In a recent statement, Joe Biden has highlighted concerns from sixteen esteemed economists, all Nobel Prize winners, warning that a second term for Donald Trump could lead to increased inflation. The letter signed by these economists outlines their concerns about the economic ramifications of a Trump presidency.
The letter reads:
We the undersigned are deeply concerned about the risks of a second Trump administration for the U.S. economy.
Among the most important determinants of economic success are the rule of law and economic and political certainty. For a country like the U.S., which is embedded in deep relationships with other countries, conforming to international norms and having normal and stable relationships with other countries is also an imperative. Donald Trump and the vagaries of his actions and policies threaten this stability and the U.S.’s standing in the world.
While each of us has different views on the particulars of various economic policies, we all agree that Joe Biden’s economic agenda is vastly superior to Donald Trump’s. In his first four years as President, Joe Biden signed into law major investments in the U.S. economy, including in infrastructure, domestic manufacturing, and climate. Together, these investments are likely to increase productivity and economic growth while lowering long-term inflationary pressures and facilitating the clean energy transition.
During Joe Biden’s presidency we have also seen a remarkably strong and equitable labor market recovery — enabled by his pandemic stimulus. An additional four years of Joe Biden’s presidency would allow him to continue supporting an inclusive U.S. economic recovery.
Many Americans are concerned about inflation, which has come down remarkably fast. There is rightly a worry that Donald Trump will reignite this inflation, with his fiscally irresponsible budgets. Nonpartisan researchers, including at Evercore, Allianz, Oxford Economics, and the Peterson Institute, predict that if Donald Trump successfully enacts his agenda, it will increase inflation.
The outcome of this election will have economic repercussions for years, and possibly decades, to come. We believe that a second Trump term would have a negative impact on the U.S.’s economic standing in the world and a destabilizing effect on the U.S.’s domestic economy.
Signed,
The Signatories: Who Are These Economists?
1. George A. Akerlof (2001)
- Background: American economist, university professor at Georgetown University, and Koshland Professor of Economics Emeritus at UC Berkeley.
- Notable Work: Nobel Prize for contributions to the understanding of markets with asymmetric information. Husband of Janet Yellen, U.S. Secretary of the Treasury.
2. Sir Angus Deaton (2015)
- Background: British-American economist, Dwight D. Eisenhower Professor of Economics and International Affairs Emeritus at Princeton University.
- Notable Work: Nobel Prize for analysis of consumption, poverty, and welfare.
3. Claudia Goldin (2023)
- Background: American economic historian and labor economist, Henry Lee Professor of Economics at Harvard University.
- Notable Work: Nobel Prize for advancing understanding of women’s labor market outcomes.
4. Sir Oliver Hart (2016)
- Background: British-born American economist, Lewis P. and Linda L. Geyser University Professor at Harvard University.
- Notable Work: Nobel Prize for contributions to contract theory.
5. Eric S. Maskin (2007)
- Background: American economist and mathematician, Adams University Professor at Harvard University.
- Notable Work: Nobel Prize for foundational work on mechanism design theory.
6. Daniel L. McFadden (2000)
- Background: American economist and econometrician, Presidential Professor of Health Economics at USC.
- Notable Work: Nobel Prize for development of methods for analyzing discrete choice behavior.
7. Paul R. Milgrom (2020)
- Background: American economist, known for auction theory, co-creator of the no-trade theorem.
- Notable Work: Nobel Prize for improvements to auction theory.
8. Roger B. Myerson (2007)
- Background: American economist, professor at the University of Chicago.
- Notable Work: Nobel Prize for work on mechanism design theory.
9. Edmund S. Phelps (2006)
- Background: American economist, founder of Columbia’s Center on Capitalism and Society.
- Notable Work: Nobel Prize for demonstrating the golden rule savings rate.
10. Paul M. Romer (2018)
- Background: American economist, University Professor in Economics at Boston College.
- Notable Work: Nobel Prize for contributions to endogenous growth theory.
11. Alvin E. Roth (2012)
- Background: American economist, Craig and Susan McCaw Professor of Economics at Stanford University.
- Notable Work: Nobel Prize for work on market design and experimental economics.
12. William F. Sharpe (1990)
- Background: American economist, STANCO 25 Professor of Finance Emeritus at Stanford University.
- Notable Work: Nobel Prize for contributions to financial economics, creator of the Sharpe ratio.
13. Robert J. Shiller (2013)
- Background: American economist, Sterling Professor of Economics at Yale University.
- Notable Work: Nobel Prize for empirical analysis of asset prices.
14. Christopher A. Sims (2011)
- Background: American econometrician and macroeconomist, John J.F. Sherrerd ’52 University Professor of Economics at Princeton University.
- Notable Work: Nobel Prize for research on cause and effect in the macroeconomy.
15. Joseph E. Stiglitz (2001)
- Background: American economist, University Professor at Columbia University.
- Notable Work: Nobel Prize for research on information asymmetry.
16. Robert B. Wilson (2020)
- Background: American economist, Adams Distinguished Professor of Management, Emeritus at Stanford University.
- Notable Work: Nobel Prize for contributions to auction theory.
Analysis
Despite their credentials, it’s noteworthy that many of these Nobel laureates were awarded for their work in specialized areas such as game theory, rather than macroeconomic policy or inflation forecasting. This raises questions about their expertise in predicting inflation outcomes from policy decisions.
In their letter, they emphasize concerns over Trump’s approach to fiscal responsibility and international relations. They argue that Biden’s economic agenda, marked by significant investments in infrastructure and manufacturing, is better suited to maintaining economic stability and controlling inflation.
The concerns raised by these Nobel-winning economists suggest that the upcoming election could have significant economic repercussions. However, the relevance of their specialized fields to the broader economic issues at hand, particularly inflation, should be carefully considered. As the election draws near, voters must weigh these expert opinions alongside their own views and experiences.