Robert Mundell
Robert Alexander Mundell (born October 24, 1932) is a Canadian economist who graduated from the University of British Columbia in Vancouver. He attended MIT and London School of Economics and was top performer in his years there. He went on to win the 1999 Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel. He is affiliated with Columbia University's Economics department. In 2002 he was made a Companion of the Order of Canada.
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Among his major contributions are:
- Theoretical work on Optimal Currency Areas.
- Contributions to the development of the Euro
- Helped start the movement known as supply-side economics.
- Historical research on the operation of the gold standard in different eras.
- Predicted the inflation of the 1970s.
- Mundell-Fleming model
- Mundell-Tobin effect
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Work on International Monetary Flows
Mundell is best known in politics for his support of tax cuts and supply side economics; however, among economists it is his work on currency areas and international exchange rates which caused him to be awarded the Nobel Prize. Nevertheless, supply side economics featured prominently in his Nobel Prize speech.
In the 1960s Canada, which Mundell is a native of, floated its exchange - this caused Mundell to begin investigating the results of floating exchange rates, a phenomenon not widely seen since the 1930's "Stockholm School" successfully lobbied Sweden to leave the gold standard.
In 1962 he co-authored the Mundell-Fleming model of exchange rates, and noted that it was impossible to have both domestic autonomy, and price stability and free capital flows - that two, and only two, of these 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:
- Discipline under the Bretton Woods system was more due to the US Federal Reserve than to the discipline of gold.
- Demand side fiscal policy would be ineffective in restraining central banks under a floating exchange rate system.
- Single currency zones relied, therefore, on similar levels of price stability, where a single monetary policy would suffice for all.
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/counter-point over this issue between Mundell and Milton Friedman (See Mundell-Friedman debate)
This work would later lead 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 denies the need for a fixed gold based currency or currency board - though he often recommends this as a policy in hyper-inflationary environments - and he is 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 only come about through a positive balance of payments.
The TV personality
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Robert Mundell has appeared on CBS's The Late Show with David Letterman either reading The Top 10 List or telling a series of jokes through segments of the show. In March 2004 the theme was "You Might Be A Redneck" jokes and on May of the same year "Yo Mama" jokes. Here are some of the highlights from his appearance on The Late Show on Tuesday, May 4, 2004, telling "Yo Mama" jokes:
- Yo Mama's so fat, her blood type is Ragu.
- Yo Mama's so fat, that when she puts on high heels in the morning, by the afternoon they're flats.
- Yo Mama's so fat, when she sits around the house, she sits around the house!
- Yo Mama's so fat, at the zoo elephants started throwing her peanuts.
- Yo Mama's so fat, when her beeper goes off, people think she's backing up.
- Yo Mama's so fat, she puts on her lipstick with a paint roller.
- Yo Mama's so fat, she puts mayonnaise on aspirin.
See also
- List of economists
- List of economics consultancies and think tanks
- Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel
External link
- Robert Mundell's homepage
- Single Global Currency Association - Bretton Woods 2024
- his analysis of monetary and fiscal policy under different exchange rate regimes and his analysis of optimum currency areas.