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Constantine Christos "Costas" Azariadis, is a macroeconomist who was born February 17, 1943 in Athens, Greece. He has worked on diverse topics, such as labor markets, business cycles, and economic growth and development. Azariadis originated and developed the concept of implicit contract theory.


Azariadis studied engineering in the National Technical University of Athens before earning his MBA and PhD in economics at Carnegie Mellon during 1969-73. His doctoral dissertation at Carnegie Mellon was advised by Edward C. Prescott and Robert Lucas.

Academic trajectory

He was an assistant professor at Brown during 1973-76, a visiting researcher at Hebrew University in 1977, then at University of Pennsylvania during 1977-92, and finally professor at UCLA since 1992. Since July 1, 2006, he is the Edward Mallinckrodt Distinguished Professor in Arts & Sciences at the Economics Department at Washington University while retaining a position at UCLA as a professor emeritus. He is a research fellow at the Federal Reserve Bank of St. Louis since 2006. Azariadis was elected a Fellow of the Econometric Society in 1989.
Implicit contract theory

Azariadis originated the concept of implicit contract theory. He proved that wage rigidities may represent a mechanism by which firms insure workers against risk, thus showing that wage rigidity was not necessarily evidence in favor of the Keynesian theory. Later Azariadis demonstrated that there are ways in which uncertainty is structured that imply that wages cannot perform their risk insurance role and simultaneously produce full employment. This result aided the Keynesian theory by providing a coherent microeconomic explanation of unemployment.

Major publications

Azariadis, C. 1975. Implicit contracts and underemployment equilibria. Journal of Political Economy, 83: 1183-1202
Azariadis, C. 1976. On the Incidence of Unemployment, Review of Economic Studies (February): 115-125.
Azariadis, C. 1981. A Re-examination of Natural Rate Theory, American Economic Review (December): 946-960.
Azariadis, C. 1981. Self-Fulfilling Prophecies, Journal of Economic Theory, (December): 380-396.
Azariadis, C. 1983. Employment With Asymmetric Information, Quarterly Journal of Economics (Supplement): 157-172.
Azariadis, C. and R. Guesnerie, 1986. Sunspots and Cycles, Review of Economic Studies (October): 725-738.
Azariadis, C. and A. Drazen, 1990. Threshold Externalities in Economic Development, Quarterly Journal of Economics (May 1990): 501-526.
Azariadis, C. 1996. The Economics of Poverty Traps, Part One: Complete Markets, Journal of Economic Growth, (December): 449-486.
Azariadis, C. and L. Lambertini, 2003. Endogenous Debt Constraints in Lifecycle Economies, Review of Economic Studies: 461-488.
Azariadis, C., J. Bullard, and L. Ohanian, 2004. Trend-Reverting Fluctuations in the Life-Cycle Model, Journal of Economic Theory: 334-356.

Author of:

Intertemporal Macroeconomics. Oxford: Blackwell Publishers, February 1993. ISBN 1-55786-366-0


Steven N. Durlauf 2007. An Interview with Costas Azariadis, Macroeconomic Dynamics, 11:2:249-271.
External links

Prof. Azariadis' homepage
Azariadis' webpage at the Federal Reserve

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