Emi Nakamura, a University of California at Berkeley professor who has used novel data sources to understand how the economy works in practice, is this year’s recipient of the most prestigious award for young economists.

The American Economic Association on Wednesday awarded Ms. Nakamura the John Bates Clark Medal honoring economists under 40 who have made significant contributions to the field. In its citation, the AEA pointed to her distinctive approach and creativity in her research.

She is just the fourth woman to win the award since it began in 1947.

Ms. Nakamura, 38, said in an interview she wants to tackle some of her fields’ biggest questions such as the causes of recessions and what policy makers can do to avoid them.

In the past, economists have relied on models and theories to answer these questions. Ms. Nakamura’s approach is different. Working with her frequent co-author and husband, Jon Steinsson, Ms. Nakamura has uncovered new data sources or created novel experiments to examine in detail how individual people and businesses react to changes in the economy or to government policy.


“One of the central challenges is that we don’t get to do experiments in economic policy as compared to the sciences. We don’t get to do trials on the effects of these policies, so figuring out the effects is really challenging,” she said. “My research has been using new sources of data to come up with better evidence for these effects.”

For instance, a few years ago Ms. Nakamura started looking into the mechanics of inflation, in particular how often and how much retailers changed their prices in periods of high and more subdued inflation.

She learned that the Bureau of Labor Statistics, the federal agency that collects inflation data, kept detailed unpublished data on prices going back to the 1970s in a filing cabinet at its offices. Working with the agency, Ms. Nakamura and her co-authors found the filing cabinet, but discovered the data was on microfilm cartridges so old that modern readers couldn’t read them. They had to ask a manufacturer to retrofit a microfilm reader to get to the files and digitize them.

“It was really an odyssey,” she said of her efforts to gather the data. “We started back in grad school. It took 10 years.”


Their sleuthing gave Ms. Nakamura and her co-workers a window into the high-inflation years or the late 1970s and early 1980s and allowed them to see how merchants reacted. Economists had previously theorized that periods of high inflation distorted the economy because not all retailers raised their prices at the same time, leaving consumers to prefer merchants while their prices were temporarily lower than their competitors.

Ms. Nakamura and her colleagues found instead that retailers boosted their prices so frequently during that period that it made those distortions less likely to occur.

In another paper, Ms. Nakamura studied the effects of higher government spending on the economy, a prominent topic during the 2007-09 recession. In the past, that question has been notoriously hard to answer since any economic boost produced by government spending could be snuffed out by higher interest rates from the Federal Reserve.

To get around that challenge, Ms. Nakamura and her co-authors compared states, which received different amounts of federal defense spending but were all subject to the same monetary policy. During times of military buildup, they found, the economy in states like California—which receives a lot of defense spending—performs better than in Illinois—which doesn’t. That allowed them to estimate that a 1% increase in government spending produces on average a 1.5% increase in per-capita economic output.


Ms. Nakamura, the daughter, niece and granddaughter of economists, grew up in Edmonton, Alberta, and Vancouver. Her interest in economic measurement was formed in high school, when she enrolled in a college course at the University of British Columbia taught by Erwin Diewert, an expert on the topic who is also a family friend.

Ms. Nakamura got her undergraduate degree at Princeton University and her doctorate at Harvard University. She taught at Columbia University for a decade before moving to Berkeley last year.

She and Mr. Steinsson are now studying how both short-term price changes and long-term inflation expectations affect the relationship between unemployment and inflation, known as the Phillips curve.

Her goal, she said, is to help make economics more of an empirical discipline, one that relies on evidence to make predictions, rather than on preconceptions.


“Macroeconomics is really about situations where everything is affecting everything else and in that situation it’s hard to learn things,” she said. “Learning more things about how the world works will help reduce the influence of ideology.”

Write to David Harrison at david.harrison@wsj.com