He was among the leading thinkers to explain the economic shocks of the 1970s, and his work was critical to the supply-side economics of the ’80s.
Edward C. Prescott, whose work explaining the economic shocks of the 1970s catalyzed new ways of thinking about fiscal and monetary policy, a breakthrough that earned him a Nobel economics prize, died on Nov. 6 at a care facility in Paradise Valley, Ariz. He was 81.
His son, Ned Prescott, said the cause was cancer.
Dr. Prescott was a leading member of the generation of economic thinkers who in the 1970s confronted the collapse of Keynesian models, which had dominated policymaking since the 1930s but proved unable to account for the decade’s high inflation and low growth.
Keynesian economics is largely focused on demand, changes in which, it posits, cause the business cycle to fluctuate. But Dr. Prescott, working with his frequent collaborator Finn Kydland, asked whether the