Hostname: page-component-586b7cd67f-gb8f7 Total loading time: 0 Render date: 2024-11-22T21:19:58.328Z Has data issue: false hasContentIssue false
  • English
  • Français

FROM UNCERTAINTY TO MACROECONOMICS AND BACK: AN INTERVIEW WITH JACQUES DRÈZE

Published online by Cambridge University Press:  14 July 2005

Pierre Dehez  and
Omar Licandro
Pierre Dehez
Affiliation:
Université Catholique de Louvain
Omar Licandro
Affiliation:
European University Institute, May 2004
Get access Rights & Permissions [Opens in a new window]

Abstract

Jacques Drèze was born in Verviers, Belgium, in 1929 and completed his Ph.D. in Economics in 1958 at Columbia. His contribution to economics is exceptional, opening up new paths of research in various areas including general equilibrium, decision theory, game theory, econometrics (in particular, Bayesian econometrics), followed by contributions to macroeconomics and economic policy. Drèze has been president of the Econometric Society as well as associate editor and co-editor of Econometrica; founding member and first president of the European Economic Association; president of the International Economic Association and honorary member of the American Economic Association and the National Academy of Sciences. He has received 15 honorary doctorates, including one from the University of Chicago. He has engaged in the promotion and development of research and higher education in Europe, being a founding member of the Centre for Operations Research and Econometrics (CORE) and of the European Doctoral Program in Quantitative Economics (EDP). He has also actively participated in the most pressing economic problems in Europe.

The interview mainly aims at inviting Jacques Drèze to explain what have been his major contributions and what avenues he suggests for future research in macroeconomics. The interview has been conducted sequentially. It started in October 2002 at the European University Institute. The long material collected along these highly illuminating talks was polished and condensed in the following pages. They are organized in the following way. The first section refers to Jacques' initial experiences in Belgium followed by his study of economics in the United States. The second section is devoted to the unity underlying an apparent diversity in his research interests. The third section is devoted to his more recent contributions to macroeconomics, which may be stated as “incomplete markets drive multiplicity of equilibria, calling for active economic policies.” The interview concludes with his contribution to the promotion of research and, in particular, research institutions across Europe.

Both Pierre Dehez and Omar Licandro were students of Jacques Drèze. Dehez and Drèze co-authored several papers, some of which are mentioned in the interview.

Keywords

UncertaintyGeneral EquilibriumSecond-Best RigiditiesCoordination Failures
Type
MD INTERVIEW
Information
Macroeconomic Dynamics , Volume 9 , Issue 3 , June 2005 , pp. 429 - 461
Copyright
© 2005 Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Arrow Kenneth 1953 The role of securities in the optimal allocation of risk bearing. Econometrie 11, 41– 47.Google Scholar
Aumann R.J. & J.H. Drèze 1975 Cooperative games with coalition structures. International Journal of Game Theory 3, 217– 237.Google Scholar
Aumann R.J. & J.H. Drèze 1987 Values of markets with satiation or fixed prices. Econometrica 54, 1271– 1318.Google Scholar
Aumann R.J. & J.H. Drèze 2004 Assessing Strategic Risk, DP 361, Center for the Study of Rationality Hebrew University of Jerusalem.
Azariadis C. 1975 Implicit contracts and underemployment equilibria. Journal of Political Economy LXIII, 1183– 1202.Google Scholar
Baily M.N. 1974 Wages and unemployment under uncertain demand. Review of Economic Studies XLI, 37– 50.Google Scholar
Barro Robert J. and Sanford J. Grossman 1976 Money, Employment and Inflation. New York: Cambridge University Press.
Blanchard O.J. and S. Fisher 1989 Lectures on Macroeconomics. Cambridge, MA: MIT Press.
Bloise G., J.H. Drèze & H. Polemarchakis 2005 Monetary equilibria over an infinite horizon. Economic Theory 25, 51– 74.Google Scholar
Champsaur P., J.H. Drèze & C. Henry 1977 Stability theorems with economic applications. Econometrica 45, 273– 294.Google Scholar
Citanna A., H. Crès, J.H. Drèze, P.J.J. Herings & A. Villanacci 2001 Continua of underemployment equilibria reflecting coordination failures, also at Walrasian prices. Journal of Mathematical Economics 36, 169– 200.Google Scholar
Cooper Russell & Andrew John 1988 Coordinating coordination failures in Keynesian models. Quarterly Journal of Economics 103, 441– 463.Google Scholar
Debreu Gérard 1959 The Theory of Value: An Axiomatic Analysis of Economic Equilibrium. New York: Wiley.
Dehez P. & Jacques Drèze 1982 State-dependent utility, the demand for insurance and the value of safety. In M.W. Jones-Lee (ed.), The Value of Life and Safety, Proceedings of a Conference held by The Geneva Association, pp. 41– 65 Amsterdam: North-Holland.
Dehez P. & Jacques Drèze 1984 On supply-constrained equilibria. Journal of Economic Theory 33, 172– 182.Google Scholar
Dehez P. & Jacques Drèze 1988 Competitive equilibria with quantity-taking producers and increasing returns to scale. Journal of Mathematical Economics 17, 209– 230.Google Scholar
Dehez P., Jacques Drèze & T. Suzuki 2003 Imperfect competition à la Negishi, also with fixed costs. Journal of Mathematical Economics 39, 219– 238.Google Scholar
Diamond Peter 1967 The role of a stock market in a general equilibrium model with technological uncertainty. American Economic Review 57, 759– 776.Google Scholar
Drèze Jacques 1961 Les fondements logiques de l'utilité cardinale et de la probabilité subjective. In La Décision, Colloques Internationaux du CNRS, pp. 73– 97. Paris: CNRS.
Drèze Jacques 1962 L'utilité sociale d'une vie humaine. Revue Française de Recherche Opérationnelle 23, 93– 118.Google Scholar
Drèze Jacques 1964 Some postwar contributions of French economists to theory and public policy. American Economic Review 54 (2), 1– 64.Google Scholar
Drèze Jacques 1971 Market allocation under uncertainty. European Economic Review 2, 133– 165.Google Scholar
Drèze Jacques 1972 Econometrics and decision theory. Econometrica 40, 1– 17.Google Scholar
Drèze Jacques 1974a Bayesian theory of identification in simultaneous equations models. In S.E. Fienberg & A. Zellner (eds.), Studies in Bayesian Econometrics and Statistics, pp. 159– 174. Amsterdam: North-Holland.
Drèze Jacques 2001b Introduction: advances and challenges in Macroeconomics. In J. H. Drèze (ed.), The Theory of Unemployment Reconsidered, pp. 1– 16. New York: Palgrave.
Drèze Jacques 1974b Investment under private ownership: optimality, equilibrium and stability, Ch. 9. In Allocation Under Uncertainty: Equilibrium and Optimality. London: Macmillan.
Drèze Jacques 1975 Existence of an exchange equilibrium under price rigidities. International Economic Review 16, 301– 320.Google Scholar
Drèze Jacques 1976a Bayesian limited information analysis of the simultaneous equations model. Econometrica 44, 1045– 1075.Google Scholar
Drèze Jacques 1976b Some theory of labour management and participation. Econometrica 44, 1125– 1139.Google Scholar
Drèze Jacques 1980 Public goods with exclusion. Journal of Public Economics 13, 5– 24.Google Scholar
Drèze Jacques 1985a Second-best analysis with markets in disequilibrium: public sector pricing in a Keynesian regime. In M. Marchand, Pierre Pestieau & Henry Tulkens (eds.), The Performance of Public Enterprises: Concepts and Measurement, pp. 45– 79. Amsterdam and New York: North-Holland; also reprinted in European Economic Review 29, 263–301.
Drèze Jacques 1987a Decision theory with moral hazard and state-dependent preferences. In J. Drèze, Essays in Economic Decisions Under Uncertainty, Ch. 2. Cambridge, UK: Cambridge University Press.
Drèze Jacques 1985b (Uncertainty and) the firm in general equilibrium theory. Economic Journal 95 (Suppl.: Conference Papers), 1– 20.Google Scholar
Drèze Jacques 1987b Underemployment: from theory to econometrics and policy. European Economic Review 31, 9– 34.Google Scholar
Drèze Jacques 1989 Labour Management, Contracts, and Capital Markets: A General Equilibrium Approach. Oxford and New York: Basil Blackwell.
Drèze Jacques 1990 The role of securities and labor contracts in the optimal allocation of risk-bearing. In H. Loubergé (ed.), Risk, Information and Insurance. Essays in the Memory of Kark H. Borch, pp. 245– 270. Boston: Kluwer Academic.
Drèze Jacques 1991 Stability of a Keynesian adjustment process. In Barnett W.A., B. Cornet, C. d'Aspremont, J.J. Gabszewicz and A. Mas-Colell (eds.), Equilibrium Theory and Applications, pp. 197– 231. Cambridge, UK: Cambridge University Press.
Drèze Jacques 1992 Money and Uncertainty: Inflation, Interest, Indexation. Rome: Edizioni Dell' Elefante.
Drèze Jacques 1993 Can varying social insurance contributions improve labour market efficiency? In A.B. Atkinson (ed.), Alternative to Capitalism: The Economics of Partnership, pp. 161– 200. London: Macmillan.
Drèze Jacques 1997 Walras-Keynes equilibria: coordination and macroeconomics. European Economic Review 41, 1737– 1762.Google Scholar
Drèze Jacques 1999 On the dynamics of supply-constrained equilibria. In Heerings P.J.J., G. van der Laan and A.J.J. Talman (eds.), Theory of Markets, pp. 7– 25. Amsterdam: North-Holland.
Drèze Jacques 2000 Economic and social security in the twenty-first century, with attention to Europe. Scandinavian Journal of Economics 102, 327– 348.Google Scholar
Drèze Jacques 2001a On the macroeconomics of uncertainty and incomplete markets. Recherches Economiques de Louvain 67, 5– 30; reprinted in J. H. Drèze (ed.), Advances in Macroeconomics, Ch. 3, London: Macmillan.Google Scholar
Drèze Jacques 2001b Introduction: advances and challenges in Macroeconomics. In Drèze J.H. (ed.), The Theory of Unemployment Reconsidered, pp. 1– 16. New York: Palgrave.
Drèze Jacques 2002 Economic and social security: the role of the EU: 15th Tinbergen Lecture. De Economist 150, 1– 18.Google Scholar
Drèze Jacques & C. Bean 1990 Europe's unemployment problem: introduction and synthesis. In J.H. Drèze, Charles Bean, Jean-Paul Lambert, Fatemeh Mehta, and Henri Sneessens (eds.), Europe's Unemployment Problem, Ch. 1. Cambridge, MA: MIT Press.
Drèze Jacques 1972 A tatonnement process for investment under uncertainty in private ownership economies. In G.P. Szegö & K. Shell (eds.), Mathematical Methods in Investment and Finance, pp. 3– 23. Amsterdam: North-Holland.
Drèze Jacques & C. Gollier 1993 Risk sharing on the labour market and second-best wage rigidities. European Economic Review 37, 1457– 1482.Google Scholar
Drèze Jacques & J. Greenberg 1980 Hedonic coalitions: optimality and stability. Econometrica 48, 987– 1003.Google Scholar
Drèze Jacques & M. Marchand 1976 Pricing, spending and gambling rules for non-profit organisations. In R.E. Grieson (ed.), Public and Urban Economics: Essays in Honor of William S. Vickrey, pp. 59– 89. Lexington, KY: Lexington Books.
Drèze Jacques & F. Modigliani 1972 Consumption decisions under uncertainty. Journal of Economic Theory 5, 308– 335.Google Scholar
Drèze Jacques & J.-A. Morales 1976 Bayesian full information analysis of simultaneous equations. Journal of the American Statistical Association 71, 919– 923.Google Scholar
Drèze Jacques & H. Müller 1980 Optimality properties of rationing schemes. Journal of Economic Theory 23, 131– 149.Google Scholar
Drèze Jacques & H.M. Polemarchakis 2001 Monetary equilibria. In G. Debreu, W. Neuefeind, and W. Trockel (eds.), Economics Essays, A Festschrift for Werner Hildenbrand, Ch. 5. Berlin, Heidelberg, and New York: Springer.
Drèze Jacques & A. Rustichini 2004 State-dependent utility and decision theory. In S. Barbera, P. Hammond & C. Seidl, (eds.), Handbook of Utility Theory, Vol. 2, pp. 839– 892. Dordrecht, The Netherlands: Kluwer.
Drèze Jacques, C. Wyplosz, C. Bean, F. Giavazzi & H. Giersch 1988 The two-handed growth strategy for Europe: autonomy through flexible cooperation. Recherches Economiques de Louvain 54, 5– 52.Google Scholar
Drèze Jacques, Charles Bean, Jean-Paul Lambert, Fatemeh Mehta & Henri Sneessens (eds.) 1990 Europe's Unemployment Problem. Cambridge, MA: MIT Press.
Drèze Jacques, E. Malinvaud, P. De Grauwe, L. Gevers, A. Italianer, O. Lefebvre, M. Marchand, H. Sneesens, A. Steinherr, Paul Champsaur, J.-M. Charpin, J.-P. Fitoussi & G. Laroque 1994 Growth and employment: the scope for a European initiative. European Economy, Reports and Studies 1, 75– 106.Google Scholar
Drèze Jacques, A. Durré & H. Sneessens 1998 Investment stimulation, with the example of housing. Recherches Economiques de Louvain 66, 33– 53.Google Scholar
Gabszewicz J.J. and J. Drèze 1971 Syndicates of traders in an exchange economy. In Kuhn H.W. and G.P. Szegö (eds.), Differential Games and Related Topics, pp. 399– 414. Cambridge, MA: MIT Press.
Geanakoplos J., M. Magill, M. Quinzii & Jacques Drèze 1990 Generic inefficiency of stock-market equilibrium when markets are incomplete. Journal of Mathematical Economics 19, 113– 151.Google Scholar
Gordon D.F. 1974 A neoclassical theory of contracts. Economic Inquiry 12, 431– 459.Google Scholar
Grandmont Jean-Michel 1977 Temporary general equilibrium theory. Econometrica 45, 535– 572.Google Scholar
Grossman S.J. and O.D. Hart 1979 A theory of competitive equilibrium in stock market economies. Econometrica 47, 293– 329.Google Scholar
Harrison J.M. and D.M. Kreps 1979 Martingales and arbitrage in multiperiod securities markets. Journal of Economic Theory 20, 381– 408.Google Scholar
Herings P.J.J. 1996 Static and Dynamic Aspects of General Equilibrium Theory. Dordrecht, German: Kluwer.
Hey J. 1988 Review of “Essays on economic decisions under uncertainty.” Economic Journal, 196– 197.Google Scholar
Lange Oskar and Fred Taylor 1938 On the Economic Theory of Socialism. Minneapolis: The University of Minnesota Press.
Malinvaud E. 1977 The Theory of Unemployment Reconsidered. Basil: Blackwell.
Phelps Edmund 1997 Rewarding Work: How to Restore Participation and Self-Support to Free Enterprise. Cambridge, MA: Harvard University Press.
Radner Roy 1972 Existence of equilibrium of plans, prices, price expectations in a sequence of markets. Econometrica 40, 289– 303.Google Scholar
Robert J. 1989 Equilibrium without market clearing. In Cornet B. and H. Tulkens (eds.), Contributions to Operations Research and Economics. Cambridge, MA: MIT Press.
Sandmo Agnar & Jacques Drèze 1971. Discount rates for public investments in closed and open economies. Economica 38, 152, 395– 412.Google Scholar
Savage L.J. 1972 The Foundations of Statistics. New York: Dover.
Sneessens H. & Jacques Drèze 1986 A discussion of Belgian unemployment, combining traditional concepts and disequilibrium econometrics. Economica 53, 89– 119.Google Scholar
Wald Abraham 1950 Statistical Decision Functions. New York: John Wiley.