Martin Stewart Eichenbaum

Charles Moskos Professor of Economics. Made important contributions to understanding of business cycle fluctuations and currency crises. In a series of influential papers, he helped document the shortcomings of the benchmark rational expectations general equilibrium business cycle models and developed new models to address those shortcomings. Work on cyclical changes in technology led to new models in which state dependent labor and capital utilization rates play important roles in the propagation of shocks to the economy. Work on identifying the effects of shocks to monetary policy led him, with others, to develop models in which nominal rigidities play a central role in business cycle fluctuations. These models also imply that monetary and fiscal policies play critical roles in business cycles, roles that he helped to document and analyze. In other work he argued, on empirical and theoretical grounds, that financial market frictions, implicit government guarantees to the financial sector, and fiscal policy play a key role in currency crises and their aftermath. Made significant methodological contributions to business cycle analysis, showing how time series methods like structural vector autoregressions and generalized method of moments could be successfully applied to estimate and evaluate dynamic stochastic general equilibrium models.