Luiss honors Professor Edmund Phelps

Luiss Guido Carli extends its deepest condolences on the passing of Edmund Phelps, Nobel Prize laureate in Economics and Professor Emeritus at Columbia University. We remember him with admiration for his extraordinary scientific depth and the long-standing collaboration with our university.

Professor Phelps was a key figure in several Luiss initiatives, particularly from 2008-2009 onwards. During that period, he made a fundamental contribution as a leading member of LIGEP (Luiss International Group on Economic Policy), the prestigious international research group established by the University under then-Rector Massimo Egidi and coordinated by Jean-Paul Fitoussi. The group’s aim was to examine economic policy issues and the structural weaknesses of the economy in the aftermath of the global crisis that had affected the world, Europe, and Italy, with a view to formulating long-term economic policy responses that went beyond simply managing the cyclical crisis. In this context, Professor Phelps' contribution helped steer the scientific debate towards the need for structural reforms focused on dynamism, innovation, and total factor productivity – the central and pioneering pillars of his research.

The relationship of mutual respect between Edmund Phelps and Luiss grew stronger over time, culminating on 18 January 2018 with the award of an honorary degree in Management, presented to him at the start of the 2017–2018 academic year. On that solemn occasion, Phelps delivered a highly acclaimed lectio magistralis focusing on the importance of economic vitality and widespread well-being, reiterating the urgent need to foster an economy based on grassroots innovation to counter the risk of stagnation.

Edmund Phelps' great achievement was to have revolutionised macroeconomics. Thanks to him, the aggregate dynamics of inflation, output, and employment were seen as the result of individual decisions made in the face of uncertainty and incomplete information. This insight is encapsulated in his famous “islands parable”, which redefined the Phillips curve and still underpins the models used by global central banks. His countless contributions range from the famous “golden rule” in growth theory to studies on how to encourage participation in the labour market. They essentially revolve around three conceptual cornerstones: the absolute centrality of human creativity and innovation as drivers of prosperity, coupled with the rejection of any institutional barriers to new ideas; a profound scepticism about the effectiveness of public demand-side policies in stimulating economic growth; and an analysis of the structural and long-term causes of mass unemployment.

With his passing, the international scientific community loses an irreplaceable guiding light; Luiss loses a mentor and a friend, whose teachings will continue to inspire future generations of economists at our university.