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Distinguished Alumni

Jerry R. Green '70

Jerry R. Green was born on December 15, 1946 in New York City. He received his bachelor's degree in mathematics in 1967 at the University of Rochester. After graduation, he entered the graduate program in economics at the University of Rochester. In 1970, he received his PhD in economics under the supervision of Professor Lionel McKenzie.

Green has been on the economics faculty at Harvard since 1970. During 1984 to 1987, he was the chair of the Economics Department. From 1992 through 1994, he served as provost at Harvard. Green is a fellow of the Econometric Society and a fellow of the American Academy of the Arts and Sciences. He is also a recipient of the J. Kenneth Galbraith Prize for excellence in teaching.

Jerry Green's large body of research has been fundamental in developing the theories of rational expectations and incentive compatibility. His work also extends to many other fields, including corporate finance, taxation, and utility theory, which have all strongly benefited from his ideas.

Green's influence is also present in the leading textbook in graduate microeconomics, Microeconomic Theory (Oxford University Press,1995) which he co-authored with Andreu Mas-Colell and Michael Winston. In recent years, every graduate student at the University of Rochester has been exposed to this book.

Publications

"Characterization of Satisfactory Mechanisms for the Revelation of Preferences for Public Goods" (with Jean-Jacques Laffont), Econometrica, Vol. 45, No. 2 (March, 1977).

This paper provides a justification of a particular way of choosing pure public goods and transfers. The centerpiece of the paper is the class of mechanisms introduced by Groves and Clark, in which agents announce their preferences in order to determine the provision of the public good. An obvious problem in such environments is that agents may lie about their tastes. The paper provides a strong motivation for the study of these mechanisms by establishing that for any agent, the only preference the agent always wants to announce are his true preferences. This result implies that when providing public goods, if we wish agents to announce their true preferences, the Groves-Clarke mechanisms give agents the incentive to do so. Another major contribution of the paper is that it shows that the Groves-Clarke mechanisms are essentially the only ones that enjoy this characteristic while satisfying a certain efficiency property.

"The Nature of Stochastic Equilibria" (with Mukul Majumdar), Econometrica, Vol. 43, No. 4 (July, 1975).

In a market setting, individual preferences are constantly changing. This fact would seem to pose a problem for the existence of equilibrium prices. The work done in this paper establishes results that are reassuring in this regard. The basic model consists of an independently and identically distributed sequence of economies. Before preferences in each state are known, a distribution of prices must be chosen. After observing excess demand, a distribution of prices is chosen for the next period, according to some rule. If, in each period, the distribution of prices is identical, the prices then comprise a stochastic equilibrium. The paper establishes that, under certain minimal technical conditions, a stochastic equilibrium always exists. Another result shown is that the stochastic equilibrium is unique, and starting from any distribution of prices, the distribution of prices will eventually tend to equilibrium prices.

"Corporate Financial Policy and Taxation in a Growing Economy" (with Martin Feldstein and Eytan Sheshiniski), Quarterly Journal of Economics, Vol. 98, No. 3 (August 1979).

A balanced-growth model of corporate finance and taxation is presented in this paper. The paper considers the effects of both personal and corporate taxation on debt and equity financing. A tax system similar to the one used in the real world is employed in this model. This research is major contribution to the field of corporate finance. It is the first model to imply that firms finance using both debt and equity, when there is both corporate and personal taxation. Increases in corporate taxation are shown to increase the debt-equity ratio, while reducing the net interest rate on bonds and the dividend rate on equity. These results are in strong contrast to other standard results, which imply that taxation has no effect on the debt-equity decision of firms.

Christopher P. Chambers (October 2000)