Robert Hall (economist)

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Robert E. Hall is an economist at Stanford with a wide variety of interests. He's a member of the Hoover Institution, the National Academy of Sciences and a fellow at both American Academy of Arts and Sciences and the Econometric Society.

[edit] Ideas

With a broad range of interest (technology, competition, employment, policy and so on), Hall is famous for coming up with new ideas and leaving others to develop them further.

In describing if marginal cost is procyclical, Hall argued that the key is knowing the productivity shocks in real business cycle theory are actually the result of monopoly power. Because monopolies can sell where their price exceeds marginal cost, they tend to have excess capacity. Thus, as demand increases, the excess capacity shrinks and marginal cost approaches price and in that way it is procyclical. This idea captures the distinction between real productivity and productivity growth; while there is greater productivity (less is being wasted), workers aren't becoming more productive.

To explain sticky wages, Hall emphasizes the importance of costs born by the employer. Firms benefit when times are good but are penalized when times are slim (because wages are usually fixed) and they pay for searching for a good employee/employer match. Thus, employers are more risk averse in hiring and have less incentive to engage in search. Hence employers simply do not hire in downtimes. This idea is reinforced because workers cannot collectively signal that they would work for less in downtimes, wages have a tendency to stick upwards.