The Cowles Foundation for Research in Economics is excited to announce that Samuel Kortum has been appointed as Director for a three-year term starting summer 2023. Professor Kortum brings a wealth of research experience to the Foundation, and his connection to Yale goes back decades. He completed his PhD in economics at Yale in 1992, and came to Yale as a Professor in 2012. He is now the James Burrows Moffatt Professor of Economics.
Much of Kortum’s research centers around international economics, and the role that technology plays in international trade, growth, and development. Together with frequent co-author Jonathan Eaton, he is the recipient of the prestigious Frisch Medal, one of the top prizes awarded in the field of economics. They received the award in 2004 for their paper titled “Technology, Geography, and Trade.” Kortum and Eaton also received the Onassis Prize for International Trade in 2019, awarded every three years to leading scholars in the field of International Trade.
Professor Kortum follows a three year appointment by Marina Halac, the Stanley B. Resor Professor of Economics. In the interview below, Kortum discusses his work and vision for the Cowles Foundation.
What are your research interests?
Ever since I was a graduate student at Yale, I’ve been interested in growth and technological change, which has morphed into issues in international economics and international trade. This line of research began with my work with Jonathon Eaton, who was also a graduate student at Yale, but about 10 years before me. He really pushed me to consider the role that technology plays in international trade, growth, and technology, and I remain excited about those areas.
Most recently, I’ve been working on the intersection between trade and climate policy, including a number of papers with coauthor David Weisbach at University of Chicago Law School. We’ve recently done work on carbon policy and carbon pricing, and my teaching is now reflecting that as well—I’m teaching an undergraduate course called International Environmental Economics, which meshes nicely with this body of research.
What was your original motivation for moving into these research areas?
As a graduate student here, I was really interested in economic growth, and was thinking a lot about growth being mostly driven by what was called the Solow residual—the part of economic growth that cannot be explained by labor or capital. I wanted to explore how we could go a little deeper into questions about what’s driving that—For example, how do you measure it? How do we use more economic theory to explain it?
Around that time, there was a big resurgent interest in economics around growth theory, and that hit at a critical time for me right when I was starting to work on my dissertation (“Inventions, R&D and industry growth”). As I mentioned, the emphasis on the international side of things really came out of my work with senior colleague Jonathon Eaton—he was thinking about similar issues from an international perspective, and that led to us working together on several projects that asked questions about how innovation and technology affect growth, and how can you measure that.
The climate work came out of a project at University of Chicago—there was a group there working on how to build a better climate model—and there were some really sticky questions around climate policy, namely around having many countries who aren’t coordinating and might even be free riding on the efforts of other countries—and that all seemed like something that needed attention and didn’t have clear answers. In general, I’m quite drawn to research areas and questions when I find it kind of confusing—so I started working on that, and finally we have a few papers around carbon pricing and policy that make the issues much clearer to me now.
Could you talk a bit more about that research, and what it’s focused on?
We’ve been diving into alternative options for green policies that would be efficient in lowering global carbon emissions—This is in the absence of a uniform international carbon price, which is widely viewed by economists as the best option.
For example, in a new paper with David Weisbach, we look at the issue of one region of the world imposing a climate policy when the rest of the world does not—which shifts activities (e.g., extraction, production, and consumption) in other regions. This is often called ‘leakage’—the increase in emissions abroad because of carbon policies at home—and these effects are of critical importance to the design of carbon policy and to its political feasibility.
We develop a model that provides an optimal set of subsidies and taxes, and then compare this to more conventional policies, such as an extraction tax, a production tax, a consumption tax, and combinations of these taxes. What we show is that if the United States and other key actors, such as the European Union and China, were to enact these optimal taxation policies, they could lower carbon emissions while reducing the incentive for firms to move production to countries that may be slow to adopt green policies.
Moving to your new position, what’s your vision as Director of the Cowles Foundation?
A lot of what I hope to do is build on the work of my predecessors—who’ve done a great job positioning Cowles as one of the premier research institutions—As well as try to tell a better story around all the great work we’re doing in our core research areas, which include Econometrics, Economic Theory, Industrial Organization, International Trade, Labor and Public Economics, Macroeconomics, and most recently: Algorithms, Data, and Market Design.
While Cowles’ research tends to fall into the more abstract, methodological, and theoretical areas of economic thinking, the work is foundational to the tools we use in modern economics. Sometimes this type of work can get overlooked because it’s more challenging to communicate to the public, but that doesn't mean it’s not interesting or important. I’d love for our work to be more visible, especially in our areas of expertise, as these tend to be areas that other research organizations emphasize to a lesser degree. I’m really looking forward to getting more of our work out there into the public.
I’m also incredibly excited to learn more from my colleagues here in the Department. We have over 80 Research Affiliates, spread throughout the Departments of Economics, Computer Science, and Statistics & Data Science, as well as Yale’s School of Management. We have such a rich network of people affiliated with Cowles, and my goal in the near term is to understand what people may need to push their work to new levels, and to expand our Research Programs in innovative ways.
Yale’s Department of Economics has traditionally been heavier on the theoretical and methodological side, but it’s been exciting to see that balance out through contributions from the Economic Growth Center and the Tobin Center for Economic Policy—which are doing fantastic policy-relevant work. However, Cowles has really served as a backbone to some of the foundational parts of the department, and so telling the story of Cowles will help better tell the story of the Department, and how it has evolved over the years.
What initiatives or programs are you planning or thinking about?
My goal at the moment is to get to know our faculty and programs, yet I’d like to begin exploring how Cowles could play an increasing role in bringing about new research. Our conferences bring hundreds of top economists to campus every year—how can we leverage this to bring about new and innovative research studies in the field? Can we play a role in bringing together leading academics on cutting edge topics? I’d especially like to think about this in areas like theory and econometrics, which tend to receive less attention from other research centers and organizations.
Similarly for communications, how can we be a leader in areas that aren’t covered by other organizations? How can we bring about innovative ways to describe complex economic research? The NBER Reporter does a great job communicating economic research, and I’d love for us to do similar work—again, in areas like theory and econometrics—as well as in newer areas like algorithms, data, and market design.
What are you most excited about in your new role as Director?
I love that Cowles rounds out our Department with research programs that are so important and foundational to the field—It sets us apart from other universities and departments—I’m just really excited to direct an organization that has such a strong methodological focus. There’s such a large opportunity to tell a compelling story around how meaningful this research is, and I can’t wait to work with all the talented researchers and staff.