james tobin was a neo keynesian economist who received the 1981 nobel prize in economics for his research on the financial system and its impact on inflation and employment 
he is known for pioneering the tobin tax a levy on foreign exchange transactions to reduce currency speculation tobin is the author of several books including essays in economics and money credit and capital james tobin died on march 11 2002 investopedia alex dos diazearly life and educationjames tobin was born on march 5 1918 in champaign ilinois he earned both a bachelor s and master s degree from harvard university after his graduation in 1940 tobin began his career at the office of price administration and civilian supply in washington d c during world war ii he served in the united states navy 1tobin returned to harvard to earn a ph d in economics in 1947 and joined the faculty at yale university in 1950 until his retirement in 1988 public serviceapplying the study of economics to real world problems guided james tobin s work throughout his career and he once noted economics has always been a policy oriented subject unless it is applied to the urgent policy issues of the day it will become a sterile exercise without use or interest 1in 1961 president kennedy invited james tobin to serve as one of three economists on his council of economic advisers the group aided the executive branch on economic policy issues and published the 1962 economic report a statement of stabilization and growth policies known as the new economics 2in addition to his work with the kennedy administration tobin served as an academic consultant to the board of governors of the federal reserve and the u s treasury department portfolio selection theoryjames tobin received the nobel prize in economics in 1981 for his analysis of financial markets and their relations to expenditure decisions employment production and prices 2his portfolio selection theory defines how financial markets influence the investment decisions of households and businesses based on weighted risks and expected rates of return tobin emphasized that these microeconomic decisions made within a home or business influence macroeconomic aggregates such as overall consumption employment and inflation the tobin taxjames tobin developed the tobin tax in response to the collapse of the bretton woods agreement in 1971 volatile floating currency exchange rates replaced fixed currency exchange rates once based on the u s dollar s link to a gold standard as money moved quickly in an environment of varying rates tobin proposed to reduce this volatility with a small tax levied on every transaction of exchange from one currency to another this tax would discourage short term currency speculation and cushion the effect of such speculation on small developing economies which could not compete with large financial institutions the tobin tax was not formally implemented or used until after james tobin s death in 2002 and tobin s original purpose of halting currency speculation has been eclipsed by ideas of using the tax to raise revenue for economic and social development internationally 3