Julio J. Rotemberg

Julio J. Rotemberg, the William Ziegler Professor of Business Administration at Harvard Business School and a pioneering economist who developed an econometric approach to modeling the macroeconomy, died of cancer on April 2, 2017 at his home in Newton, Mass. He was 63. Rotembergs research, published in more than fifty articles, papers, and book chapters, focused on the sources of economic fluctuations, particularly the effects of monetary policy, fiscal policy, and oil price changes. He also explored the behavior of retail prices, international economics, and the economics of both market structure and organizations. Julio Rotemberg was a superb scholar and beloved teacher who left a lasting mark on the field of economics and on thousands of students, said Harvard Business School Dean Nitin Nohria. Using both theoretical and empirical approaches, Rotemberg provided microeconomic foundations for the field of macroeconomics by helping to explain how macroeconomic activity relates to the decisions being made by individuals or firms. Rotembergs research provided a role for monetary and fiscal policy to stabilize economic fluctuations, noted the American Economic Association when it presented him with its Distinguished Fellows Award last year in honor of his lifetime research contributions, adding that His influence can be appreciated in the way modern central banks conduct monetary policy. Among Rotembergs most significant papers was An Optimization Based Framework for the Evaluation of Monetary Policy, coauthored with Professor Michael Woodford of Columbia University. Published in the 1997 National Bureau of Economic Research (NBER) Annual, the paper developed an approach for modeling the macroeconomy that provided the basis for the Dynamic Structural General Equilibrium (DSGE) models now used widely in both academia and policy-making bodies. Rotemberg was also among the first to introduce the concept of monopolistic competition -- a market structure that combines elements of monopoly and competitive markets -- into models of macroeconomic fluctuations. Rotemberg also brought a deep understanding of U.S. economic history to his work. In a 2013 paper titled "Penitence after Accusations of Error: 100 Years of Monetary Policy at the U.S. Federal Reserve, presented at a National Bureau of Economic Research (NBER) conference during the Federal Reserves centennial year, he offered a groundbreaking explanation for some of the changes in the central banks approach to stabilizing the economy and ameliorating swings of the business cycle over time. The research analyzed a particular force that may help account for qualitative changes in Fed policy: the tendency of the Fed to avoid actions that have been criticized for having led to poor outcomes in the past. The paper also discussed occasions in which the Fed abandoned its past approaches. In an NBER paper issued the following year, The Federal Reserves Abandonment of Its 1923 Principles, Rotemberg explored the history of one of the most dramatic reversals in Federal Reserve policymaking -- the targeting of monetary policy to promote financial stability | and its consequences. Rotemberg was also well known for his examination of why prices are sticky, meaning that they do not always adjust as quickly or completely as they should to changes in economic conditions. He believed that sluggish or infrequent price adjustments were a possible cause of market failures and involuntary unemployment and might justify government intervention. In a seminal 1982 paper in the Journal of Political Economy, he presented a formal behavioral theory justifying sticky prices. His broad body of work also includes Charitable Giving When Altruism and Similarity are Linked, which examines psychological factors that lead people to decide to contribute to a charity, and A Behavioral Model of Demandable Deposits and Its Implications for Financial Regulation, which reviews various government regulations available to be imposed on financial institutions to understand how much they can help protect investors. Rotemberg also developed more than two dozen case studies and other teaching materials. His cases Subprime Meltdown: American Housing and Global Financial Turmoil and U.S. Banking Panic of 1933 and Federal Deposit Insurance are best-sellers. Julio Jacobo Rotemberg was born on September 26, 1953, in Buenos Aires, Argentina. He received his BA in economics from the University of California, Berkeley, in 1975 and PhD in economics from Princeton University in 1981. He first came to Harvard Business School as a visiting professor in 1994 from the MIT Sloan School of Management, where he was on the faculty from 1980 to 1996. He joined the HBS faculty full time in 1997. Rotemberg brought an international perspective and considerable rigor to the classroom, where he inspired many HBS students, both academically and personally. Julio Rotemberg was arguably the best professor we had [in the first year of the MBA program] wrote Alison Lu (MBA 2017) in a blog post. If you got a cold call to start the case discussion or commented on the case, he would ask very probing follow-up questions, so each of us spent a bit more time prepping for the case. His teaching style was as terrifying as it was effective, she added. He showed that it is possible to find a lifes calling that you are as passionate about as life itself. At the MBA Class of 2016s Class Day ceremonies last year on the day before Harvard Commencement, Rotemberg received the coveted MBA Student Association Class Faculty Teaching Award in recognition of his remarkable classroom skills. As one further indication of his passion for and dedication to his work, Rotemberg came to his office and kept teaching until just shortly before his death, despite the gravity of his illness. Rotemberg was editor of several leading professional journals, including the NBER Macroeconomics Annual and the Review of Economics and Statistics. Most recently, he was associate editor of the Journal of Money, Credit and Banking. He was a fellow of the Econometrica Society and a research associate at NEBR. In 2007, he was also a visiting scholar at the Federal Reserve Bank of Boston for several months. Rotemberg is survived by his wife, Analisa Lattes, and their children, Veronica and Martin, both of New York City; his mother, Ellen Wolf, of Buenos Aires; his sisters, Astrid and Teresa, of Miami and Zurich, respectively; and his brother, Alfredo, of Key Biscayne, Florida. Donations can be sent to Erica Wilcoxson, Brigham and Womens Development Office, 116 Huntington Ave., 5th floor, Boston, MA 02116-5712. Checks should be made out to the hospital and designated for the Center for Excellence in Nursing in memory of Professor Rotemberg. Gifts can also be made online at BWHgiving.org by selecting other under Designation and typing Center for Excellence in Nursing Fund (17374). Select In Honor Of under Tribute Type and enter Julio Rotemberg.