• Facilitating and strengthening dialogue and communication of people and organizations in Japan and ASEAN countries with their multiple cultures and faiths as well as with people and organizations in other parts of the world to further understanding, trust and cooperation
• Building bridges with Nobel Laureates and local universities or other prestigious institutions in Japan and the ASEAN region to establish long-term relationships which may lead to common research programs and other forms of collaboration enhancing science, technology and education as a basis for peace and development
• Inspiring a large public and especially the young generation in Japan and ASEAN to dedicate their lives towards a culture of peace and non-violence
• Achieving a better cooperation for the promotion of peace, freedom and security in Japan and the ASEAN region
• Developing ethical action plans and multidisciplinary programs for creative conflict prevention, mediation and resolution from a politically and religiously independent point of view
• Promoting Japan and ASEAN as a bridge for peace, diplomacy and international understanding

Professor Finn Erling Kydland is a 2004 Nobel Laureate for Economics at the Department of Economics of the University of California in Santa Barbara and a Member of the Advisory Board of the International Peace Foundation.

Finn E. Kydland received his B.A. in Economics from the Norwegian School of Economics and Business Administration and his Ph.D. in Economics from Carnegie Mellon University. He joined the faculty of the University of California in Santa Barbara in 2004 where he holds the Jeff Henley Chair in Economics, after previous appointments at Carnegie Mellon University, the University of Texas at Austin and the Norwegian School of Economics and Business Administration. He is a Research Associate for the Federal Reserve Bank of Dallas and a Senior Research Fellow at the IC2 Institute at the University of Texas at Austin. He has held visiting scholar and professor positions at, among other places, the Hoover Institution and the Universidad Torcuato di Tella in Buenos Aires, Argentina. He was elected a Fellow of the Econometric Society in 1992.

Professor Kydland was awarded the 2004 Nobel Prize in Economic Sciences jointly with Professor Edward C. Prescott of Arizona State University.  Professors Kydland and Prescott received the Nobel Prize for their research on business cycles and macroeconomic policy, specifically the driving forces behind business cycles and the time consistency of economic policy. Their awarded work established the foundations for an extensive research program on the credibility and political feasibility of economic policy. This research shifted the practical discussion of economic policy away from isolated policy measures towards the institutions of policymaking, a shift that has largely influenced the reforms of central banks and the design of monetary policy in many countries over the last decade.

Research by the Laureates also transformed the theory of business cycles by integrating it with the theory of economic growth. Whereas earlier research had emphasized macroeconomic shocks on the demand side of the economy, Professors Kydland and Prescott demonstrated that shocks on the supply side may have far-reaching effects. In their business-cycle model realistic fluctuations in the rate of technological development brought about a co-variation between GDP, consumption, investments and hours worked close to that observed in actual data. Previous business-cycle models had typically been based on historical relations between key macroeconomic variables. But models that had functioned quite well during the 1960s began to break down under the more turbulent economic conditions of the 1970s, with oil-price shocks and concurrent inflation and unemployment. The Laureates laid the groundwork for more robust models by regarding business cycles as the collective outcome of countless forward-looking decisions made by individual households and firms regarding consumption, investments, labor supply, etc. The methods of Professor Kydland and Professor Prescott have been widely adopted in modern macroeconomics.

More recently Professor Kydland has conducted research on the role of monetary policy for the business cycle. He has studied Ireland and Argentina in the belief that there is a lot for other nations’ policy makers to learn from the respective successes and failures of these two nations.

Japan-ASEAN Bridges

“Consistent economic policy and economic development”

In all economies, whether market oriented or centrally governed, the way they become more prosperous in the long run, with opportunity for lower poverty levels, is basically the same: the development of steadily higher productivity, combined with growing productive capacity to take advantage of the productivity increase. This talk will revolve around a major problem facing market economies, a problem pointed out in scientific work cited by the Nobel committee as justification for Prof. Finn Kydland’s prize. The problem is referred to as “time inconsistency of optimal government policy”. It suggests the need for a commitment mechanism to ensure that good economic policy is pursued consistently over time. Without such a commitment a prediction is that economic policy becomes short-run oriented, missing the benefit of the long-run consistency needed for sustainable growth and resulting in unnecessarily low welfare for the nation’s citizens and sometimes disruptions to peace.

Since the financial crisis in 2008-09 this problem has become much more acute in large parts of the world, with the business environment characterized by an extent of uncertainty that is unprecedented over the past several decades. The main reason is lack of clarity in economic policy making. In market economies, in order to be properly informed and well founded, important growth-promoting decisions, such as innovative activity, investment in new productive capacity, choice of new markets and so on, require an assessment – an expectation – of the policy environment years into the future. Important policy dimensions are tax policy, extent of trade restrictions and the regulatory environment in general. Based on the above-mentioned economic theory the increase in policy uncertainty was quite predictable. The talk will expound on the fundamental theoretical reasons. Contexts from various parts of the world will be used as illustrations, as significant differences in what has evolved across nations makes it all the more likely that elements of their respective economic policies have been sources of troublesome outcomes.