Thanks to Dr. Janet Yellen, the Most Powerful Figure in World Finance, for Speaking at UMass Amherst

Those of us who are in academia get to meet and interact with leaders on the world stage.

This can happen through our work, through serendipity, because we tend to travel a lot, and also through various speaking venues.

This past Thursday, UMass Amherst was host to Dr. Janet Yellen, the Chair of the Board of Governors of the Federal Reserve system. She has been called the most powerful figure in world finance and she spoke to an audience of almost 2,000 in the UMass Fine Arts Center, beginning shortly after 5PM. She only gives a few public speeches a year, so this speech was eagerly anticipated,  and her lecture was the Philip Gamble Memorial lecture. 

 

The Gamble lecture series has brought renowned economists to UMass Amherst. Last year the speaker was Thomas Piketty, whom I blogged about, and, in 2011, it was the Nobel laureate, Elinor Ostrom, the first female Nobel laureate in Economic Sciences. She died of cancer in 2012. And, in 2012, Professor George Akerlof, also a Nobel laureate, who is  Yellen's husband, delivered the Gamble lecture.  His first paper on information asymmetry, which has inspired several of my papers on supply chains and information asymmetry, which I wrote with Dong "Michelle" Li, was rejected 3 times before it was finally accepted for publication in a journal and for this work he received the Nobel prize in Economic Sciences! Our first publication on the topic was: Equilibria and Dynamics of Supply Chain Network Competition with Information Asymmetry in Quality and Minimum Quality Standards, Anna Nagurney and Dong Li, Computational Management Science 11(3): (2014) pp 285-315.

Back in 2002, the Nobel laureate, John F. Nash, delivered the Gamble lecture. I have cited his work in probably close to 100 papers that I have written. He passed away last May in a car crash in which his wife also died, having just returned from Norway, where he was awarded the Abel prize from the king.

I had the pleasure of sitting during Yellen's lecture next to my great Finance colleague, Professor Ben Branch, and to my husband. Ben had heard Yellen speak a few years back at the Financial Management Association meeting so he gave me an excellent preview of what to expect. She would read from a script and there would be no questions. Professor Michael Ash, the chair of our Economics Department, introduced Yellen and emphasized that she was the first female head in the Federal Reserve system's history.

Since her words have so much clout and can literally move markets, her speeches have to be very precise and carefully constructed. Her speech was on Inflation Dynamics and Monetary Policy.. In her speech she emphasized the dual goals of full employment and keeping the inflation rate at 2%. She presented numerous graphs and discussed inflation also from a historical perspective dating to the 1960s. She noted highlights from the Federal Open Market Committee (FOMC). About 50 minutes into her speech, she made what Professor Ben Branch said to me was the newsworthy announcement and that many were awaiting - that the interest rate will be gradually increased. This statement made national and  international news including The New York Times and The Wall Street Journal.

Shortly, thereafter, she went silent and the audience was completely still, in suspense. She coughed a bit, found her place again, went silent again, and stated that she would end now.  Needless to say, we were all very anxious and concerned and as we exited with several students and faculty form the Isenberg School I wondered whether she had been thirsty. I did not see her take a break to drink some water or to catch her breath during about 50 minutes of continuous speaking.

We also saw an ambulance stop at the Fine Arts Center. She had been dehydrated and once EMTs treated her,  given her impact, this also made news. She recovered and then enjoyed dinner with our Chancellor, Dr. Kumble Subbaswamy, and special guests.

Dr. Yellen received her undergraduate degree at my alma mater, Brown University.  It is pretty cool that we are both on the same Wikipedia page as notable Brown University alumni.  I am under "Academia" and she is under "Advisors."

I hope that all is well with her and that the Federal Research system, the US, and the world, can still count on her leadership and monetary policy wisdom.

Information Asymmetry, Nobel Prize in Economics, and Favorite Chidlren's Books

In a recent post I wrote about the 2013 Nobel laureates in Economic Sciences and connections to and  reflections on Operations Research.

In parallel, I have been doing research, when not conferencing and teaching, on supply chains and information asymmetry.

Of course, George A. Akerlof's paper, "The Market for "lemons": Quality Uncertainty with the Market Mechanism," published in The Quarterly Journal of Economics in 1970 is the classic in information asymmetry. And, you may recall that I wrote about believing in your work, since this paper was rejected by journals 3 times, and then was published and earned Akerlof the Nobel Prize in Economic Sciences in 2001.

Akerlof is married to Janet Yellen, who has been in the news a lot lately since  President Obama has selected her to be the next chair of the Federal Reserve Bank, succeeding Ben Bernanke. She and I share the same undergraduate alma mater, Brown University, although we did not overlap in our studies. She then went on to receive her PhD at Yale in economics.

Also, the most recent paper that my team at the Supernetworks Center wrote was inspired by Akerlof's lemon paper. The paper is Spatial Price Equilibrium with Information Asymmetry in Quality, Anna Nagurney, Dong Li, and Ladimer S. Nagurney. We are completing another paper on this general theme and have authored several papers on quality and supply chains as well as quality and the future Internet.

Coincidentally, in preparing my blogpost on the 2013 Nobel laureates, I came across George Akerlof's Nobel Prize acceptance speech and I have been smiling ever since.

He begins his Nobel speech Behavioral Macroeconomics and Macroeconomic Behavior (the text is here) with: Think about Richard Scarry’s Cars and Trucks and Things That Go. Think about what that book would have looked like in sequential decades of the last century had Richard Scarry been alive in each of them to delight and amuse children and parents. Each subsequent decade has seen the development of ever more specialized vehicles. We started with the model-T Ford. We now have more models of backhoe loaders than even the most precocious four- year old can identify.

Can you believe it -- starting a Nobel prize speech by acknowledging a children's book and in a series which was one of my daughter's favorites as a child. When we traveled and lived n Europe we would see Richard Scarry's books in bookstores and libraries with such favorite characters as Huckle Cat and Lowly Worm in different languages. The humor, lessons, and imagination in these books we treasured and we have kept many in our collection.

Below, I feature a photo taken yesterday of some of our favorite Richard Scarry books in honor of Akerlof and his work and his wife, whom he acknowledged in his speech.

Never lose your sense of wonder and never give up! And when life gives you lemons, make lemonade!

Akerlof mentioned Robert Shiller's work in his Nobel speech and Shiller is sharing the 2013 Prize with Fama and Hansen -- small world!

Since Akerlof and Yellen have a son, who has a PhD in economics, and is also a professor,  I suspect that they read Richard Scarry books to him when he was a child.