Princeton Professor Nobuhiro Kiyotaki has been awarded an Honorary Degree of Doctor of Science from the University of Edinburgh for his “significant contribution to current research being undertaken on financial markets, labour markets, and the aggregate economy” and for his “internationally recognized influence as a macroeconomist of the last 30 years.” Professor Kiyotaki was conferred the degree in a ceremony at the university on November 29, 2019.

A key architect of the New Keynesian Economics school of thought, Professor Kiyotaki’s contributions to the fields of economics and finance are numerous. In the late 1980s, Kiyotaki and Olivier Blanchard, now a senior fellow at the Peterson Institute in Washington, built the foundation for today’s New Keynesian macroeconomic models by demonstrating the importance of monopolistic competition for the aggregate demand multiplier. Put more simply, they showed that economists, when studying how demand affects what firms produce, must take into account a market structure where firms compete by selling similar, but differentiated, products. Kiyotaki further influenced the field of finance through his groundbreaking paper “On Money as a Medium of Exchange” co-authored with Randall Wright of the University of Wisconsin-Madison. The work examined in detail one of the several roles that money plays in the economy and showed that introducing a fiat currency (one that is legally backed by a government issuer) into an economy that has traditionally operated on the exchange of commodities could improve welfare by reducing the inefficient storage of real commodities. In 1997, Kiyotaki and John Moore—now at the University of Edinburgh—developed the Kiyotaki-Moore model of credit cycles that remains central to how economists think about business cycles. More than ten years before the financial crisis, the model demonstrated how even small shocks to the economy could lead to a downward spiral in real estate asset prices, ultimately resulting in a large economic downturn.

The field of economics remains indebted to Professor Kiyotaki for these contributions and many others. The entire Princeton community extends its heartfelt congratulations to Professor Kiyotaki on this great honor.