Birthday: September 14, 1920
Died At Age: 93
Sun Sign: Virgo
Born in: Omaha, Nebraska, U.S.
Famous as: Economist
father: Leo Byron Klein
mother: Blanche Monheit
children: Hannah, Jonathan, Rachel, Rebecca
Died on: October 20, 2013
place of death: Gladwyne, Pennsylvania, U.S.
U.S. State: Nebraska
City: Omaha, Nebraska
awards: John Bates Clark Medal (1959)
Nobel Memorial Prize in Economic Sciences (1980)
Lawrence R. Klein was American economist who received the Nobel Prize in Economic Sciences for the models he created to analyze the fluctuations of the world economy especially the economy of the United States. He based his model on the model developed by Jan Tinbergen earlier and was able to successfully predict the effect of taxes, expenditure and other factors on the American economy. He started developing various models for the analysis of the economic conditions while he was still an undergraduate student. The models he developed became better with time and he was able to predict successfully what the economy had in store for the American people in the future. With the end of the Second World War the general idea was that the American and consequently the world economy would slide into a depression. But Klein was able to predict with the model developed by him that nothing like this would happen to the economy. The economy would rather get a boost from the demand for more consumer goods and the increased purchasing power of the soldiers who returned from the war with pockets filled with salaries. He was also right in predicting that the Korean War would have a very low impact on the economy.
Childhood & Early Life
Lawrence Klein was born in Omaha, Nebraska on September 14, 1920 to Leo Byron Klein and Blanche Monheit who were both from the ‘American Middle West’.
He had an elder brother and a younger sister.
His early education took place at a public school in Omaha. His high school training helped him to become proficient in English, history, languages and mathematics.
He grew up during the Great Depression which had a profound impact on his future life and career. His experiences during this period helped him build models that would successfully predict the pre-war and post-war economic condition in America.
He graduated from the ‘Los Angeles City College’ where he studied calculus and other subjects.
After this he joined the ‘University of California’ at Berkeley from where he finished his B.A. degree in Economics in 1942.
He joined the ‘Massachusetts Institute of Technology’ and completed his PhD in Economics from there in 1944.
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After receiving his PhD from MIT he joined the ‘Cowles Commission for Research in Economics’ (currently the ‘Cowles Foundation’), which was located at the ‘University of Chicago’. While working here he built an economic model by using an earlier one developed by Dutch economist Jan Tinbergen as a starting point to analyze and forecast the impact of government policies and prevailing conditions on the American economy.
After the end of the Second World War he used his econometric model to correctly predict, against majority opinion, an economic upturn rather than a depression.
He was briefly a member of the Communist Party in America from 1946 to 1947 which caused problems in his career later.
He moved to the ‘University of Michigan’ and developed even more complicated and bigger economic models which helped him predict the future economic conditions in a better way. During this period he built the famous Klein-Goldberger economic model with the help of a graduate student, Arthur S. Goldberger.
In 1954 he had to move to the ‘Oxford University’ in England as he was not allowed to stay on at the ‘University of Michigan’ during the McCarthy era due to his previous Communist Party association. He built a model for the British economy while he was at Oxford. He also helped in developing a model for the ‘British Savings Surveys’ which was based on the ‘Michigan Surveys’.
In 1958 he returned to the US and joined the ‘Department of Economics’ at the ‘University of Pennsylvania’. He worked as a professor of economics and finance in the ‘Wharton School’ up to 1968.
In early 1960 he led the team dealing with the ‘Brookings-SSRC Project’ and helped to build an econometric model which could be used to forecast the effects of short-term economic development in the United States.
During the late 1960s of his tenure at the ‘Wharton School’ he developed the famous ‘Wharton Econometric Forecasting Model’ for the American economy. This model consisted of thousands of equations that had to be simultaneously calculated on a computer to reach a final result.
He created the ‘Wharton Econometric Forecasting Associates’ or WEFA in 1969. This came to be known as ‘IHS Global Insight’ later.
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He was the initiator and the leader of the LINK project which was a model that could show a reflection in the economies of all countries when a change occurred in any country. Presently this model is operated by the United Nations.
Klein joined the economic task force set-up by the American President Jimmy Carter in 1976 but refused to join the administration.
He became the president of the ‘American Economic Association’ in 1977 and the president of the ‘International Atlantic Economic Society’ from 1989 to 1990.
Lawrence Klein published his first book ‘Economic Fluctuations in the United States, 1921-1941’ in 1950 followed by another book written in collaboration with Arthur S. Goldberger titled ‘Econometric Model of the United States, 1929 -1952’ in 1955.
The second edition of his third book ‘The Keynesian Revolution’ came out in 1966.
He wrote ‘The Brookings Model’ with Gary Fromm and published it in 1975, while his next book ‘The Economics of Supply and Demand’ was published in 1983.
Awards & Achievements
Lawrence Klein received the ‘John Bates Clark Medal’ in 1959. This was one of the two prestigious awards given in the field of economics.
He was awarded the Nobel Prize in Economic Sciences in 1980.
Personal Life & Legacy
He met and married Sonia Adelson at the Cowles Commission and had 3 daughters, Hannah, Rebecca and Rachel and a son, Jonathan, with her.
Lawrence Klein died in his home in Gladwyne, Pennsylvania, USA on October 20, 2013 at the age of 93.