecasting the short-term development of the American economy. Sometime later, Klein set out to construct another model, called "The Wharton Econometric Forecasting Model," which achieved a very good reputation for its analysis of business conditions, the awarding body said.

A reporter who telephoned Klein at his home asked him if he was surprised by the award announcement.

"Yes," he answered: "I was asleep."

The economics prize has been heavily dominated by Americans. Since first awarded in 1969 there have been nine Americans out of a total 18 laureates, including Klein. The stipend this year is $212,000.

Seven Americans, a Briton, a Frenchman and an Argentine were awarded the five other 1980 prizes for achievements in medicine, physics, chemistry, literature, and fostering world peace.

The literature prize went to poet-novelist Czeslaw Milosz, a naturalized American citizen who writes in Polish. The medicine prize was shared by Venezuelan-born Baruj Benacerraf of Harvard University, a US citizen; George D. Snell of the Jackson Laboratory in Bar Harbor, Maine, and Jean Dausset of France. The peace prize was awarded to Argentine human rights activist Adolfo Perez Esquivel.

Two Americans - James Cronin of the University of Chicago and Val L. Fitch of Princeton - shared the physics prize. The prize in chemistry went to Americans Paul Berg of Stanford University and Walter Gilbert of Harvard and Briton Frederick Sanger.

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