The 2022 winner of the John Bates Clark medal is Oleg Itskhoki. Each year, the medal goes to
the American economist under the age of 40 who made the most significant contribution to economic thought and knowledge.
Below is a summary of his research from the American Economic Association (AEA) website. One key finding is that financial market noise rather than economic fundamentals may be the key drivers of movements in exchange rates.
Oleg Itskhoki has made fundamental contributions to both international finance and international trade. In international finance, he has upended long-standing explanations for exchange rate puzzles, replacing them with new conceptual frameworks for understanding exchange rate movements. In international trade, his research sheds new light on the link between globalization and within-country income inequality…
Itskhoki’s most important contributions to international finance are his papers on general-equilibrium exchange-rate puzzles and exchange-rate pass-through. “Exchange Rate Disconnect in General Equilibrium” (Journal of Political Economy 2021, with Dmitry Mukhin) and the follow-up paper “Mussa Puzzle Redux” (also with Mukhin) are likely to be considered Itskhoki’s landmark contributions to international finance. The JPE paper offers a unifying theory that solves five of the major exchange-rate puzzles that have stymied international macroeconomics since the beginning of the flexible exchange-rate regime fifty years ago. The key insight is the recognition that financial market noise, not economic fundamentals, may be the main driver of exchange rates.
Congratulations to Dr. Itskhoki!