Leading Economist John B. Taylor Awarded 2012 Hayek Prize
One of the country’s leading economists, Hoover Institution senior fellow and Stanford economist John B. Taylor, has been named this year’s recipient of the prestigious Hayek Prize for his book First Principles: Five Keys to Restoring America’s Prosperity (W.W. Norton 2012). The $50,000 Hayek Prize—one of the most significant book prizes in the country—is awarded by the Manhattan Institute in New York to honor the book that best reflects economist and Nobel laureate Friedrich Hayek’s vision of economic and individual liberty. Taylor will accept the prize and deliver the Hayek Lecture on May 31 in New York City.
US House Budget Committee chairman Paul Ryan said of the book First Principles: “John Taylor has long advanced bold reforms that apply our nation’s timeless principles to the challenges of today. Taylor’s latest contribution to the national debate could not come at a more important moment. First Principles is an important guide for policy makers and the citizens we serve, as Americans work together to restore the promise and prosperity of this exceptional nation.”
In his new book, Taylor offers solutions to the current economic crisis that involve returning to America’s founding principles. He argues that to restore prosperity America should return to economic and political freedom— a predictable policy framework, rule of law, strong incentives, reliance on markets, limited government—and reconstruct its economic foundation from those proven principles. Taylor shows that, when we embrace these first principles, the economy prospers. When we abandon them, the economy falters. In a masterful sweep through history he identifies those key policy makers who stuck to, ignored, or compromised on the principles, drawing lessons from the mistakes and the successes.
Taylor is creator of the Taylor Rule, a monetary policy rule that stipulates how much the central bank should change the nominal interest rate in response to changes in inflation, output, or other economic conditions. From 2001 to 2005, he served as undersecretary of the Treasury for international affairs where he was responsible for currency markets, international development, oversight of the International Monetary Fund and the World Bank, and coordinating policy with the G-7 and G-20. Taylor also served as a member of President George H. W. Bush's Council of Economic Advisers and as senior economist on President Ford's and President Carter’s Councils of Economic Advisers.
The winner of the Hayek Prize, chosen by a selection committee of distinguished economists and journalists, is then asked to deliver the annual Hayek Lecture. Last year the prize was awarded to Matt Ridley for his book The Rational Optimist: How Prosperity Evolves.
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