Robert Mundell

Robert Mundell

Birth	October 24, 1932 (1932-10-24) (age 77) Kingston, Ontario, Canada
Nationality	Canada
Institution	Columbia University
Field	Monetary economics
Alma mater	University of British Columbia Massachusetts Institute of Technology
Influences	Charles Kindleberger
Influenced	Rudi Dornbusch Jacob Frenkel Michael Mussa
Contributions	Mundell-Fleming model Optimum currency areas Research on the gold standard
Awards	Nobel Memorial Prize in Economics (1999)
Information at IDEAS/RePEc

Robert Mundell, CC (born October 24, 1932) is a professor of economics at Columbia University and the recipient of the Nobel Memorial Prize in Economics in 1999. Mundell laid the groundwork for the introduction of the euro through his pioneering work in monetary dynamics and optimum currency areas, for which he won the Nobel. Mundell helped to start the movement known as supply-side economics, and is known for the Mundell-Fleming model and Mundell-Tobin effect.

Background

Mundell was born in Kingston, Ontario, Canada and is a graduate of the University of British Columbia in Vancouver. He attended the Massachusetts Institute of Technology (MIT), where he obtained his PhD in Economics in 1956. He also attended the London School of Economics and was a top performer in his years there.

Career

Since 1974 he has been a professor in the Economics department at Columbia University; since 2001 he has 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 at Paul H. Nitze School of Advanced International Studies in Johns Hopkins University. 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 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.

Among his major contributions are:

• Theoretical work on optimum 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

Awards

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

In 1992, Mundell received the Docteur Honoris Causa from the University of Paris. Mundell's honorary 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 honor.

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 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 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 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, 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.^[1]

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^{[citation needed]}- 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.

Television

Robert Mundell has appeared on CBS's Late Show with David Letterman. His first appearance was in October 2002^[2] where he gave The Top 10 List on "Ways My Life has Changed Since Winning the Nobel Prize." In March of 2004^[3] he told "You might be a redneck" jokes followed in May of 2004^[4] with "Yo Mama" jokes. In September of 2004^[5] he appeared again, this time to read excerpts from Paris Hilton's memoir at random moments throughout the show. In November of 2005^[6] he told a series of Rodney Dangerfield's jokes. On February 7, 2006^[7] he read Grammy Award nominated song lyrics, the night before CBS aired the 48th Grammy Awards.

Robert Mundell has also appeared on China Central Television's popular Lecture Room series.

See also

• List of economists
• Optimum currency area
• Pearl Spring Chess Tournament, Prof. Mundell’s initiative

References

External links

• 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.
• Economista canadiense. Profesor en la Columbia University de New York.
• The Sveriges Riksbank Prize in Economic Sciences
• The Kiel Institute Global Economy Prize
• Nobel biography for laureate Mundell
• IDEAS/RePEc