US economist. He received the 2004 Nobel Prize for Economics for his research on business cycles and time consistency in macroeconomic policy, an award he shared with Norwegian economist Finn E Kydland.
An influential feature of his work was the relationship between politics and economic policy. He argued that governments aiming to restrict inflation are reluctant to raise interest rates because of the short-term political costs. His work helped foster the shift of fiscal policy-makers in several countries away from the political process.
Prescott was born in Glens Falls, New York. He received his bachelor's degree in mathematics from Swarthmore College, Pennsylvania, in 1962, and went on to earn his master of science in operations research from Case-Western Reserve University in Cleveland, Ohio, in 1963, and his PhD in economics from Carnegie-Mellon University in Pittsburgh, Pennsylvania, in 1967. He taught at the University of Pennsylvania, Philadelphia, 1966–71, then at Carnegie Mellon 1971–80, where he conducted his seminal research with Kydland. He taught at the University of Chicago and Northwestern University in Illinois before joining the faculty of the University of Minnesota in 1982, where he stayed for more than 20 years. Major articles written with Kydland include ‘Rules Rather than Discretion: The Inconsistency of Optimal Plans’ (1977) and ‘Time to Build and Aggregate Fluctuations’ (1982).
From 2003 he has been a professor of economics at the W P Carey School of Business at Arizona State University, and senior advisor to the Federal Reserve Bank of Minneapolis.