By Douglas Clement
Best friends since high school are expanding the frontiers of economics
Mikhail Golosov and Aleh Tsyvinski are from the same small city in Belarus. They attended the same high school and college. They made their separate ways to the University of Minnesota, where they earned Ph.D's in economics in 2004 and 2003. They then became assistant professors at the Massachusetts Institute of Technology and Harvard University, respectively. And not incidentally, Mike and Oleg -- as they're known -- are also best friends.
So it isn't surprising (even in a discipline that extols the virtues of competition) that the boys from Belarus have found huge professional payoff from close collaboration. Over the course of their nascent careers, the two have worked jointly on almost all their research. Golosov and Tsyvinski motivate each other, capitalize on comparative strengths and communicate smoothly.
Still, what makes their collaboration truly noteworthy is the quality of their work. "In many ways, they're the future of macroeconomics and macroeconomic theory," observes award-winning MIT economist, Daron Acemoglu. "They're going to leave a very big mark on the profession," says V. V. Chari, their Minnesota dissertation adviser.
Central focusGolosov and Tsyvinski's work has focused on "new dynamic public finance," which works to reconcile Frank Ramsey's insights on optimal taxation with established theory from James Mirrlees about incentive/insurance trade-offs.
"A general Ramsey approach shows that pretty much under no circumstances do you want to distort savings, so you want to use labor taxes rather than capital taxes," Golosov explains. "But once you introduce these other features from Mirrlees, the answer becomes much less clear. It actually shows that you may want to distort savings."
In a series of papers published in some of the profession's most prestigious journals -- the Review of Economic Studies, the Quarterly Journal of Economics, and the Journal of Political Economy -- Golosov and Tsyvinski explore various angles of this theme.
More recent collaboration has evaluated the allocative capacity of markets and governments when governments are run by self-interested politicians, not benevolent social planners.
At the U of MThe two have high praise for the University of Minnesota economics program and its partnership with the Federal Reserve Bank. "This economics community, the Fed, and Minnesota," Golosov begins, "it's impossible to overemphasize how important they were for me. I'm very, very grateful to many people here."
"At Minnesota," says Tsyvinski, "they move you from somebody who's never seen many of the issues to the frontier of economic research. They give you enough tools so you can actually do it on your own." And at the Fed, he says, a grad student is "treated as a junior colleague, or as a faculty member. So you sit at the same table during lunch; you go to all the seminars."
"Barriers that typically exist in grad programs disappear here," says Golosov.
Future plansIn the past two years, Golosov and Tsyvinski received a prestigious Sloan Research Fellowship, and each was given a coveted National Science Foundation CAREER grant. Yale University lured Tsyvinski from Harvard in July with a full professorship, a rare honor for such a young economist.
Will collaboration suffer? "I don't think it will be that hard," replies Golosov. "New Haven is only two hours away. We used to be much farther apart when I was in Minneapolis and he taught at UCLA."
Precisely what they'll collaborate on is difficult to predict. "But whatever problem it
is that seizes their attention," says Chari, "they'll bring a combination of technical skill, a nose for the central issues, and strong computational abilities to that problem. They're a phenomenal team."