On Wednesday, February 27, Hugo Sonnenschein gave a talk titled "A New Look at Some Issues in International Trade: the Effects of an Increase in Factor Endowments" as part of the 12th Barcelona Economics Lecture Series.
The talk took place at the Banc Sabadell, which co-sponsors the lecture series in conjunction with the Barcelona GSE Research Network, formerly known as CREA. It was opened by a short introduction by Salvador Barberà, Director of the Research Network, who noted Professor Sonnenschein’s longtime connection with the Barcelona economics community. Joan Llonch, Deputy Chairman of Banc Sabadell, also gave a short introduction.
Beginning his talk, Professor Sonnenschein spoke of his longstanding affection for Catalonia, saying that he "has watched with the greatest pleasure the development of economics in Barcelona” and noting, “with the bringing together of the Barcelona economics community behind the Barcelona GSE I am convinced we are witnessing a special moment."
His affiliation with Catalan economists began in the 1960s, when he coincided at the University of Minnesota with graduate students from Catalonia and Spain who were studying there at the time. Popularly known as "los minnesotos", the group includes GSE Chairman Andreu Mas-Colell, Research Network Director Salvador Barberà, Banc Sabadell President Josep Oliu, and many prominent members of the GSE community.
The first part of his talk was dedicated to discussion of simple reductionist models of economic equilibrium and what can be learned from them. Professor Sonnenschein pointed out that in many cases individual rational choice is a bad intuition for what will happen in terms of general equilibriums, Nash equilibriums, and general game theory instances, and that an understanding of the instances when individual rational choice gives good guidance is essential.
According to Professor Sonnenschein, “in order to understand the fundamentals of game theory, it is important to think about the situations in which what happens in a game is different than what happens in an individual decision problem, and to organize your thinking maniacally around those differences.”
He then went on to discuss a new paper of his, "A Reversal of Rybczynski's Comparative Statics via 'Anything Goes'" with Marcus Opp (Chicago GSB) and Christus Tombazos (Monash University) that explores a reductionist model from a highly technical perspective, demonstrating that Rybczynski’s classic comparative statics can be reversed in the 2×2×2 Heckscher-Ohlin model of international trade when there is a home bias in consumption.
In addition to his role as GSE Scientific Council Chairman, Professor Sonnenschein is President Emeritus and Distinguished Service Professor at the University of Chicago, where he served as president from 1993 to 2000. He is a longtime economist well known for his research in the mathematical structure of market demand functions. He is a member of the National Academy of Sciences, a fellow of the American Academy of Arts and Sciences, and a member of the American Philosophical Society.
He has served as President of the Econometric Society, Chairman of the Board of Argonne National Laboratories, Director of the National Merit Scholarship Corporation, and Member of the Civic Committee of the City of Chicago.
Professor Sonnenschein is in Barcelona for the occasion of the first official meeting of the Scientific Council of the school, which brings together 30 top academics who guide the school academically and help it fulfill its potential.
The Barcelona Economics Lecture Series brings top economist from around the world to speak to the Barcelona GSE community. Previous lectures have features Jean-Claude Trichet (ECB), Michele Boldrin (Washington University), and Andrei Scheifer (Harvard University and NBER).