MIT affiliates bag BBVA Foundation Frontiers of Knowledge Award in Economics category
Acclaimed Economist Olivier Blanchard, formerly the Robert M. Solow Professor of Economics at MIT, has been honored with the 2025 BBVA Foundation Frontiers of Knowledge Award in the Economics, Finance, and Management category. The prestigious recognition acknowledges Blanchard's significant contributions to modern macroeconomic analysis, particularly in establishing robust foundations for studying business cycle fluctuations.
Sharing the award with MIT alumni Jordi Gali at the Centre de Recerca en Economia Internacional and Pompeu Fabra University in Spain, and Michael Woodford of Columbia University, the trio were instrumental in developing the New Keynesian model. This educational framework has been embraced globally, given its novel insights into macroeconomic policy analysis, such as incorporating consumer expectations into policymaking.
The New Keynesian model's unconventional tools, including greater transparency regarding monetary policy, were first tested following the dotcom bubble burst in the early 2000s. Subsequently, these tools were applied by central banks, notably the Federal Reserve and the European Central Bank, during the 2008 financial crisis.
Blanchard played a formative role in the development of New Keynesian economics, starting with a 1987 paper co-authored with Princeton University's Nobuhiro Kiyotaki. More than a decade later, Woodford offered critical insights into optimal monetary policy within the New Keynesian framework, while Gali extended and synthesized the framework, culminating in a blueprint for designing optimal monetary policy.
Throughout his career, Blanchard has been a resident scholar at MIT, serving as head of the Department of Economics from 1998 to 2003 and mentoring generations of macroeconomics students, including Gali. As the IMF's Chief Economist from 2008 to 2015, Blanchard drew upon his theoretical framework to help shape policy responses to the global financial crisis and the Euro debt crisis.
MIT economist Jonathan Gruber, the current head of the department, lauds Blanchard's extensive contributions. Gruber acknowledges Blanchard as an exceptional macroeconomist whose work continues to significantly influence economic understanding during this time of global uncertainty. Furthermore, Gruber acknowledges Blanchard as a cornerstone of the department, crediting his leadership for perpetuating the department's legacy and establishing MIT Economics as a preeminent institution.
Blanchard, Gali, and Woodford will be formally recognized at a ceremony in Bilbao, Spain, in June, receiving a shared prize of 400,000 euros. The BBVA Foundation supports scientific research and cultural creation, promotes knowledge dissemination, and recognizes exceptional talent and innovation across five strategic areas: environment, biomedicine and health, economy and society, basic sciences, and technology, and culture. The Frontiers of Knowledge Awards, comprising eight categories, celebrate outstanding research and cultural creation while promoting the concept of knowledge as a global public good.
Since 2009, the BBVA Foundation has honored more than a dozen MIT faculty members, including MIT economist Daron Acemoglu and the Abdul Latif Jameel Poverty Action Lab (J-PAL), led by MIT economists Abhijit Banerjee, Esther Duflo, and Ben Olken.
- Olivier Blanchard, along with MIT alumni Jordi Gali and Michael Woodford, have been honored with the 2025 BBVA Foundation Frontiers of Knowledge Award for their significant contributions to modern macroeconomic analysis.
- The New Keynesian model, developed by this group, has been widely adopted internationally, offering novel insights into macroeconomic policy analysis, such as incorporating consumer expectations into policymaking.
- The New Keynesian model's unconventional tools, including greater transparency in monetary policy, were first tested during the dotcom bubble burst in the early 2000s.
- Blanchard's theoretical framework has been influential in shaping policy responses to crises, such as the 2008 financial crisis, where these tools were applied by central banks like the Federal Reserve and the European Central Bank.
- Blanchard's career includes stints at MIT, where he mentored generations of macroeconomics students, including Jordi Gali, and served as head of the Department of Economics from 1998 to 2003.
- As the IMF's Chief Economist from 2008 to 2015, Blanchard applied his theoretical framework to help formulate policy responses to the global financial crisis and the Euro debt crisis.
- The BBVA Foundation, which supports scientific research and cultural creation, has recognized Blanchard, Gali, and Woodford for their exceptional talent and innovation in the fields of economics, finance, and management.
- The trio will receive a shared prize of 400,000 euros at a ceremony in Bilbao, Spain, in June, and the BBVA Foundation promotes the concept of knowledge as a global public good.
- MIT Economics has been repeatedly honored by the BBVA Foundation, with more than a dozen faculty members, including Daron Acemoglu and the Abdul Latif Jameel Poverty Action Lab (J-PAL), receiving recognition for their contributions to various areas, including biomedicine, health, environment, culture, and technology.
