Lawrence R Klein

Klein began model building while still a graduate student. After getting his PhD from MIT in 1944, he moved on to the Cowles Commission for Research in Economics, then at the University of Chicago. While there he built a model of the U.S. economy with the goal of forecasting economic conditions and estimating the impact of changes in government spending, taxes, and other policies. In 1946 the conventional wisdom was that the end of World War II would sink the economy into a depression for a few years. Klein used his model to counter this thinking. The pent-up demand for consumer goods, he correctly argued, combined with the purchasing power of returning soldiers, would ward off a depression. Later he predicted correctly again that the end of the Korean War would bring only a mild recession. Klein moved to the University of Michigan, where he built the bigger and more complicated Klein-Goldberger model with then-graduate student Arthur Goldberger, then to Oxford University, where he created a model of the British economy. Klein returned to the U.S. to join Penn’s Department of Economics in 1958, joining Wharton a decade later, where he built the now-famous “Wharton model” of the U.S. economy — a model with more than a thousand simultaneous equations. Later in his career, in 1976, Klein served as coordinator of President Jimmy Carter’s economic task force before the U.S. presidential election, later declining an invitation to join Carter’s administration.