Economist Shleifer Receives Medal

Professor of Economics Andrei Shleifer '82 was awarded the John Bates Clark Medal by the American Economics Association (AEA) on Friday-an honor traditionally seen as a prelude to the Nobel Prize.

The award is given to an economist under the age of 40 who has made the outstanding contributions to economic research. Shleifer is 38.

He is regarded as one of the world's leading authority on transition economics, and is an expert on corporate finance.

But Shleifer is also a controversial figure. Though he is regarded almost universally as a brilliant economist, his name was recently tarnished by allegations of impropriety over his involvement in rebuilding the Russian economy with the Harvard Institute for International Development (HIID) in the early 1990s.

Shleifer was eventually dismissed from HIID by Stone Professor of International Trade and HIID Director Jeffrey D. Sachs '76 for violations of the institute's conflict interest policy.


Shleifer retained his Harvard professorship, though the U.S. Attorney's office is currently investigating the University over the Russian HIID program. Sachs was unavailable for comment yesterday.

Shleifer oversaw the HIID operation, which was financed by a $57 million contract from the U.S. government, which cancelled the grant in May of 1997. Shleifer was accused of having invested in Russian securities while advising the Russian government on economic policy.

But according to Dale W. Jorgenson, president-elect of the AEA and Abbe professor of economics at Harvard, the allegations against Shleifer never entered into discussions about his qualifications for the medal.

"There was nothing relevant [in the allegations] to the quality of his scientific contributions," Jorgenson said. "The committee was simply out to pick the best person under 40."

And, added AEA Secretary John J. Siegfried, "people have made allegations about a lot of people that have turned out to be untrue."

The Clark Medal may suggest that the allegations have not tainted him in the eyes of the academic community.

"I'd be very surprised if he didn't end up withthe Nobel Prize," Jorgenson said. "This certainlyimproves the odds."

Shleifer is an expert in the economicsinvolving the transition from socialism tocapitalism and in corporate finance.

In transition economics, much of which he gotto put into practice as an adviser to the Russiangovernment, Shleifer is "the leading person in thefield," according to Jorgenson.

Shleifer's work examines the role of differentforms of government in providing the lawsnecessary to make such a transition.

In corporate finance, Shleifer also contrastedlegal systems, looking at the impact of Englishcommon law, on the one hand, and Roman civil law,on the other, on the relationship betweenshareholders and company managers.

His research found that common law tends to doa better job protecting the interests ofshareholders in what Jorgenson calls "a brilliantempirical study."

Though the committee considered several othercandidates, most notably Princeton labor economistAlan B. Krueger, the AEA ultimately foundShleifer's work incomparable among economistsunder the age of 40.

The award is voted on by a combination of theAEA's executive committee and its honors andawards committee. It is given in honor of JohnBates Clark, a turn-of-the-century economist.

Shleifer was appointed to the Harvard Facultyas a full professor in 1991 at the age of 30, fiveyears after receiving his doctorate from M.I.T

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