Profile Major Works Resources

James Tobin, 1918-2002

Photo of J. Tobin

Prominent Keynesian macroeconomist and monetary theorist at Yale.

Born and raised in Champaign, Illinois, James Tobin received his principal degrees from Harvard (B.A., 1939, M.A. 1940, Ph.D., 1946), where he came under the influence of Alvin Hansen, Seymour E. Harris and Joseph Schumpeter.  While still an undergraduate, Tobin read the "new" book causing so much of a stir in England: John Maynard Keynes's General Theory, and was promptly hooked. Tobin's senior thesis emerged as a paper in the QJE, where he analyzed the conditions for the "Keynes Effect" of money wage flexibility, unearthing its implicit assumptions about factor substitutability.  

Tobin interrupted his studies from 1942 to 1946, when he served with the U.S. Navy in the Pacific (the character, "Tobit", in Heman Wouk's novel, The Caine Mutiny, was based on him).  Upon his return, he finished his Ph.D. In his 1947 paper, Tobin resurrected the money wage question.  He focused on outlining the cases where the Keynes Effect might not work -- e.g. the "liquidity trap", zero interest-elasticity of investment, etc.

In 1950, James Tobin joined the faculty at Yale University, where he would remain until his retirement in 1988.  Tobin was director of the Cowles Foundation from its move to Yale in 1955 until 1965  Tobin took leave in 1961 to serve on John F. Kennedy's Council of Economic Advisors (CEA) for two years.

1958 explaining the impact of diversification on portfolio selection.

Tobin's "Q ratio" (relation between a firm's physical capital and its market value)

"Tobin tax" (1978)

Milton Friedman

James Tobin won the Nobel Memorial prize in 1981 "for his analysis of financial markets and their relations to expenditure decisions, employment, production and prices".



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Major Works of James Tobin

  • "A Note on the Money Wage Problem", 1941, QJE
  • "Money Wage Rates and Employment" 1947, in Harris, editor, The New Economics.
  • "Liquidity Preference and Monetary Policy", 1947, REStat
  • "A Statistical Demand Function for Food in the USA", 1950, JRSS
  • "A Dynamic Aggregative Model", 1955, JPE
  • "The Application of Multivariate Probit Analysis to Economic Data", 1955, Cowles Discussion Paper
  • "The Interest Elasticity of the Transactions Demand for Cash", 1956, REStat. [cwls]
  • "Comment: The Measurement and Behavior of Unemployment", 1957, NBER.
  • "Liquidity Preference as Behavior Towards Risk", 1958, RES. [cwls]
  • "Estimation of Relationships for Limited Dependent Variables", 1958, Econometrica [cwls]
  • "On the Predictive Value of Consumer Intentions and Attitudes", 1959, RES  [cwls]
  • "Consumer Expenditures and the Capital Account" with Harold W. Watts, 1960, in Friend and Jones, editors, Proceedings of the Conference on Consumption and Saving [cwls]
  • "Towards a General Kaldorian Theory of Income Distribution", 1960, RES
  • "Money, Capital and Other Stores of Value", 1961, AER.
  • "An Essay on the Principles of Debt Management", 1963, in Fiscal and Debt Management Policies [cwls]
  • "Comments on the Relevance of Psychology to Economic Theory and Research" with F.T. Dolbear, 1963, in Koch, editor, Psychology: A study of a science [cwls]
  • "Commercial Banks as Creators of Money", 1963, in Carson, Banking and Monetary Studies. [cwls]
  • "Financial Intermediaries and the Effectiveness of Monetary  Controls", with W.C. Brainard, 1963, AER. [cwls]
  • "Economic Growth as an Objective of Government Policy", 1964, AER [cwls]
  • "The Theory of Portfolio Selection", 1965, in Hahn and Brechling, editors, Theory of Interest Rates.
  • "Money and Economic Growth", 1965, Econometrica. [cwls]
  • "A Monetary Interpretation of History", 1965, AER. [cwls]
  • "Neoclassical Growth with Fixed Factor Proportions", with R.M. Solow, C.C. von Weizsacker and M. Yaari 1966, RES. [cwls]
  • "Life Cycle Saving and Balanced Growth", 1967, in Ten Economic Studies in the Tradition of Irving Fisher [cwls]
  • "Pitfalls in Financial Model Building" with W.C. Brainard, 1968, AER. [cwls]
  • "The Consumption Function", 1968, IESS [cwls]
  • "Notes on Optimal Monetary Growth", 1968, JPE [cwls]
  • "Raising the Incomes of the Poor" 1968, in Gordon, editor, Agenda for the Nation [cwls]
  • "The Case for a Negative Income Tax", 1969,  in Money and the Poor.
  • "Money and Permanent Income: Some Empirical Tests" with C. Swan, 1969, AER  [cwls]
  • "A General Equilibrium Approach to Monetary Theory", 1969, JMCB.
  • "Deposit Interest Ceilings as a Monetary Control", 1970, JMCB. [cwls]
  • "Money and Income: Post Hoc Ergo Propter Hoc?", 1970, QJE. [cwls, also wp]
  • "Rejoinder to Professor Friedman", 1970, QJE.
  • "Wealth, Liquidity and Consumption" with W. Dolde, 1971, in Consumer Spending and Monetary Policy [cwls]
  • "Friedman's Theoretical Framework", 1972, JPE. [cwls]
  • "Inflation and Unemployment", 1972, AER. [cwls]
  • "The Wage-Price Mechanism", 1973, in Weiner, editor, Econometrics of Price Determination. [cwls]
  • "Is Growth Obsolete?" with W.D. Nordhaus, 1973, in Moss, editor, Measurement of Economic and Social Performance [cwls][nber]
  • Essays in Economics, two volumes, 1974-5.
  • "Keynesian Models of Recession and Depression", 1975, AER. [cwls]
  • "Long-Run Effects of Fiscal and Monetary Policy", with W.H. Buiter, 1976, in Stein, editor, Monetarism. [cwls]
  • "Reply: Is Friedman a Monetarist?"  1976, in Stein, editor, Monetarism. [cwls]
  • "Hansen and Public Policy", 1976, QJE
  • "Asset Markets and the Cost of Capital." with W.C. Brainard, 1977, Economic Progress, Private Values and Public Policy [cwls]
  • "How Dead Is Keynes?", 1977, Econ Inquiry [cwls]
  • "Monetary Policies and the Economy: The transmission mechanism", 1978, Southern EJ. [cwls]
  • "A Proposal for International Monetary Reform", 1978, Eastern EJ [eej, cwls]
  • "Deficit Spending and Crowding Out in Shorter and Longer Runs", 1979, in Theory for Economic Efficiency [cwls]
  • "A Model of U.S. Financial and Non-financial Economic Behavior" with W.C. Brainard, D. Backus and G. Smith, 1980, JMCB  [cwls]
  • "Debt Neutrality: A Brief Review of Doctrine and Evidence." with W.H. Buiter, 1979, in Fursternberg, editor, Social Security Versus Private Saving [cwls]
  • "Stabilization Policy Ten Years After", 1980, BPEA  [cwls]
  • "The Short-Run Macroeconomics of Floating Exchange Rates: An Exposition" with J.B. de Macedo, 1980, in Chipman and Kindleberger, editors, Flexible Exchange Rates and the Balance of Payments [cwls]
  • "Fiscal and Monetary Policies, Capital Formation, and Economic Activity" with W.H. Buiter, 1980, in  Government and Capital Formation [cwls]
  • "Are New Classical Models Plausible Enough to Guide Policy?", 1980, JMCB [cwls]
  • "Government Deficits and Capital Accumulation", 1980, Contemporary Economic Activity [cwls]
  • Asset Accumulation and Economic Activity: Reflections on contemporary macroeconomic theory, 1980.
  • "The Monetarist Counter-Revolution Today: An appraisal", 1981, EJ. [cwls]
  • "Money and Finance in the Macroeconomic Process", 1982, JMCB. [nobel, cwls]
  • "The Commercial Banking Firm: A simple model", 1982, Scandinavian JE. [cwls]
  • "The 1982 Economic Report of the President: Comment on the Annual Report of the Council of Economic Advisers", JME [cwls]
  • "The State of Exchange Rate Theory: Some Skeptical Observations", 1982, in International Monetary System Under Flexible Exchange Rates [cwls]
  • "Monetary Policy: Rules, Targets, and Shocks", 1983, JMCB [cwls]
  • "On the Efficiency of the Financial System", 1984, Lloyd's Bank Review.
  • "A Mean–Variance Approach to Fundamental Valuations", 1984, J of Portfolio Management [cwls]
  • "Financial Innovation and Deregulation in Perspective", 1985, Bank of Japan MES.
  • "Neoclassical Theory in America: J. B. Clark and Fisher", 1985, AER [wp cwls]
  • "The Monetary-Fiscal Mix: Long-Run Implications", 1986, AER [wp cwls]
  • "The Future of Keynesian Economics", 1986, EEJ, [pdf]
  • "A Case for Preserving Regulatory Distinctions", 1987, Challenge.
  • Policies for Prosperity: Essays in a Keynesian mode, 1987.
  • "Financial Intermediaries", 1987, in J. Eatwell, M.Milgate and P. Newmand, editors, New Palgrave. [wp cwls]
  • "Irving Fisher", 1987, in J. Eatwell, M.Milgate and P. Newmand, editors, New Palgrave.
  • "The Future of Social Security: one economist's assessment", 1988, in T.R. Marmor and J.L. Mashaw, eds, Social Security in Contemporary American Politics [wp cwls]
  • "Inventories, Investment, Inflation and Taxes" 1988, in Chikan and Lovell, editors, Economics of Inventory Management [wp cwls]
  • "Growth and Distribution: A Neoclassical Kaldor–Robinson Exercise", 1989, Cambridge JE  [wp cwls]
  • "The Optimal Cash Balance Proposition: Maurice Allais' Priority" with W.J. Baumol, 1989, JEL 
  • "On the Theory of Macroeconomic Policy", 1990, De Economist. [wp cwls]
  • "On Crotty's Critique of Q-Theory" with W.C. Brainard, 1990, JPKE  [cwls]
  • "The Macroeconomics of Government Finance" with M. Haliassos, 1990, in Friedman and Hahn, editors,  Handbook of Monetary Economics - intro [wp cwls]
  • "The Invisible Hand in Modern Macroeconomics", 1991 [wp cwls]
  • "Commentary of Irving Fisher's Nature of Capital and Income, 1906", 1991 [wp cwls]
  • "International Currency Regimes, Capital Mobility and Economic Policy", 1991 [wp cwls]
  • "Preface", 1991, in Edward Marz, Schumpeter [wp cwls]
  • "On the Internationalization of Portfolios" with W.C. Brainard, 1992, Oxford EP  [wp cwls]
  • "An Old Keynesian Counterattacks", 1992, Eastern EJ  [pdf, wp cwls]
  • "Money", 1992, New Palgrave Money and Finance [wp cwls]
  • "Price Flexibility and Output Stability: An Old Keynesian view", 1993, JEP. [aea]
  • "Defense Spending, the Budget Deficit, and the U.S. Economy"1993 Keynote speech at ECAAR
  • "International Currency Regimes, Capital Mobility and Macroeconomic Policy", 1993, Greek ER
  • "Poverty in Relation to Macroeconomic Trends, Cycles, and Policies", 1994, in Danziger et al., editors, Confronting Poverty  [wp cwls]
  • "Health Care seen by a general economist", 1994 [wp cwls]
  • "Monetary Policy" 1994, in M. Feldstein, editor, American Policy in the 1980s. [nber]
  • "Democratic Values and Capitalist Efficiency: The Liberal Reconciliation." 1995, in Taitte, editor, Moral Values in Liberalism and Conservatism
  • "The Natural Rate as New Classical Macroeconomics", 1995, in Cross, editor, The Natural Rate of Unemployment   [wp cwls]
  • "Some Economic Consequences of the Information Explosion", Keynote Speech, 1995,  Nobels for the Future 
  • "A Currency Transactions Tax, Why and How", 1996, Open Economies Review
  • "A Liberal Agenda: Response to R. Freeman", 1996, Boston Review [br]
  • "Clinton's Second Term and the American Economy", 1996, Project Syndicate [ps]
  • "Thinking About A "New World Order"", 1996 Keynote speech at ECAAR
  • "An Overview of the General Theory: Behavior of an economic system without government intervention", 1997, in Harcourt and Riach, editors, A Second Edition of The General Theory [wp cwls]
  • Full Employment and Growth: Further Keynesian essays on policy, 1996
  • Money, Credit and Capital, with S.S. Golub, 1997
  • "Supply Constraints on Employment and Output: Natural Rave versus NAIRU", 1997 [cwls]
  • "Can we grow faster?" 1996 [wp cwls]
  • "Fisher's introductory text",1997, AER [cwls]
  • "The Experiment in Applied Economics", 1997 [wp cwls]
  • "Why We Need Sand In the Market's Gears", 1997, Washington Post
  • "Thoughts on Indexing the Elderly", 1997, FAS  [fas]
    "Judgmental Cuts in Consumer Price Indexation Are a Bad Idea," with R. Solow and K. Arrow, 1997, FAS  [fas]
  • "Monetary Policy: Recent Theory and Practice", 1998, in Wagner, editor, Current Issues in Monetary Economics [cwls]
  • "Flawed Fund: the IMF's misplaced prioirities" with G. Ranis, 1998, New Republic
  • "Europe, Japan and the Ghost of John Maynard Keynes", 1998, Project Syndicate [ps]
  • "Financial Globalization", 1999, Proceedings of the American Philosophical Society [cwls]
  • "Financial Globalization: Can National Currencies Survive?" 1999, Annual World Bank Conference of Development Economics [cwls]
  • "On Minsky's Agenda for Reform", 1999, [wp cwls]
  • "Floating Currencies are the Only Way", 1999, Project Syndicate [ps]
  • "Fiscal Policy: Its macroeconomics in perspective", 2001 [wp cwls]
  • "Macroeconomic strategy in wartime", 2002 [wp cwls]




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Resources on James Tobin


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