Lars Peter Hansen named founding director of Milton Friedman Institute for Research in Economics

Lars Peter Hansen, an internationally known leader in economic dynamics, has been named the founding director of the University of Chicago's Milton Friedman Institute for Research in Economics.

Hansen, the Homer J. Livingston Distinguished Service Professor in Economics and the College at the University, has been one of the forces behind the development of the Institute. He served as chairman of the faculty steering committee that recommended MFI's creation and gave it scholarly direction, and he has helped build a robust program for the Institute following its launch in July 2008.

Entering its second year, MFI has become a destination for top economists from around the world, who have come to Chicago to explore themes as diverse as market liquidity, computational economics and the economics of the family.

Formed in collaboration with the University's Department of Economics, the University of Chicago Booth School of Business and the Law School, MFI builds upon the best of Chicago's history of groundbreaking scholarship in economics, bringing together faculty, visiting scholars and students at every level to create new economic models based on the highest quality empirical evidence.

"Lars Peter Hansen has set the standard for a new generation of Chicago economists who lead their field in intellectual rigor and empirical integrity," said President Robert J. Zimmer. "There is no better choice to lead this endeavor, which represents the qualities that make scholarship here distinctive."

Hansen said that at a time when economic scholarship itself is receiving worldwide scrutiny, MFI best contributes to the field by supporting work that transcends traditional boundaries of study, and provides a place where the very best scholars can trade ideas and arguments.

"By bringing together top-caliber scholars and truly original thinkers, MFI will stimulate new ideas and research, as well as provide a vehicle for disseminating those findings to key audiences around the world," Hansen said. "It has the power not only to advance an academic field, but to encourage new directions of inquiry."

In its first year, the Institute hosted visiting fellows such as Pierre-Andr'e Chiappori of Columbia University; Ernst Fehr, Director of the Institute for Empirical Research in Economics at the University of Zurich; former Chicago Booth faculty member Monika Piazzesi, now at Stanford University; and Jean-Marc Robin of University of Paris-Sorbonne and University College London.

MFI also has hosted a robust schedule of guest lectures and a variety of workshops this year, including "Finance and Development" in May, "Heterogeneity in Labor Markets" in April, "Liquidity, Solvency and Bubbles in Financial Markets" in March and "New Economics of the Family" in February.

Colleagues say those wide-ranging interests are a hallmark of Hansen's work.

"Lars Peter Hansen is a scholar's scholar who has devoted his academic life to using insights from mathematics and statistics to improve our understanding of how the economy works. He has been gifted in spotting interesting new problems and formulating long-standing problems in new ways," said Thomas Sargent, Berkley Professor of Economics and Business at New York University. "This makes him an ideal choice to be the founding director of the Milton Friedman Institute for Research in Economics."

Gary Becker, University Professor in Economics, Sociology and Chicago Booth, also noted Hansen's research and leadership. "Lars is a pioneer in the development and application of rigorous methods to estimate, test and interpret financial and other macro data, and his work provides a foundation for research in that field. As chairman of the Department of Economics, Lars provided exceptional leadership. As MFI faculty steering committee chair, he has helped us develop a vision to make the Institute a center with the highest possible academic standards," said Becker.

Looking forward, MFI will host the upcoming workshops: "New Directions in the Economic Analysis of Education" in November, "Measuring and Analyzing Economic Development" in February and "New Developments in Monetary Economics" in May. The Institute also will co-host a number of other conferences on campus.

Upcoming workshop participants and visiting scholars include Angus Deaton of Princeton University, Robert Hall of Stanford University, Neil Wallace of Penn State University, Alwyn Young of the London School of Economics and Political Science, and Matthew Stephenson of Harvard Law School.

At MFI, they will be able to take part in a deep tradition of interdisciplinary and innovative economic thinking on a faculty that has included 10 Nobel laureates, beginning with Milton Friedman. Three of those laureates serve on the MFI faculty steering committee.

Hansen's research looks at ways to bridge the gap between dynamic economic theories and data. His work has led to improved methods for formulating, analyzing and testing models of dynamic economies. He has applied these methods to study the determinants of consumption, savings and security market prices in the presence of uncertainty.

Hansen joined the University of Chicago faculty in 1981 and later served as chairman of Economics. Among the many honors he has received are the 2008 CME-MSRI Prize for Innovative Quantitative Applications; the Faculty Award in graduate teaching from the University of Chicago; the Frisch Medal from the Econometric Society, awarded biennially for the best empirical paper in the journal Econometrica; and the 2006 Erwin Plein Nemmers Prize in Economics from Northwestern University. He is a member of the National Academy of Sciences and the American Academy of Arts and Sciences, and is a fellow of the Econometric Society and the American Finance Association. He is a former John Simon Guggenheim Memorial Foundation fellow and a Sloan Foundation fellow. In 2007 he became president of the Econometric Society.

Over the past century, the University of Chicago has shaped how academics, business leaders, citizens and governments worldwide think about economics and its relationship to society. Chicago economics is known for its intellectual rigor and for systematically employing economic theory and empirical evidence to address questions of fundamental importance.

MFI was established in July 2008 to build on that legacy, developing ground-breaking economic applications relating to issues such as the cultivation of human capital, the economics of the family, human productivity, finance, entrepreneurship and wealth creation. The Institute has been carefully designed to create a new culture of scholarship that, by nourishing collaborations across disciplines and generations of scholars, results in highly creative approaches and transformative methods and theories in economics research.