Andrei Shleifer

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Andrei Shleifer
New Keynesian economics
Born (1961-02-20) February 20, 1961 (age 53)
Moscow, Soviet Union
Nationality Russian American
Institution Harvard University
University of Chicago
Field Behavioral finance
Law and economics
Development economics
Alma mater MIT
Harvard University
Influences Lawrence Summers
Peter Diamond
Milton Friedman[1]
Influenced Rafael La Porta
Jesse Shapiro
Contributions Legal origins theory
Big push model
Awards John Bates Clark Medal (1999)
Information at IDEAS/RePEc

Andrei Shleifer (/ˈʃlfər/ SHLY-fər; born February 20, 1961) is a Russian American economist and Professor of Economics at Harvard University, where he has taught since 1991. Shleifer was awarded the biannual John Bates Clark Medal in 1999 for his seminal works in three fields: corporate finance (corporate governance, law and finance), the economics of financial markets (deviations from efficient markets), and the economics of transition. The Clark medal citation described him as a "superb economist, working in the old Chicago tradition of building simple models, emphasizing basic economic mechanisms, and carefully looking at the evidence.... A recurring theme of his research is the respective role of markets, institutions, and governments."[2]

IDEAS/RePEc has ranked him as the top economist in the world,[3] and he is also listed as #1 on the list of "Most-Cited Scientists in Economics & Business".[4] He served as project director of the Harvard Institute for International Development's Russian aid project from its inauguration in 1992 until it was shut down in 1997.[5]

Life[edit]

He was born in Soviet Union and emigrated to Rochester, New York, as a teenager in 1976, where he attended an inner-city school and learned English from episodes of Charlie's Angels.[6] He then studied mathematics, obtaining his B.A. from Harvard University in 1982.[7] Following this, he went to graduate school in economics, acquiring his Ph.D. from MIT in 1986. As a freshman at Harvard, Shleifer took Math 55 with Brad DeLong; he has said that the course made him realize he was not destined to be a mathematician, but the experience gave him a future co-author.[6] Shleifer also met his mentor and professor Lawrence Summers during his undergraduate education at Harvard. The two went on to be co-authors, joint grant recipients and faculty colleagues.[5]

He has held a tenured position in the Department of Economics at Harvard University since 1991 and was, from 2001 through 2006, the Whipple V. N. Jones Professor of Economics.[8] Previously, he taught at the Graduate School of Business at the The University of Chicago and briefly at Princeton University.

Work[edit]

Shleifer's earliest work was in financial economics, where he has contributed to the field of behavioral finance. He has also written influential papers on political economy, the economics of transition, and economic development, collaborating with his former colleagues in Chicago, Kevin M. Murphy and Robert W. Vishny. Their paper "Industrialization and the Big Push" was credited by Paul Krugman as a major breakthrough which ended a "long slump in development theory".[9]

With coauthors Rafael La Porta, Simeon Djankov and Florencio Lopez de Silanes, Shleifer has also made significant contributions to the study of corporate governance.

In recent years, his research has focused on the legal origins theory (also sometimes known as law and finance theory), which claims that the legal tradition a country adheres to (such as common law or various types of civil law) is an important determining factor for a country's development, most of all financial development.

In 1994 Shleifer founded with fellow academics—and behavioral finance specialists—Josef Lakonishok and Robert Vishny a Chicago-based money management firm known as LSV Asset Management. As of February 2006 it managed about $50 billion in quantitative value equity portfolios, though, according to the firm's website, Shleifer has sold his ownership stake.[10]

Activities in Russia[edit]

During the early 1990s, Andrei Shleifer was an advisor to Anatoly Chubais, the then vice-premier of Russia, handling the portfolio of Rosimushchestvo (the Committee for the Management of State Property), and was one of the engineers of Russian privatization. During that time, the Harvard Institute for International Development of Harvard University was under a contract with the United States Agency for International Development, which paid Harvard and its employees to advise the Russian government. In a period from 1992 to 1997, the Harvard Institute for International Development (HIID) under Shleifer received $40 million directly from the $300 million budgeted for the United States Agency for International Development.[5] Shleifer was also tasked with establishing a stock market for Russia that would be a world-class capital market.[11]

While in Russia working as the project director of the HIID, Andrei Shleifer was an adviser to the State Property Committee (Russian acronym GKI), a board member of the Russian Privatization Center, and a USAID-paid advisor to the Russian Federal Securities Commission.[5]

It was alleged that Summers' influential position in the Treasury "helped Shleifer and Harvard gain noncompetitive government awards”.[12] In 1996 complaints about the Harvard Project led Congress to launch a General Accounting Office investigation, which concluded that the Harvard Institute for International Development was given "substantial control of the U.S. assistance program.”[13]

Some of the public allegations concerning Shleifer and Summers drew considerable criticism from his close friends and collaborators. Edward Glaeser once stated to The Harvard Crimson that the Institutional Investor article "How Harvard Lost Russia" on Shleifer's role in the Harvard advisory program in Russia "is a potent piece of hate creation—not quite ‘The Protocols of the Elders of Zion,’ but it's in that camp." A Chicago Tribune article attributed Shleifer's fall from grace to "political maneuvering in Moscow".[14]

Lawsuit[edit]

The Cooperative Agreement signed in 1992 by the Harvard Institute and USAID for the purpose of creating the Russian reform project included this paragraph under “Regulations Governing Employees”:

Other than work to be performed under this grant for which an employee is assigned by the grantee, no employee of the grantee shall engage directly or indirectly, either in the individual's own name or in the name or through an agency of another person, in any business, profession, or occupation in the foreign countries to which the individual is assigned, nor shall the individual make loans or investments to or in any business, profession or occupation in the foreign countries to which the individual is assigned.[15]

Under the False Claims Act, the US government sued Harvard, Shleifer, Shleifer's wife Nancy Zimmerman, Shleifer's assistant Jonathan Hay, and Hay's girlfriend (now his wife) Elizabeth Hebert, because these individuals bought Russian stocks and GKOs while they were working on the country's privatization, which potentially contravened Harvard's contract with USAID. In 2001, a federal judge dismissed all charges against Zimmerman and Hebert.[16] In June 2004, a federal judge ruled that Harvard had violated the contract but was not liable for treble damages, but that Shleifer and Hay might be held liable for treble damages (up to $105 million) if found guilty by a jury.[17]

In August 2005, Harvard University, Shleifer and the Justice department reached an agreement under which the university paid $26.5 million to settle the five-year-old lawsuit. Shleifer was also responsible for paying $2 million worth of damages, though he did not admit any wrongdoing. A firm owned by his wife previously had paid $1.5 million in an out-of-court settlement. Shleifer's conduct was reviewed by Harvard's internal ethics committee. In October 2006, at the close of that review, Shleifer released a statement making it clear that he remains on Harvard's faculty.[8] Summers resigned from his position as President of Harvard University in 2006 in part due to concerns that his relationship with Andrei Shleifer constituted a financial conflict of interest.

Works[edit]

  • Boycko, Maxim; ———; Vishny, Robert (1995). Privatizing Russia. Cambridge, MA: MIT Press. ISBN 0-262-02389-X. 
  • Shleifer, Andrei; Vishny, R. W. (1997). "A Survey of Corporate Governance". Journal of Finance 52 (2): 737–783. doi:10.2307/2329497. JSTOR 2329497. 
  • La Porta, R.; López de Silanes, F.; ———; Vishny, R. W. (1998). "Law and Finance". Journal of Political Economy 106 (6): 1113–1155. doi:10.1086/250042. 
  • La Porta, R.; López de Silanes, F.; ——— (1999). "Corporate Ownership Around the World". Journal of Finance 54 (2): 471–517. doi:10.1111/0022-1082.00115. 
  • La Porta, R.; López de Silanes, F.; ———; Vishny, R. W. (2000). "Investor Protection and Corporate Governance". Journal of Financial Economics 58 (1–2): 3–27. doi:10.1016/S0304-405X(00)00065-9. 
  • Shleifer, Andrei (2000). Inefficient Markets: An Introduction to Behavioral Finance. Oxford, UK: Oxford University Press. ISBN 0-19-829227-9. 
  • Djankov, S.; La Porta, R.; López de Silanes, F.; ——— (2002). "The Regulation of Entry". Quarterly Journal of Economics 117 (1): 1–37. doi:10.1162/003355302753399436. 
  • Djankov, S.; La Porta, R.; López de Silanes, F.; ——— (2003). "Courts". Quarterly Journal of Economics 118 (2): 453–517. doi:10.1162/003355303321675437. 
  • Botero, J.; Djankov, S.; La Porta, R.; López de Silanes, F.; ——— (2004). "The Regulation of Labor". Quarterly Journal of Economics 119 (4): 1339–1382. doi:10.1162/0033553042476215. 
  • Mulligan, C.; ——— (2005). "Conscription as Regulation". American Law and Economics Review 7 (1): 85–111. doi:10.1093/aler/ahi009. 

References[edit]

  1. ^ Andrei Shleifer. "The Age of Milton Friedman". Retrieved 2013-10-19. 
  2. ^ "Andrei Shleifer, Clark medal citation". aeaweb.org. Retrieved 2013-10-19. 
  3. ^ "Economist Rankings at IDEAS". Ideas.repec.org. Retrieved 2011-09-13. 
  4. ^ "Most-Cited Scientists in Economics & Business" ISI Web of Knowledge
  5. ^ a b c d Wedel, Janine. Shadow Elite: How the World's New Power Brokers Undermine Democracy, Government, and the Free Market. New York: Basic, 2009.
  6. ^ a b Bhayani, Paras D. (June 4, 2007). "Andrei Shleifer and J. Bradford DeLong". Harvard Crimson. Retrieved 2009-03-12. 
  7. ^ http://scholar.harvard.edu/files/shleifer/files/as_cv_5.pdf
  8. ^ a b Bombardieri, Marcella (2006-10-14). "Harvard professor loses honorary title in ethics violation". Boston Globe. 
  9. ^ Paul Krugman. "The Fall and Rise of Development Economics". Retrieved 2013-10-19. 
  10. ^ How Harvard lost Russia at the Wayback Machine (archived September 27, 2007)
  11. ^ How Harvard lost Russia at the Wayback Machine (archived September 27, 2007)
  12. ^ "Harvard’s role in US aid to Russia". The Boston Globe. Retrieved 2011-11-11. 
  13. ^ "Who Taught Crony Capitalism to Russia?". The Wall Street Journal Europe. March 19, 2001. Retrieved 2011-11-11. 
  14. ^ David Warsh (1999-05-02). "Chicago School Sidewalk To Russian Privatization". Chicago Tribune. Retrieved 2013-10-19. 
  15. ^ United States District Court, District of Massachusetts, United States of America, Plaintiff, v. President and Fellows of Harvard College, Andrei Shleifer, Jonathan Hay, Nancy Zimmerman, and Elizabeth Hebert, Defendants.
  16. ^ How Harvard lost Russia at the Wayback Machine (archived September 27, 2007)
  17. ^ "The Harvard Crimson :: News :: Harvard To Pay $26.5 Million in HIID Settlement". Thecrimson.com. 2005-07-29. Retrieved 2011-09-13. 

External links[edit]