In Honor of Andrei Shleifer: Winner of the John Bates Clark Medal

Andrei Shleifer is the 1999 recipient of the John Bates Clark Medal, an award presented by the American Economic Association to an outstanding economist under the age of 40. The Clark medal citation singles out his contributions to three fields: corporate finance (corporate governance, law and finance), the economics of financial markets (deviations from efficient markets), and the economics of transition. One could add a fourth area, an early but then spurned love, macroeconomics (the role of increasing returns in cycles and growth). In each area that Andrei has touched, his contributions have shaped the basic paradigm and have triggered considerable follow-up research. The reason is that Andrei focuses on the big issues of economics. A recurring theme of his research is the respective role of markets, institutions, and governments. In his work, markets do not work perfectly and institutions are of the essence. But one should not trust governments always to do the right thing, be it in the design of institutions or in direct interventions. Governments are not perfect and sometimes they can be quite bad indeed. In the hands of others, such themes could lead to ideological blabber or to banal generalities. In Andrei’s hands, they don’t. In each case, Andrei focuses on a specific market, a specific institution, a specific mechanism. He writes down a simple model, very much in the old Chicago tradition, and uses it as a guide to the empirical evidence. He looks at the available evidence, often, as in his work on law and finance, assembling that evidence for the first time. The general lessons come from the accumulation of papers and evidence. This is why his work is so convincing, influential, and likely to endure.