### From Wikipedia, the free encyclopedia

**Jacques H. Drèze** is a Belgian economist noted
for his contributions to economic theory, econometrics, and economic policy
as well as for his leadership in the economics profession. Drèze was the first President of
the European Economic
Association in 1986 and was the President of the Econometric
Society in 1970.

Jacques Drèze is also the father of five sons. One son is the
economist, Jean
Drèze, who is known for his work on poverty and hunger in India (some of which has been in collaboration
with Amartya K. Sen); another son, Xavier Drèze,
is professor of Marketing at UCLA.

###
Decisions informed by economic theory, statistics, and
optimization

Drèze's vision of economics emphasizes the normative role of
**economic theory** in
shaping policy, naturally using **Bayesian econometrics** and **mathematical optimization.** This
vision is expressed in Drèze's 1970 Presidential Address to the Econometric
Society:

"We should now regard as a realistic challenge the formal
analysis of decision problems in economics, resting on a
specification of ends and means firmly rooted in economic theory,
incorporating a probabilistic treatment of economic information,
and making use of the possibilities offered by mathematical
programming techniques to compute optimal policies."

"We should prepare ourselves to do better: first, by relating more
tightly the specification of the criterion function to general
economic theory ...; second, by treating in probabilistic terms all
the unknown parameters of the model, instead of proceeding
conditionally on point estimates for some of these; and third, by
searching for optimal decision rules by mathematical programming
techniques."

These sentences describe the research program at a research
institute that was founded by Drèze, **CORE,** the Center for Operations
Research and Econometrics, at the Université catholique de Louvain. CORE hosts economists, econometricians, game theorists and operations
researchers.

In implementing this three-part program, Drèze has concentrated
on economic theory but has also contributed to econometrics and optimization. Drèze's main work consists
mostly of theoretical and applied economics, spanning microeconomic and macroeconomic issues.
His theoretical work often uses general equilibrium theory.
The macroeconomic work ranges over theory, empirical econometrics, and economic
policy.

Drèze has contributed work on decision theory and Bayesian econometric methods.
Drèze has also written articles on game theory (37, 53, 75), mathematical programming (14, 35) and stability of
dynamical systems (45, 47).

## Contributions to
economics

Drèze's contributions to economics combine policy-relevance and
mathematical techniques.

"Indeed, models basically play the same role in economics as in
fashion: they provide an articulated frame on which to show off
your material to advantage ...; a useful role, but fraught with the
dangers that the designer may get carried away by his personal
inclination for the model, while the customers may forget that the
model is more streamlined than reality."^{[1]}

### Economics of
uncertainty and insurance

#### Preferences
depending on the state of nature

Between games of strategy and games
against nature, there remains a middle ground where
uncertainties are partially controllable by the
decision-maker---situations labelled “games of strength and skill”
by von Neumann and Morgenstern, or “moral hazard” in subsequent work. Such
problems of moral hazard have been discussed by Jacques Drèze in
his dissertation, leading to the 1961 paper (8), whose analysis was
generalized in 1987 (76), and simplified in 2004 (123). Drèze's
theory allows for preferences depending on the state of the
environment. Rational behaviour is again characterised by subjective expected utility
maximisation, where the utility is
state-dependent, and the maximisation encompasses the choice of an
optimal subjective probability from an underlying feasible set.

#### Willingness
to pay

With reference to state-dependent preferences and moral hazard, a
natural application of long-standing interest to economists
concerns the provision of safety, for instance
through road investments that are aimed at saving lives. In this
area, Jacques Drèze introduced in 1962 (12) the “willingness-to-pay” approach, which
is now widely adopted. That approach rests on individual preferences aggregated as per the theory of public goods. The
willingness to pay approach thus fits squarely in economic
theory.

*Essays on
Economic Decisions Under Uncertainty*

The work of Jacques Drèze on the economics of uncertainty
through the mid-eighties is collected in his volume of *Essays
on Economic Decisions under Uncertainty* (B2), published in
1987.

The book is organised in seven parts, covering successively decision
theory, market allocation, consumption, production, the firm under incomplete markets, labor and public decisions. Under market
allocation comes an important paper (21) on the interpretation and
properties of the general
equilibrium model pioneered in Arrow (1953). The
more significant piece in the next part is a classic paper with Franco
Modigliani on savings and portfolio choice under uncertainty (28). There follow three papers
on industry equilibrium (17, 42,
62).

###
General equilibrium economics with price rationing: Drèze
equilibria

#### Price
rigidities

In the early seventies, motivated by the potential role of price
rigidities for enhancing risk-sharing efficiency, Jacques Drèze
undertook to define equilibria with price rigidities and quantity
constraints and to study their properties in a general equilibrium context. His 1975 paper
(36, circulated in 1971) introduces the so-called “Drèze
equilibrium” at which supply (resp. demand) is constrained only
when prices are downward (resp. upward) rigid, whereas a
preselected commodity (e.g. money) is never rationed. Existence is
proved for arbitrary bounds on prices, through an original approach
repeatedly used ever since. That paper is a widely cited classic.
It was followed by several others (51, 55, 63, 75), exploring
properties of the new concept. Of particular significance to future
developments is a joint paper with Pierre Dehez (55), which
establishes the existence of Drèze equilibria with no rationing of
the demand side. These are called “supply-constrained equilibria”.
They correspond to the empirically relevant macroeconomic
situations.

#### Macroeconomic
consequences of microeconomics

In the meantime, Jean-Pascal Bénassy (1975) and Yves Younès
(1975) had approached the same problem from a macroeconomic angle,
for the more restrictive case of fixed prices. There developed a
lively interest in fixed price economies, and specifically in a
three-good macroeconomic model, first formulated by Robert Barro and
Herschel Grossman (1971) and then studied extensively by Edmond
Malinvaud (1977). That model invited empirical estimation.
The new statistical
challenges posed by “disequilibrium econometrics” were attacked at CORE by two
students of Jacques Drèze, namely Henri Sneessens (1981) and
Jean-Paul Lambert (1988). Following a joint paper by Drèze and
Sneessens (71), a major project (the European Unemployment Program)
directed by Jacques Drèze and Richard Layard led to
estimation of a common disequilibrium model in ten countries (B4,
93, 94). The results of that successful effort were to inspire
policy recommendations in Europe for several years.^{[2]}

#### Supply-constrained
equilibria

The next steps in the theoretical research came with the work of
John
Roberts on supply-constrained equilibria at competitive prices,
and then with the dissertation of Jean-Jacques Herings at Tilburg
(1987, 1996). In both cases, there appear results on existence of a
continuum of Drèze equilibria.

Following the work of Roberts and Herings, Drèze (113) proved
existence of equilibria with arbitrarily severe rationing of
supply. Next, in a joint paper with Herings and others (132), Drèze
established the generic existence of a continuum of Pareto-ranked
supply-constrained equilibria for a standard economy with some
fixed prices.

An intuitive explanation of that surprising result is this: if
some prices are fixed and the remaining are flexible, the level of
the latter prices relative to the former introduces a degree of
freedom that accounts for the multiplicity of equilibria; globally,
less rationing is associated with a higher price level; the
multiplicity of equilibria thus formalises a trade-off between
inflation and unemployment, comparable to a Phillips curve.
In this analysis, the continuum is interpreted as reflecting
co-ordination failures, not short-run price dynamics à la Phillips.
The fact that price-wage rigidities can sustain co-ordination
failures adds a new twist to explanations of involuntary
unemployment. At the same time, multiple equilibria create problems
for the definition of expectations, and introduce a new dimension
of uncertainty.

#### Increasing
returns, externalities, and nonconvexities

"Starting with a paper in *Econometrica* by Dierker,
Guesnerie and Neuefeind (1985), a theory of general equilibrium has
developed for economies with non-convex production sets, where
firms follow well-defined pricing rules. In particular, existence
theorems of increasing generality cover (to some extent, because of
various differences in assumptions) the case of Ramsey-Boiteux
pricing. Those interested primarily in applications might express
skepticism, perhaps even horrified skepticism, upon realizing that
90 pages of a serious economics journal---a 1988 issue of *The
Journal of Mathematical Economics*---were devoted to existence
proofs of equilibrium in non-convex economies, under alternative
formulations of the assumption that marginal cost pricing entails
bounded losses at normalized prices. Still, I think that economic
research must cover the whole spectrum from concrete applications
to that level of abstraction."^{[3]}

#### Incomplete markets and
money

#### Theory of the
firm

##### Finance and the
diversification of risk

Drèze gave a public lecture on "Human Capital and Risk Bearing"
(48). The innovative idea here is the transposition of the
reasoning underlying the theory of “implicit labour contracts” to
the understanding of wage rigidities and unemployment benefits.
When markets are incomplete, so that workers cannot insure the
risks associated with their future terms of employment, competitive
clearing of spot labour markets is not second-best efficient: wage
rigidities cum unemployment benefits offer scope for
improvement.

The lecture develops this theme informally. The conclusion,
stated with specific reference to labour markets, has more general
validity. It applies to any situation where the uninsurable
uncertainty about future prices results in welfare costs. Even
though price rigidities entail a loss of productive efficiency,
this can be more than offset by a gain of efficiency in
risk-sharing. What may be specific to the labour market is the
realistic possibility of controlling (minimum) wages and organising
unemployment compensation. The analysis implies that the claim that
wage flexibility is efficient requires qualification.

For “price-wage rigidities", the presence of rigidities receives
an explanation in Section Seven of Drèze's lecture: Under
incomplete markets, wage rigidities contribute to risk-sharing
efficiency. The theme of the 1979 lecture (48) is taken up in
several papers (91, 95, 101), exploring the definition and
implementation of second-best wage rigidities.

Since then, Jacques Drèze has examined ways of reconciling
flexibility of labour costs to firms with risk-sharing efficiency
of labour incomes, if needed through wage subsidies (119, 125,
131).

##### Labor
managed firms

Main article: Labor
managed firm#An economic model: The labor-managed firm

#### Disequilibrium

Drèze has suggested that research needs both to search for "microeconomic
foundations for macroeconomics" and to consider the
"macroconomic consequences of microecononomics", and Drèze had
contributed to the latter project of macroeconomic consequences of
microeconomics

##### Theory

In the early seventies, motivated by the potential role of price
rigidities for enhancing risk-sharing efficiency, Jacques Drèze
undertook to define equilibria with price rigidities and quantity
constraints and to study their properties in a general equilibrium context. His 1975 paper
(36, circulated in 1971) introduces the so-called “Drèze
equilibrium” at which supply (resp. demand) is constrained only
when prices are downward (resp. upward) rigid, whereas a
preselected commodity (e.g. money) is never rationed. Existence is
proved for arbitrary bounds on prices, through an original approach
repeatedly used ever since. That paper is a widely cited classic.
It was followed by several others (51, 55, 63, 75), exploring
properties of the new concept. Of particular significance to future
developments is a joint paper with Pierre Dehez (55), which
establishes the existence of Drèze equilibria with no rationing of
the demand side. These are called “supply-constrained equilibria”.
They correspond to the empirically relevant macroeconomic
situations.

In the meantime, Jean-Pascal Bénassy (1975) and Yves Younès
(1975) had approached the same problem from a macroeconomic angle,
for the more restrictive case of fixed prices. There developed a
lively interest in fixed price economies, and specifically in a
three-good macroeconomic model, first formulated by Robert Barro and
Herschel Grossman (1971) and then studied extensively by Edmond
Malinvaud (1977). That model invited empirical estimation.
The new statistical
challenges posed by “disequilibrium econometrics” were attacked at CORE by two
students of Jacques Drèze, namely Henri Sneessens (1981) and
Jean-Paul Lambert (1988). Following a joint paper by Drèze and
Sneessens (71), a major project (the European Unemployment Program)
directed by Jacques Drèze and Richard Layard led
to estimation of a common disequilibrium model in ten countries
(B4, 93, 94). The results of that successful effort were to inspire
policy recommendations in Europe for several years.

The next steps in the theoretical research came with the work of
John
Roberts on supply-constrained equilibria at competitive prices,
and then with the dissertation of Jean-Jacques Herings at Tilburg
(1987, 1996). In both cases, there appear results on existence of a
continuum of Drèze equilibria. Following these leads, Drèze (113)
proved existence of equilibria with arbitrarily severe rationing of
supply. Next, in a joint paper with Herings and others (132), the
generic existence of a continuum of Pareto-ranked
supply-constrained equilibria was established for a standard
economy with some fixed prices. An intuitive explanation of that
surprising result is this: if some prices are fixed and the
remaining are flexible, the level of the latter prices relative to
the former introduces a degree of freedom that accounts for the
multiplicity of equilibria; globally, less rationing is associated
with a higher price level; the multiplicity of equilibria thus
formalises a trade-off between inflation and unemployment,
comparable to a Phillips curve.

##### Econometrics
and the European Unemployment Programme

Two young French economists, Jean-Pascal Bénassy (1975) and Yves
Younès (1975), approached the same problem from a macroeconomic
angle, for the more restrictive case of fixed prices. There
developed a lively interest in fixed-price economies, and
specifically in a three-good macroeconomic model, first formulated
by Robert Barro
and Herschel Grossman (1971) and then studied extensively by Edmond
Malinvaud (1977).

That model invited empirical estimation. The new statistical challenges
posed by “disequilibrium econometrics” were attacked at CORE by two
students of Jacques Drèze, namely Henri Sneessens (1981) and
Jean-Paul Lambert (1988), whose dissertations were published and
widely read. Drèze and Sneessens proposed and estimated a
disequilibrium model of Belgium's open economy (71). This model
became the prototypical model estimated by the European
Unemployment Programme, which under the guidance of Drèze and Richard Layard developed similar models for
ten countries (B4, 93, 94). The results of that successful effort
were to inspire policy recommendations in Europe for several
years.^{[2]}

### Economic
policy

Following the emergence of European unemployment in the 1970s, Jacques Drèze
worked with Franco Modigliani on macroeconomic
policies. There resulted a paper (56), which contains some
methodological innovations (an early formulation of the “union-wage
model”, and Bayesian synthesis of classical estimates from
several models). It also contains an innovative discussion of work
sharing, a topic to which Drèze returned in (73).

In the 1980s and early 1990s, Drèze wrote about the policy front,
campaigning for two-sided policies of demand stimulation and supply-side restructuring (100). With Edmond
Malinvaud, Drèze organized a group of thirteen Belgian and
French economists who wrote *“Growth and employment: the scope
for a European initiative”* (103, 104): This position paper
advocated an ambitious program of public
investments coupled with elimination of social security
contributions by employees on minimum wages. That
paper has influenced the programs of reduced contributions on low
wages introduced recently in several countries, especially France and Belgium.

The logic of these two-handed policies stands out more sharply
in the light of the work on co-ordination failures (124, section
6). These failures are more naturally remedied through demand
stimulation. But the failures are apt to be recurrent, so that deficit
spending could lead to continued growth of the public
debt. Accordingly, demand stimulation should take the form of
socially profitable investments, with returns covering the debt
service. Substituting profitable investments and variable social security
contributions for deficit spending and straight wage rigidities, the proposed two-handed policies
differ from either orthodox Keynesianism or New
Keynesian policies.

### Public
economics

"I am impressed by the depth and breadth of knowledge that a
serious public economist dreams of commanding. The methodological
spectrum includes at one end practical and institutional aspects of
public utility pricing, taxation or health care provision, which
give the field its substantive content. The real problems
encountered in these and many other areas offer scope for the
general equilibrium mathematical analysis of second-best policies.
At the far end of the spectrum is abstract modelling of economies
with non-convex technologies or uncertainty and incomplete markets.
Confronted by this spectrum, duly illustrated here, I feel neither
despairing nor resigned to narrow specialization, but probably
over-extended."^{[4]}

### Bayesian
econometrics of simultaneous equations

One important by-product of the theory of rational decisions
under uncertainty has been the emergence of the Bayesian approach to statistics, which
views problems of statistical decision as no different from other
decision problems, and problems of statistical inference as concerned
with the revision of subjective
probabilities on the basis of observations.

Bayesian analysis of structural
econometric models raises specific difficulties, linked to the
so-called “identification
problem”, readily illustrated by a single market: we observe
prices and quantities at the intersection of supply and
demand, whereas we wish to estimate the demand and supply
curves. The development of suitable Bayesian
methods for this problem followed circulation in 1962 of a
Discussion Paper by Jacques Drèze, fully developed in several
subsequent papers (34, 39, 41, 61). The “Drèze Prior” is introduced
in (39).

## Leadership

Jacques Drèze has been involved in helping to found several
institutions that have strengthened economic research in Europe,
notably the Center for Operations Research and Econometrics (CORE),
the European Doctoral Program in Quantitative Economics (EDP) and
the European Economic Association (EEA).

### CORE

CORE was created in 1966, and rapidly grew into a leading
research centre of international significance. Jacques Drèze was
the instigator, the organiser, the first Director and a long-time
President of CORE. His outside connections were critical in
gathering outside support and in attracting foreign members or
visitors.

As expressed by Robert Aumann, CORE is “a unique breeding
ground; a place where cross-fertilisation leads to the conception
of new ideas, as well as a womb – a warm, supportive environment in
which these ideas can grow and mature”. The research output at CORE
since 1966 consists to date of some 110 books, 125 doctoral
dissertations, 1700 published articles; Discussion Papers now
average 85 per year.

Also, CORE has served as a model, emulated in other European
countries, often at the hands of former CORE members or visitors:
Bonn, for GREQAM in Marseille, CentER at Tilburg or Delta in
Paris.

###
Doctoral study and the European Doctoral Program in Quantitative
Economics

It is also at CORE, and again at the initiative of Jacques
Drèze, that EDP was conceived in 1975. Two ideas came together:

- An institution should not organise its own doctoral program if
it cannot do as well as leading institutions elsewhere.
- Education for research is greatly enhanced if students attend
at least two institutions, being thereby led to hear confronting
opinions and form their own!

These ideas were realised under EDP, where several universities
organise a joint doctoral program, with all students attending at
least two institutions and having access to supervisors from both.
Some 120 students have graduated under this program, which again
has been emulated by others in Europe.

### European Economic
Association

In 1885 the EEA was conceived by Jean Gabszewicz and Jacques
Thisse, both of CORE. The first secretary was CORE's Louis Phlips
and Jacques Drèze was the first President. Today the EEA sponsors
the *Journal of the European Economic Association* (JEEA),
holds annual meetings, and organizes summer schools for young
researchers.

## Personal
biography

Born in Verviers (Belgium) in 1929, Jacques Drèze
did undergraduate economics at the nearby Université de Liège, and then a Ph.D. at Columbia
University, with a thesis on “Individual Decision Making under
Partially Controllable Uncertainty” supervised by William
Vickrey. After a first academic job at Carnegie Mellon University
in Pittsburgh, he joined Université Catholique de Louvain in 1958,
and has been there ever since---apart from visiting appointments at
Northwestern University, the University of Chicago, and Cornell
University---until his retirement from teaching and
administration in 1989. Since his nominal retirement, he remains
active in research.

Jacques Drèze has five sons^{[5]},
including the economist and anti-hunger activist Jean Drèze, who has
collaborated on three books with Amartya K. Sen.
Another son, Xavier Drèze, is a marketing professor at UCLA.

## Notes

**^**
*JHD. "(Uncertainty and) The Firm in General Equilibrium Theory".
*The Economic Journal*, Vol. 95, Supplement: Conference
Papers (1985), pp. 1-20.
- ^
^{a}
^{b}
Dehez 2006.
**^**
- JHD. 1995. “Forty years of public economics: A personal
perspective”.
*Journal of Economic Perspectives* Vol. 9, No.
2: 111—130

**^**
- JHD. 1995. “Forty years of public economics: A personal
perspective”.
*Journal of Economic Perspectives* Vol. 9, No.
2: 111—130

**^**
Five sons are listed in the dedication to
- JHD. 1989.
*Labour Management, Contracts and Capital
Markets: A General Equilibrium Approach*. [1983 Yrjö Jahnsson
Lectures]. Basil Blackwell.

## Bibliography

### Books by Jacques Drèze

These enumerated citations and comments adapt the c.v. of Jacques
Drèze (2009-03-06):

- 1.
*Allocation under Uncertainty: Equilibrium and
Optimality* (Ed.), Macmillan, London, 1974.

- 2.
*Essays on Economic Decisions under Uncertainty*,
Cambridge University Press, Cambridge, 1987.
- Twenty reprinted papers, organised under 7 headings: individual
decision theory, markets and prices, consumer decisions, producer
decisions, theory of the firm, human capital and labour contracts,
public decisions.

- 3.
*Labour Management, Contracts and Capital Markets, A
General Equilibrium Approach*, Oxford, 1989.
- An extended version of the 1983 Yrjö Jahnsson Lectures, dealing
with the pure theory of labour-managed, then stock-market
economies; stock-market economics with labour contracts; labour
management versus labour contracts under incomplete capital
markets; and some macroeconomic aspects.

- 4.
*Europe's Unemployment Problem* (Ed.), MIT Press,
Cambridge (Mass.), 1990. (With C. Bean, J.P. Lambert, F. Mehta and
H. Sneessens, Eds)
- Papers prepared under the European Unemployment Program, a
10-country research initiative supervised by Richard Layard and Drèze in 1986-88. The
country papers adopted a common econometric framework inspired by
work on Belgium by Drèze and Henri Sneesens (see article [71]).
Includes a 65-page synthesis by Charles Bean and Drèze.

- 5.
*Underemployment Equilibria: Essays in Theory,
Econometrics and Policy*, Cambridge University Press,
Cambridge, 1991.
- Eighteen reprinted papers, organised under 8 headings:
overview, equilibria with price rigidities, efficiency of
constrained equilibria, public goods and the public sector, price
adjustments, wage policies, econometrics, and policy.

- 6.
*Money and Uncertainty: Inflation, Interest,
Indexation*, Edizioni Dell' Elefante, Roma, 1992.
- An extended version of the 1992 Paolo Baffi Lecture at Banca
d'Italia, dealing successively with a positive theory of positive
inflation, with interest rates policies and with wage
indexation.

- 7.
*Pour l'emploi, la croissance et l'Europe*, De Boeck
Université, 1995.
- Ten papers (some initially written in French, some translated
from English) dealing successively with growth and employment,
technical progress and low-skilled employment, European
macroeconomic policies, work sharing, Europe's capital city and a
status for regions within a Europe of nations. Most papers are
based on lectures addressed to non-specialist audiences.

### Selected articles by
Jacques Drèze

These enumerated citations and comments come from the c.v. of Jacques
Drèze (2009-03-06):

- 7. "Quelques réflexions sereines sur l'adaptation de
l'industrie belge au Marché Commun",
*Comptes Rendus de la
Société d'Economie Politique de Belgique*, Bruxelles, 275,
3-37, 1960; translated as "The Standard Goods Hypothesis" in
*The European Internal Market: Trade and Competition*, Eds.
A. Jacquemin and A. Sapir, 13-32, Oxford University Press,
Oxford,1989.
- Product differentiation and economies of scale as a new source
of comparative advantage---a pillar of the extensive theory of
"intra-industry trade", and of some more recent developments
following the paper by Krugman in
*AER* 1970.

- 8. "Les fondements logiques de l'utilité cardinale et de la
probabilité subjective", in
*La Decision*, Colloques
Internationaux du CNRS, Paris, 73-97, 1961.
- Extension of individual decision theory to moral hazard and
state-dependent preferences, based on unpublished Ph.D. Thesis,
revised and more systematically presented in [76].

- 12. "L'utilité sociale d'une vie humaine",
*Revue Francaise
de Recherche Opérationnelle*, 23, 93-118, 1962.

- 13. "Some Postwar Contributions of French Economists to Theory
and Public Policy",
*American Economic Review*, 54, 2, 1-64,
1964.
- An extensive review (with some extensions) of the work of the
French marginalist school (Allais, Boiteux, Massé,. . . ), with
additional sections on intertemporal allocation (Allais,
Malinvaud,. . . ) and French planning.

- 21. "Market Allocation under Uncertainty",
*European
Economic Review*, 2, 2, 133-165, 1971.
- Interpretation of the Arrow-Debreu contingent-markets model. An
early statement and demonstration of the martingale property of prices for contingent claims.

- 23. "A Tâtonnement Process for Public Goods",
*Review of
Economic Studies*, 38, 2, 133-150, 1971. (With D. de la Vallèe
Poussin.)
- Introduces the well-known MDP process for public goods,
demonstrates convergence and provides an early analysis of
incentive compatibility.

- 25. "Discount Rates for Public Investments in Closed and Open
Economies",
*Economica*, 38, 152, 395-412, 1971; reprinted
in *Cost-Benefit Analysis*, A.C. Harberger and G.P. Jenkins
Eds, Edward, 2002, and in *Discounting and Environmental
Policy*, J. Scheraga, Ed., Ashgate, 2002. (With A. Sandmo.)
- Second-best analysis of the choice of a discount rate for
public investment (previously confined to partial analysis). The
social discount rate should be a weighted average of rates of
return on specific investments, with weights reflecting marginal
shares.

- 26. "Cores and Prices in an Exchange Economy with an Atomless
Sector",
*Econometrica* 40, 6, 1090-1108, 1972. (With J.
Jaskold Gabszewicz, D. Schmeidler and K. Vind.)
- For an exchange economy with both an atomless sector and atoms,
the paper gives alternative sufficient conditions for a core
allocation to have a competitive restriction to the atomless
sector.

- 27. "Econometrics and Decision Theory",
*Econometrica*,
40, 1, 1-17, 1972.
- Presidential address to the Econometric Society; summarises
Drèze's work on Bayesian Econometrics (see also [61]) and expounds
complementarities between economic theory, decision theory,
econometrics and mathematical programming.

- 28. "Consumption Decisions under Uncertainty",
*Journal of
Economic Theory*, 5, 3, 308-335, 1972. (With F.
Modigliani.)
- Clearly distinguished time preferences from risk preferences
and temporal versus timeless uncertainty, while expounding results
on savings and portfolio choices under uncertainty.

- 33. "Investment under Private Ownership: Optimality,
Equilibrium and Stability" in
*Allocation under Uncertainty:
Equilibrium and Optimality*, Macmillan, chap. 9, 1974.
- Develops the "incomplete markets" model of general equilibrium under uncertainty, with a
single commodity per state, as an extension of the special model
(fixed coefficients) introduced in the seminal paper by Diamond in
*AER* 1967; proves basic results (most notably
non-convexity, but also existence of stockholders equilibria, their
inefficiency, and stability of stock-market valuation of
investments.)

- 34. "Bayesian Theory of Identification in Simultaneous
Equations Models" in
*Studies in Bayesian Econometrics and
Statistics*, Eds. S.E. Fienberg and A. Zellner, North-Holland, 1974.
- Based on an unpublished manuscript of 1962. Introduces the
Bayesian concept of identification and
applies it to SEM;
together with [39, 41, 44], forms the core of the material
summarised in [61] and outlined in [27].

- 36. "Existence of an Exchange Equilibrium under Price
rigidities",
*International Economic Review*, 16, 2,
301-320, 1975.
- Introduces an equilibrium concept for market economies
operating under price rigidities (the so-called Drèze equilibrium)
and a now widely used method of proving existence. Covers both real
and nominal rigidities defined by upper and/or lower bounds on
individual prices.

- 38. "Pricing, Spending and Gambling Rules for Non-Profit
Organisations" in
*Public and Urban Economics, Essays in Honor
of William S. Vickrey*, Ed. R.E. Grieson, Lexington Books,
59-89, 1976. (With M. Marchand.)
- Second-best theory applied to non-profit organisations,
including Ramsey-Boiteux pricing, criteria for capital accumulation
or consumption and guidelines for risk-taking.

- 39. "Bayesian Limited Information Analysis of the Simultaneous
Equations Model",
*Econometrica* 44, 5, 1045-1075, 1976.
- The fundamental paper on Bayesian methods for SEM, including
the use of ratio-form poly-
*t* densities.

- 40. "Some Theory of Labour Management and Participation",
*Econometrica*, 44, 6, 1125-1139, 1976.
- Walras lecture to the 1975 World Congress of the Econometric
Society. Preview of book [3]. Includes the first
general-equilibrium analysis of labour management. Under
labour-mobility across firms, labour-management equilibria
replicate competitive equilibria.

- 41. "Bayesian Full Information Analysis of Simultaneous
Equations", Journal of the American Statistical Association 71,
345, 919-923, 1976. (With J.-A. Morales.)
- Extension of [39] from limited to full information: a broader
class of prior densities and a more informative analysis, at
greater computational cost.

### Vision and
projects

- "FROM UNCERTAINTY TO MACROECONOMICS AND BACK: AN INTERVIEW WITH
JACQUES DRÈZE", Pierre Dehez and Omar Licandro.
*Macroeconomic Dynamics*, 9,
2005, 429–461.
- Jacques H. Drèze. 1972. “Econometrics and decision theory
[Presidential address to the Econometric Society]”
*Econometrica*, 40(1): 1-18. [J. H. Drèze 1987.
**Essays on Economic Decisions Under
Uncertainty**. Cambridge UP]:
- Jacques H. Drèze. 1987. “Underemployment Equilibria: From
Theory to Econometrics and Policy” [First Congress of the European Economic
Association, Presidential Address]
*European Economic
Review*, 31: 9—34. In Drèze 1993]

- Gérard
Debreu. 1991. "Address in honor of Jacques Drèze". Pages 3–6 in
W. A.
Barnett, B. Cornet, C. D'Aspremont, J. Gabszewicz, A.
Mas-Colell, eds.
*Equilibrium Theory and Applications*.
Cambridge U. P.

### Unemployment

- Henri R. Sneessens and Jacques H. Drèze. 1986. “A Discussion of
Belgian unemployment, combining traditional concepts and
disequilibrium econometrics.”
*Economica* 53: S89—S119.
[Supplement: Charles Bean, Richard Layard, and
Stephen Nickell, eds. 1986. *The Rise in Unemployment*.
Blackwell]

- Jacques H. Drèze and Charles Bean. 1990. “European
unemployment: Lessons from a multicountry econometric study.”
*Scandinavian Journal of Economics* Vol 92, No. 2: 135—165
[Bertil Holmlund and Garl-Gustaf Löfgren, eds. *Unemployment and
Wage Determination in Europe*. Blackwell. 3—33. In Dréze
1993.]

- Jacques H. Drèze, Charles R. Bean, JP Lambert. 1990.
**Europe's Unemployment Problem**. MIT
Press.

- Jacques H. Drèze. 1993.
**Underemployment Equilibria:
Essays in Theory, Econometrics, and Policy**. Cambridge
UP.

- Jacques H. Drèze; Torsten Persson; Marcus Miller.
"Work-Sharing: Some Theory and Recent European Experience".
*Economic Policy*, Vol. 1, No. 3 (Oct., 1986),
pp. 561-619.

#### Dissertations of Ph.D.
students

- Sneessens, Henri B. 1981.
*Theory and Estimation of
Macroeconomic Rationing Models*. Springer-Verlag Lecture Notes
in Economics and Mathematical Systems, Volume 191.

- Lambert, Jean-Paul. 1988.
*Disequilibrium Macroeconomic
Models: Theory and Estimation of Rationing Models Using Business
Survey Data*. Cambridge UP.

### Economic policy,
especially for Europe

- Drèze, Jacques H.; Malinvaud, Edmond. 1994. 'Growth and
employment: The scope for a European initiative',
*European
Economic Review* 38, 3—4: 489—504.

- Drèze, Jacques, E. Malinvaud, P. De Grauwe, L. Gevers,
A. Italianer, O. Lefebvre, M. Marchand, H. Sneesens, A. Steinherr,
Paul Champsaur, J.-M. Charpin, J.-P. Fitoussi & G. Laroque
(1994) “Growth and employment: the scope for a European
initiative”.
*European Economy, Reports and Studies* 1,
75–106.

- Drèze, Jacques H.; Henri Sneessens (1996). 'Technical
development, competition from low-wage economies and low-skilled
unemployment',
*Swedish Economic Policy Review*.
185–214.

- Jacques H. Drèze. 2000. “Economic and social security in the
twenty-first century, with attention to Europe”.
*Scandinavian
Journal of Economics* 102, 327–348.

### Theory of
the firm, especially labor in the firm

- JHD. 1989.
**Labour Management, Contracts and Capital
Markets: A General Equilibrium Approach**. [1983 Yrjö
Jahnsson Lectures]. Basil Blackwell.

- JHD. "Some Theory of Labor Management and Participation",
*Econometrica*, Vol. 44, No. 6 (Nov., 1976),
pp. 1125-1139

- JHD. "(Uncertainty and) The Firm in General Equilibrium
Theory".
*The Economic Journal*, Vol. 95, Supplement:
Conference Papers (1985), pp. 1-20,

### Public
economics

- JHD. "Research and Development in Public Economics: William
Vickrey's Inventive Quest of Efficiency".
*The Scandinavian
Journal of Economics*, Vol. 99, No. 2 (Jun., 1997),
pp. 179-198

- JHD. 1995. “Forty years of public economics: A personal
perspective”.
*Journal of Economic Perspectives* Vol. 9, No.
2: 111—130.

- J. H. Drèze; D. de la Vallee Poussin. "A Tâtonnement Process
for Public Goods",
*The Review of Economic Studies*, Vol.
38, No. 2. (Apr., 1971), pp. 133-150.

#### Planning and regional
economics

- Jacques Drèze; Paul de Grauwe; Jeremy Edwards. "Regions of
Europe: A Feasible Status, to Be Discussed".
*Economic
Policy*, Vol. 8, No. 17 (Oct., 1993), pp. 265-307

- Abraham Charnes; Jacques Drèze; Merton Miller. "Decision and
Horizon Rules for Stochastic Planning Problems: A Linear Example".
*Econometrica*, Vol. 34, No. 2. (Apr., 1966),
pp. 307-330.

###
Statistics and Bayesian econometrics: Simultaneous equations and
the Louvain School

- JHD. "Bayesian Limited Information Analysis of the Simultaneous
Equations Model".
*Econometrica*, Vol. 44, No. 5 (Sep.,
1976), pp. 1045-1075.

- JHD and Juan-Antonio Morales. "Bayesian Full Information
Analysis of Simultaneous Equations".
*Journal of the American
Statistical Association*. Vol. 71, No. 356 (Dec., 1976),
pp. 919-923.

- JHD and Jean-François Richard. 1983. "Bayesian Analysis of
Simultaneous Equation Systems". Chapter 9, pages 517-598, in
*Handbook of Econometrics*, Volume I, edited by Zvi Griliches and
Michael D. Intriligator. (Book 2 of *Handbooks in
Economics*, edited by Kenneth J. Arrow
and Michael D. Intriligator) North-Holland.

#### Colleagues

- Luc Bauwens, Michel Lubrano, Jean-François Richard. 1999.
*Bayesian Inference in Dynamic Econometric Models*. Oxford
University Press. (JHD wrote the "Foreword", pages v-vi)

- Jean Pierre Florens, Michel Mouchart, Jean-Marie Rolin. 1990.
*Elements of Bayesian Statistics*. Pure and Applied
Mathematics, Volume 134. Marcel Dekker.

### CORE

- Bernard Cornet and Henry Tulkens, eds.
*Contributions to
Operations Research and Economics. The twentieth anniversary of
CORE*. Papers from the symposium held in Louvain-la-Neuve,
January 1987. Edited by. MIT Press, Cambridge, MA, 1989. xii+561
pp. ISBN 0-262-03149-3

## References

- Arrow, K.J. (1953), "Le rôle des valeurs
boursières pour la répartition la meilleure des risques", in
*Econométrie*, CNRS, Paris, 41-47 (translated as "The role
of securities in the optimal allocation of risk-bearing", in
*Review of Economic Studies* 31, 91-96, 1964).

- Barro, R.J. and H.I. Grossman (1971), "A
general disequilibrium model of income and employment", American
Economic Review 61, 82-93.

- Benassy, J.P. (1975), "Neo-Keynesian disequilibrium theory in a
monetary economy",
*Review of Economic Studies* 42,
502-23.

- Boiteux, M. (1951), "La tarification au cout marginal et les
demandes aléatoires",
*Cahiers du Séminiare d'Econométrie*
1, 56-69.

- Dehez, Pierre (August 2006), "About Jacques H. DRÈZE".
CORE.

- Diamond,
Peter A. (1967), "The role of a stock market in a general
equilibrium model with technological uncertainty",
*American
Economic Review* 42, 759-76.

- Grandmont, J.M. (1977), "Temporary general equilibrium theory",
*Econometrica* 45, 535-72.

- Herings, J.J. (1996),
*Static and Dynamic Aspects of General
Disequilibrium Theory*, Kluwer.

- Magill, Michael and Martine Quinzii (1996),
*Theory of
Incomplete Markets*, MIT Press.

- Malinvaud,
E. (1977), The Theory of Unemployment Reconsidered, Basil
Blackwell.

- Radner, R. (1967),
"Equilibre des marchés à terme et au comptant en cas
d’incertitude",
*Cahiers du Séminaire d’Econométrie* 17,
35-52.

- Radner, R. (1972),
"Existence of Equilibrium of Plans, Prices and Price Expectations
in a Sequence of Markets",
*Econometrica* 40, 289-304.

- Roberts, J. (1987), "An equilibrium
model with involuntary unemployment at flexible, competitive prices
and wages",
*American Economic Review* 77, 856-74.

- Rosen, S. (1985), “Implicit contracts: a survey”,
*Journal
of Economic Literature* 23, 1144-75.

- Zellner,
A. (1971),
*An Introduction to Bayesian Inference in
Econometrics*, Wiley.