Barro graduated with a B.S. in physics from the California Institute of Technology in 1965, where he was a student of Richard Feynman, but he realized he "wouldn't be close to the top in those fields."[4] He then turned to economics and earned a Ph.D. from Harvard University in 1970.[5] He first reached wide notice with a 1974 paper, "Are Government Bonds Net Wealth?" It argued that under certain assumptions, present governmental borrowing would be matched by increased bequests to future generations to pay future taxes expected to pay down the government bonds; thus a lowering of current taxes, financed by the issuance of government bonds, would have no effect on the public's spending on consumer goods. The paper was in direct response to Alan Blinder and Robert Solow's results, which had implied that the long term implications of government borrowing would be compensated for by the wealth effect. The paper is among the most cited in macroeconomics. Its implications of his Ricardian equivalence are still being debated.
Barro collaborated with Herschel Grossman to produce the influential 1971 article "A General Disequilibrium Model of Income and Employment",[6] which for many years held the distinction of being the most cited article published in the American Economic Review.[7] The article explored the idea that disequilibrium in one market can have spillover effects to another market, creating a distinction between notional demand and effective demand. Barro and Grossman expanded on their work and produced the classic textbook Money, Employment, and Inflation in 1976.[8]
In 1976, he authored another influential paper, "Rational expectations and the role of monetary policy" in which he argued that information asymmetries would cause real effects as rational economic actors in response to uncertainty but not in response to expected monetary policy changes. In it and other essays, he investigated the real effects of monetary changes through which he could significantly contribute to the clarification of the exact circumstances of the validity of the policy-ineffectiveness proposition. While he has revisited the topic since then and critically appraised the paper, it was important in integrating the role of money into neoclassical economics and into the synthesis of general equilibrium and macroeconomic models.[9]
In 1983, he applied the information asymmetry argument to the role of central banks and concluded that central banks, to have credibility in inflation fighting, must be locked into inflation targets that they cannot violate to reduce unemployment. In the 1970s, economist Arthur Okun developed the concept of the Misery Index, which Jimmy Carter publicized during his 1976 presidential campaign, and Ronald Reagan did the same in his 1980 presidential campaign. Numerous sources incorrectly credit Barro with this because of the similarity of name with his own "Barro Misery Index." Barro's version first appeared in a 1999 BusinessWeek article.[10]
His 1984 Macroeconomics textbook remains a standard for explaining the subject, and his 1995 book, with Columbia University economist Xavier Sala-i-Martin, on Economic Growth, is a widely cited and read graduate-level textbook on the theory and evidence concerning long-run economic growth. Barro's research in the 1990s was focused mainly on the theoretical and empirical determinants of growth: he gave fundamental contributions to the theory of endogenous growth, with particular attention to the links between innovation and public investment on one side and growth on the other side. He was a pioneer in the econometric analysis of the main factors associated with growth in the modern era.[11]
Another often-cited work is a 1988 paper that he coauthored with Gary Becker, "A Reformulation of the Economic Theory of Fertility" published in the Quarterly Journal of Economics, which is influential in thinking about "infinite time horizon" modelling.
Subsequently, Barro began investigating the influence of religion and popular culture on political economy by working with his wife, Rachel McCleary.
Barro believes that the Keynesian multiplier is less than one. He believes that for every dollar the government borrows and spends, spending elsewhere in the economy falls by almost the same amount.[14]
Finally, Barro has been an outspoken opponent of stimulus spending, calling Obama's stimulus bill "garbage" and "the worst bill since the 1930s."[17][18][19]
Personal life
Robert Barro is married to Rachel McCleary. Together they have made critical contributions to the field of religion and economics. McCleary holds a doctorate from the University of Chicago and teaches at Harvard. Barro has four children: Jennifer, Lisa, Jason, and Josh, who is a journalist.
Barro, Robert J. (1976). "Rational expectations and the role of monetary policy". Journal of Monetary Economics. 2 (1): 1–32. doi:10.1016/0304-3932(76)90002-7.
^Solow, Robert, ed. (2004). Productivity growth, inflation, and unemployment: The collected essays of Robert J. Gordon. New York: Cambridge University Press. pp. 226–227. ISBN978-0-521-53142-9.
^Galbács, Peter (2015). The Theory of New Classical Macroeconomics. A Positive Critique. Contributions to Economics. Heidelberg/New York/Dordrecht/London: Springer. doi:10.1007/978-3-319-17578-2. ISBN978-3-319-17578-2.
