| Robert Mundell |
Article Index for Robert |
Website Links For Robert |
Information AboutRobert Mundell |
|
the Global Economics Prize from the 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. . Among his major contributions are:
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 Bank of Sweden prize. Nevertheless, supply side economics featured prominently in his Bank of Sweden prize speech. In the 1960s Canada, of which Mundell is a native, 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:
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. NOVEMBER 2005: PROFESSOR MUNDELL’S POSITION ON THE CHINESE RENMINBI IS AS FOLLOWS: The US and international authorities should stop pressuring China for substantial appreciation of its currency. Substantial appreciation (e.g., 25%) would undermine China’s growth miracle; aggravate the problem of non-performing loans of the banking system, delay convertibility of the RMB, weaken China’s compliance with WTO, cause deflation in the poor rural sector, unravel the role of China as a major processing center, and cause a major recession in Asia. China has used the dollar as its anchor because the dollar has served as the de facto world currency since the 1930s and the anchor serves as a rudder for China’s macroeconomic policy .just as it did for Japan and West Germany in the period of their growth miracles in the 1950s and 1960s. Appreciation would not have any important effect on the US current account deficit which obeys a logic of its own. The U.S. had mainly deficits when it was a debtor nation before World War I, surpluses as it built up a strong creditor position between 1915 and 1970 and has had deficits since the late 1970s, and crossed over into being a growing debtor nation in the late 1980s. China has played very little role in these stages of the US balance of payments, which have more to do with international savings-investment behavior based on demographic factors and the role of the dollar as the principal international currency. Rather than seeking to destabilize China’s currency, the U.S. and the IMF should help China to bring its balance of payments closer to equilibrium by opening up its markets, and moving in the direction of currency convertibility, at the same time creating a stable currency for the global economy that can be used as an anchor for all countries that would benefit from it. THE TV PERSONALITY jokes on '' The Late Show With David Letterman ''.]] Robert Mundell has appeared on CBS's nominated song lyrics, the night before CBS aired the 48th Grammys . SEE ALSO
EXTERNAL LINKS
|
|
|