Robert Mundell

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Robert Mundell
Robert Mundell (cropped).jpg
Born
Robert Alexander Mundell

(1932-10-24)October 24, 1932
DiedApril 4, 2021(2021-04-04) (aged 88)
Siena, Tuscany, Italy
Nationality Canadian
Institution Johns Hopkins University (1959–61, 1997–98, 2000–01)
University of Chicago (1965–72)
Graduate Institute of International Studies in Geneva, Switzerland (1965–75) [1]
University of Waterloo (1972–74)
McGill University (1989–1990) [2]
Columbia University (1974 – 2021)
Chinese University of Hong Kong (2009 – 2021)
Field Monetary economics
School or
tradition
Supply-side economics
Alma mater University of British Columbia
University of Washington
London School of Economics
Massachusetts Institute of Technology
Doctoral
advisor
Charles Kindleberger [3]
Doctoral
students
Jacob A. Frenkel
Rudi Dornbusch [4]
Carmen Reinhart [5]
Contributions Mundell–Fleming model
Optimum currency areas
Research on the gold standard
Awards Nobel Memorial Prize in Economics (1999)
Information at IDEAS / RePEc

Robert Alexander Mundell CC (October 24, 1932 – April 4, 2021) was a Canadian economist. He was a professor of economics at Columbia University and the Chinese University of Hong Kong.

Contents

He received the Nobel Memorial Prize in Economic Sciences in 1999 for his pioneering work in monetary dynamics and optimum currency areas. [1] Mundell is known as the "father" of the euro, [6] as he laid the groundwork for its introduction through this work and helped to start the movement known as supply-side economics. [7] Mundell was also known for the Mundell–Fleming model and Mundell–Tobin effect.

Early life

Mundell was born Robert Alexander Mundell on October 24, 1932, in Kingston, Ontario, Canada, to Lila Teresa (née Hamilton) and William Mundell. [8] [9] His mother was a heiress while his father was a military officer and taught at the Royal Military College of Canada. [10] He spent his early years in a farm in Ontario and moved to British Columbia with his family when his father retired at the end of World War II. He completed his high school education in British Columbia where he was known to have participated in boxing and chess events during this time. [10]

He studied economics and Russian at the University of British Columbia in Vancouver, and went on a scholarship to the University of Washington in Seattle. [9] He went on to complete his PhD from the Massachusetts Institute of Technology while continuing to study at the London School of Economics. [9]

In 2006 Mundell earned an honourary Doctor of Laws degree from the University of Waterloo. [11] He was Professor of Economics and Editor of the Journal of Political Economy at the University of Chicago from 1965 to 1972, Chairman of the Department of Economics at the University of Waterloo 1972 to 1974 and since 1974 he had been Professor of Economics at Columbia University. [12] He also held the post of Repap Professor of Economics at McGill University. [1] [13]

Career

From 1974 until his death he had been a professor in the Economics department at Columbia University; and from 2001 he had held Columbia's highest academic rank – University Professor. After completing his post-doctoral fellowship at the University of Chicago in 1957, he began teaching economics at Stanford University, and then Paul H. Nitze School of Advanced International Studies at Johns Hopkins University during 1959–1961. [2] In 1961, he went on to staff the International Monetary Fund. Mundell returned to academics as professor of economics at the University of Chicago from 1966 to 1971, and then served as professor during summers at the Graduate Institute of International Studies in Geneva until 1975. In 1989, he was appointed to the post of Repap Professor of Economics at McGill University. [1] [13] In the 1970s, he laid the groundwork for the introduction of the euro through his pioneering work in monetary dynamics and optimum currency forms for which he won the 1999 Nobel Prize in Economics. During this time he continued to serve as an economic adviser to the United Nations, the IMF, the World Bank, the European Commission, the Federal Reserve Board, the United States Department of Treasury and the governments of Canada and other countries. He was the Distinguished Professor-at-Large of The Chinese University of Hong Kong. His 1971 Princeton tract The dollar and the policy mix is credited with founding supply-side economics (Bartlett 1971, p 101).

Among his major contributions are:

International monetary flows

Mundell is best known in politics for his support of tax cuts and supply-side economics; however, in economics it is for his work on currency areas [16] and international exchange rates [17] that he was awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel by the Bank of Sweden (Sveriges Riksbank). Nevertheless, supply-side economics featured prominently in his Bank of Sweden prize speech.

In the 1960s, Mundell's native Canada floated its exchange rate: this caused Mundell to begin investigating the results of floating exchange rates, a phenomenon not widely seen since the 1930s "Stockholm School" successfully lobbied Sweden to leave the gold standard.

In 1962, along with Marcus Fleming, he co-authored the Mundell–Fleming model of exchange rates, and noted that it was impossible to have domestic autonomy, fixed exchange rates, and free capital flows: no more than two of those objectives could be met. The model is, in effect, an extension of the IS/LM model applied to currency rates.

According to Mundell's analysis:

His analysis led to his conclusion that it was a disagreement between Europe and the United States over the rate of inflation, partially to finance the Vietnam War, and that Bretton Woods disintegrated because of the undervaluing of gold and the consequent monetary discipline breakdown. There is a famous point/counterpoint over this issue between Mundell and Milton Friedman. [18]

This work later led to the creation of the euro and his prediction that leaving the Bretton Woods system would lead to "stagflation" so long as highly progressive income tax rates applied. In 1974, he advocated a drastic tax reduction and a flattening of income tax rates.

Mundell, though lionized by some conservatives, has many of his harshest critics from the right: he denied the need for a fixed gold-based currency or currency board [ citation needed ] (he still often recommended this as a policy in hyperinflationary environments) and he was both a fiscal and balance of payments deficit hawk. He is well known for stating that in a floating exchange rate system, expansion of the money supply can come about only by a positive balance of payments.

In 2000, Mundell recommended that Canada permanently tie its dollar's value to the U.S. dollar. [19]

Father of the euro

Robert Mundell was considered the "father of the euro" for his early work encouraging a European monetary union. [6] [20] Starting in the 1960s, Mundell supported the constitution of a European Economic and Monetary Union and pushed for the creation of the euro. [21]

In 2000, he predicted that before 2010, the eurozone would expand to cover 50 countries, while the U.S. dollar would spread throughout Latin America, and much of Asia would look towards the yen. [22] Such predictions have proved highly inaccurate.

In his 2012 article "Robert Mundell, evil genius of the euro", Greg Palast affirms that Mundell advocated for the euro because its implementation would have the effect of removing democratic control over monetary policy. As such, when a crisis hits, eurozone governments would not be able to stimulate the economy by creating money, as is prescribed by Keynesian economics. They would thus be forced to resort to other means to curtail unemployment, such as deregulating businesses, privatizing state industries, cutting taxes, and weakening the social safety net. [23]

In 2014, Mundell voiced his opposition to proposals of a fiscal union between the European states. He declared that "it would be insane to have a central European authority that controls all the taxes and duties of the states ... controlled in the Union. This transfer of sovereignty is far too big". He also voiced his opposition to the prospect that countries could be liable for other countries' debt. [24]

Awards and honours

Mundell was awarded the Guggenheim Fellowship in 1971 and the Nobel Memorial Prize in Economics in 1999. [25] [26] In 2002 he was made a Companion of the Order of Canada. [27]

In 1992, Mundell received a Docteur honouris Causa from the University of Paris. Mundell's honourary professorships and fellowships were from Brookings Institution, the University of Chicago, the University of Southern California, McGill University, the University of Pennsylvania, the Bologna Center and Renmin University of China. He became a Fellow of the American Academy of Arts and Sciences in 1998. In June 2005 he was awarded the Global Economics Prize World Economics Institute in Kiel, Germany, and in September 2005 he was made a Cavaliere di Gran Croce del Reale Ordine del Merito sotto il Titolo di San Ludovico by Principe Don Carlo Ugo di Borbone Parma.

The Mundell International University of Entrepreneurship in the Zhongguancun district of Beijing, People's Republic of China, is named in his honour. [28]

Mundell won the Nobel Memorial Prize in Economic Science in 1999 and gave as his prize lecture a speech titled "A Reconsideration of the Twentieth Century". According to the Nobel Prize Committee, he got the honour for "his analysis of monetary and fiscal policy under different exchange rate regimes and his analysis of optimum currency areas".

Mundell concluded in that lecture that "the international monetary system depends only on the power configuration of the countries that make it up". He divided the entire twentieth century into three parts by different periods of time:

With the destruction of the old monetary system, a new international monetary system was finally founded. Controlling inflation by each country became a main topic during this era.

Television appearances

Mundell appeared on CBS's Late Show with David Letterman . His first appearance was on October 17, 2002, [29] where he gave The Top 10 List on "Ways My Life has Changed Since Winning the Nobel Prize." In March 2004 [30] he told "You might be a redneck" jokes, followed in May 2004 [31] with "Yo Mama" jokes. In September 2004 [32] he appeared again, this time to read excerpts from Paris Hilton's memoir at random moments throughout the show. In November 2005 [33] he told a series of Rodney Dangerfield's jokes. On February 7, 2006, [34] he read Grammy Award nominated song lyrics, the night before CBS aired the 48th Grammy Awards.

Mundell also appeared on Bloomberg Television many times, mainly speaking on euro-related topics and other European financial issues. [35]

Mundell has also appeared on China Central Television's popular Lecture Room series. He was also a special guest making the ceremonial first move in Game Five of the 2010 World Chess Championship between Viswanathan Anand and Veselin Topalov. [36] He also played the opening move at the Pearl Spring Chess Tournament. [37]

Personal life

Mundell was married to Velerie Natsios-Mundell. The couple had a son and lived in Monteriggioni, Siena, Tuscany, Italy, starting the late 1970s. He had two sons and a daughter from an earlier marriage. One of his sons had predeceased him in a car accident. [9] Mundell died on April 4, 2021 from cholangiocarcinoma, a cancer of the bile duct. [38] [39] [40] He was aged 88. [9]

See also

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References

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Selected publications

Awards
Preceded by
Amartya Sen
Laureate of the Nobel Memorial Prize in Economics
1999
Succeeded by
James J. Heckman
Daniel L. McFadden