Department of Economics
Cornell University
402 Uris Hall
Ithaca NY 14853-7601 USA



Karl Shell 

Research: highlights

  • Shell (1966 and 1967) introduced a macroeconomic theory of inventive activity in which "technological knowledge" is a non-conventional factor of production.  There are increasing returns to scale in all factors (including the non-conventional factor) taken together.  Hence purely competitive provision of inventive activity is not possible.  Also because of increasing returns, the growth process is history-dependent and permits both explosive growth and contractionary growth. Shell (1973) provides the first growth model in which inventive activity depends on the prevailing industrial organization. 

  • In his 1971 JPE paper, Shell introduced the formal general-equilibrium analysis of the overlapping-generations model. He showed that the restrictions on market participation caused by births and deaths are not the cause of "Samuelson's friction." The open horizon is the source of the inoptimality. Yves Balasko and Shell provided the equilibrium and welfare analyses of monetary (and nonmonetary) general OG economies.   Balasko and Shell were the first to analyze bonafide fiscal policies, policies that allow money to have positive value.  This analysis has implications for retirement of the public debt. 

  • Shell is co-inventor with David Cass of the sunspot equilibrium concept.  Sunspots provide a rational-expectations explanation for "excess market volatility" — the excess of the randomness in outcomes over the randomness in the fundamentals. Sunspots can explain bank runs and other financial panics. If an economy is fragile in the face of sunspot shocks, then it will be fragile in the face of shocks to the fundamentals, even relatively minor shocks.

Research: partial summaries

Research: full listing

Cornell/Penn State Macroeconomics Conference, at Cornell University September 28-29, 2013

Cornell/Penn State Macroeconomics Conference, at State College April 13-14, 2013

Price-Level Volatility

Economic Advice to Obama: Video

Conference on Financial Fragility: Cornell University, September 26-27, 2009

Education, Positions, and Professional Activities

Karl Shell has been the Thorne Professor of Economics at Cornell University since 1986. Shell has been the editor of the Journal of Economic Theory since its founding in 1968. In 2013, four distinguished scholars joined to edit JET. The new editors are Alessandro Pavan (Northwestern), Ricardo Lagos (NYU), Marciano Siniscalchi (Northwestern), and Xavier Vives (IESE).

Shell was a member of the MIT faculty during 1964-68. He was a member of the University of Pennsylvania faculty during 1968-87. 

Professor Shell received his A.B. in Mathematics from Princeton University in 1960, where he was a student of William Baumol, Ralph Gomory and Harold Kuhn. He received his Ph.D. in Economics from Stanford University in 1965, where he was a student of Kenneth Arrow and Hirofumi Uzawa.

Fellowships and Honors

Professor Shell has been a fellow of the Econometric Society since 1973. He received fellowships from the Woodrow Wilson Foundation in 1960-61 and 1963-64. He was a Ford Foundation faculty research fellow in 1967-68. He held a Guggenheim fellowship during his 1977-78 visit to CEPREMAP, the government research unit in Paris. Shell spent 1984-85 in Stanford as a fellow of the Center for Advanced Study in the Behavioral Sciences. He was a Fulbright Scholar at the Institut d'Analisi Economica in Barcelona during June 1989. Shell was inducted into the first class (2011) of Economic Theory Fellows of the Society for Advancement of Economic Theory.

Cornell University: highlights

Professor Shell is an economic theorist. His teaching and administration at Cornell are in macroeconomics. Shell is the organizer for the Macroeconomics Program of the Center for Analytic Economics, and co-director with Neil Wallace of the Cornell/Penn State Macro Workshop. Shell is a member of Cornell's Center for Applied Mathematics.

Interview by Macroeconomic Dynamics




Last updated on: August 30, 2013