Olivier Blanchard PhD ’77, the Robert M. Solow Professor of Economics Emeritus, has been named a winner of the 2025 BBVA Basis Frontiers of Data Award in Economics, Finance and Administration for “profoundly influencing trendy macroeconomic evaluation by establishing rigorous foundations for the research of enterprise cycle fluctuations,” as described within the BBVA Basis’s award quotation.
Blanchard, who can also be senior fellow on the Peterson Institute for Worldwide Economics, shares the award with MIT alumni Jordi Galí PhD ’89 of the Centre de Recerca en Economia Internacional and Pompeu Fabra College in Spain and Michael Woodford PhD ’83 of Columbia College. The three economists have been instrumental in growing the New Keynesian mannequin, now broadly taught and utilized in central banking coverage all over the world.
The framework builds on classical Keynesian fashions partially by introducing the position of client expectations to macroeconomic coverage evaluation — in brief, utilizing the general public’s notion of the long run to assist inform present coverage. The mannequin’s unconventional instruments, together with higher transparency round financial coverage, have been examined by policymakers following the burst of the dotcom bubble within the early 2000s and utilized by the Federal Reserve and European Central Financial institution in response to the 2008 monetary disaster.
Blanchard performed a foundational position within the growth of New Keynesian economics, starting with a 1987 paper coauthored with Princeton College’s Nobuhiro Kiyotaki (additionally a Frontiers of Data laureate) on the results of financial coverage underneath monopolistic competitors. A decade later, Woodford described optimum financial coverage inside the New Keynesian framework, laying key theoretical groundwork for the mannequin, and Galí prolonged and synthesized the framework, finally leading to a blueprint for designing optimum financial coverage.
Blanchard, who joined the MIT school in 1983 and served as head of the Division of Economics from 1998 to 2003, suggested and taught many years of macroeconomics college students at MIT, together with Galí. As chief economist of the Worldwide Financial Fund from 2008 to 2015, Blanchard used his framework to assist design coverage throughout the World Monetary Disaster and the Euro debt disaster. Blanchard’s management as a scholar, scholar advisor, trainer, and coverage advisor is on the coronary heart of the trio’s prize-winning analysis.
MIT Professor Jonathan Gruber, present head of the economics division, praises Blanchard’s multifaceted contributions.
“Olivier shouldn’t be solely a tremendous macroeconomist whose work continues to have profound affect on this time of worldwide macroeconomic uncertainty,” says Gruber, “but in addition a pillar of the division. His management in analysis and massive dedication to our program have been central in carrying ahead the legacy of the division’s early greats and making MIT Economics what it’s as we speak.”
Blanchard, Galí, and Woodford share the award’s 400,000-euro prize and can be formally honored at a ceremony in Bilbao, Spain, in June.
The BBVA Basis works to assist scientific analysis and cultural creation, disseminate data and tradition, and acknowledge expertise and innovation, specializing in 5 strategic areas: atmosphere, biomedicine and well being, financial system and society, fundamental sciences and know-how, and tradition. The Frontiers of Data Awards, spanning eight prize classes, acknowledge world-class analysis and cultural creation and goal to have fun and promote the worth of information as a world public good.
Since 2009, the BBVA has given awards to greater than a dozen MIT school members, together with MIT economist Daron Acemoglu, in addition to to the Abdul Latif Jameel Poverty Motion Lab (J-PAL), led by MIT economists Abhijit Banerjee, Esther Duflo, and Ben Olken.
