Robert Mundell
Encyclopedia
Robert Mundell, CC
(born October 24, 1932) is a Nobel Prize-winning Canadian economist
. Currently, Mundell is a professor of economics at Columbia University
and the Chinese University of Hong Kong
.
He received the Nobel Memorial Prize in Economics in 1999 for his pioneering work in monetary dynamics and optimum currency area
s. Mundell laid the groundwork for the introduction of the Euro
through this work and helped to start the movement known as supply-side economics
. Mundell is also known for the Mundell–Fleming model and Mundell–Tobin effect.
, Ontario
, Canada
and is a graduate of the University of British Columbia
in Vancouver
. He earned his MA at the University of Washington
in Seattle. After studying at the University of British Colombia and at The London School of Economics
in 1956 , He then attended the Massachusetts Institute of Technology
(MIT), where he obtained his PhD
in Economics
in 1956. In 2006 Mundell earned a Doctor of Laws degree from the University of Waterloo
in Canada.
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 was Professor of Economics at Columbia University
.
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. He is currently the Distinguished Professor-at-Large of The Chinese University of Hong Kong.
Among his major contributions are:
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.
s and supply-side economics
; however, among economists it is his work on currency areas and international exchange rate
s 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 rate
s, 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:
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
.
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. During 2000, he predicted that before 2010, the euro zone would expand to cover 50 countries, while the dollar would spread throughout Latin America, while and much of Asia would look towards the yen. Such predictions have proved highly inaccurate.
Robert Mundell got the conclusion in the 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. In first third of the century which is from the beginning to the Great Depression, economics was dominated by the confrontation of the Federal Reserve System with the gold standard. The second third of the century is from the World War II to 1973 when the international monetary system was dominated by fixing the price of gold with the US dollar. The last third started with the destruction of the old system due to the problem of inflation. With the destruction of the old system, a new international monetary system founded finally. Controlling inflation by each country became a main topic during this era.
's Late Show with David Letterman
. His first appearance was on October 17, 2002 where he gave The Top 10 List on "Ways My Life has Changed Since Winning the Nobel Prize." In March 2004 he told "You might be a redneck
" jokes followed in May 2004 with "Yo Mama" jokes. In September 2004 he appeared again, this time to read excerpts from Paris Hilton
's memoir at random moments throughout the show. In November 2005 he told a series of Rodney Dangerfield
's jokes. On February 7, 2006 he read Grammy Award
nominated song lyrics, the night before CBS aired the 48th Grammy Awards.
Robert Mundell also appeared on Bloomberg Television
many times.
Robert Mundell has also appeared on China Central Television
's popular Lecture Room
series. Professor Mundell 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
.
Robert Mundell started the Pearl Spring Chess Tournament
, a double round robin tournament with six players. The first tournament in 2008 was won by the Bulgarian, Veselin Topalov
. The next two: 2009–2010 was won by the Norwegian, Magnus Carlsen
.
Order of Canada
The Order of Canada is a Canadian national order, admission into which is, within the system of orders, decorations, and medals of Canada, the second highest honour for merit...
(born October 24, 1932) is a Nobel Prize-winning Canadian economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
. Currently, Mundell is a professor of economics at Columbia University
Columbia University
Columbia University in the City of New York is a private, Ivy League university in Manhattan, New York City. Columbia is the oldest institution of higher learning in the state of New York, the fifth oldest in the United States, and one of the country's nine Colonial Colleges founded before the...
and the Chinese University of Hong Kong
Chinese University of Hong Kong
The Chinese University of Hong Kong is a research-led university in Hong Kong.CUHK is the only tertiary education institution in Hong Kong with Nobel Prize winners on its faculty, including Chen Ning Yang, James Mirrlees, Robert Alexander Mundell and Charles K. Kao...
.
He received the Nobel Memorial Prize in Economics in 1999 for his pioneering work in monetary dynamics and optimum currency area
Optimum currency area
In economics, an optimum currency area , also known as an optimal currency region , is a geographical region in which it would maximize economic efficiency to have the entire region share a single currency. It describes the optimal characteristics for the merger of currencies or the creation of a...
s. Mundell laid the groundwork for the introduction of the Euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
through this work and helped to start the movement known as supply-side economics
Supply-side economics
Supply-side economics is a school of macroeconomic thought that argues that economic growth can be most effectively created by lowering barriers for people to produce goods and services, such as lowering income tax and capital gains tax rates, and by allowing greater flexibility by reducing...
. Mundell is also known for the Mundell–Fleming model and Mundell–Tobin effect.
Background
Mundell was born in KingstonKingston, Ontario
Kingston, Ontario is a Canadian city located in Eastern Ontario where the St. Lawrence River flows out of Lake Ontario. Originally a First Nations settlement called "Katarowki," , growing European exploration in the 17th Century made it an important trading post...
, Ontario
Ontario
Ontario is a province of Canada, located in east-central Canada. It is Canada's most populous province and second largest in total area. It is home to the nation's most populous city, Toronto, and the nation's capital, Ottawa....
, Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
and is a graduate of the University of British Columbia
University of British Columbia
The University of British Columbia is a public research university. UBC’s two main campuses are situated in Vancouver and in Kelowna in the Okanagan Valley...
in Vancouver
Vancouver
Vancouver is a coastal seaport city on the mainland of British Columbia, Canada. It is the hub of Greater Vancouver, which, with over 2.3 million residents, is the third most populous metropolitan area in the country,...
. He earned his MA at the University of Washington
University of Washington
University of Washington is a public research university, founded in 1861 in Seattle, Washington, United States. The UW is the largest university in the Northwest and the oldest public university on the West Coast. The university has three campuses, with its largest campus in the University...
in Seattle. After studying at the University of British Colombia and at The London School of Economics
London School of Economics
The London School of Economics and Political Science is a public research university specialised in the social sciences located in London, United Kingdom, and a constituent college of the federal University of London...
in 1956 , He then attended the Massachusetts Institute of Technology
Massachusetts Institute of Technology
The Massachusetts Institute of Technology is a private research university located in Cambridge, Massachusetts. MIT has five schools and one college, containing a total of 32 academic departments, with a strong emphasis on scientific and technological education and research.Founded in 1861 in...
(MIT), where he obtained his PhD
Doctor of Philosophy
Doctor of Philosophy, abbreviated as Ph.D., PhD, D.Phil., or DPhil , in English-speaking countries, is a postgraduate academic degree awarded by universities...
in Economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
in 1956. In 2006 Mundell earned a Doctor of Laws degree from the University of Waterloo
University of Waterloo
The University of Waterloo is a comprehensive public university in the city of Waterloo, Ontario, Canada. The school was founded in 1957 by Drs. Gerry Hagey and Ira G. Needles, and has since grown to an institution of more than 30,000 students, faculty, and staff...
in Canada.
He was Professor of Economics and Editor of the Journal of Political Economy
Journal of Political Economy
The Journal of Political Economy is an academic journal run by economists at the University of Chicago and published every two months by the University of Chicago Press. The journal publishes articles in both theoretical economics and empirical economics...
at the University of Chicago
University of Chicago
The University of Chicago is a private research university in Chicago, Illinois, USA. It was founded by the American Baptist Education Society with a donation from oil magnate and philanthropist John D. Rockefeller and incorporated in 1890...
from 1965 to 1972, Chairman of the Department of Economics at the University of Waterloo
University of Waterloo
The University of Waterloo is a comprehensive public university in the city of Waterloo, Ontario, Canada. The school was founded in 1957 by Drs. Gerry Hagey and Ira G. Needles, and has since grown to an institution of more than 30,000 students, faculty, and staff...
1972 to 1974 and since 1974 he was Professor of Economics at Columbia University
Columbia University
Columbia University in the City of New York is a private, Ivy League university in Manhattan, New York City. Columbia is the oldest institution of higher learning in the state of New York, the fifth oldest in the United States, and one of the country's nine Colonial Colleges founded before the...
.
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 ChicagoUniversity of Chicago
The University of Chicago is a private research university in Chicago, Illinois, USA. It was founded by the American Baptist Education Society with a donation from oil magnate and philanthropist John D. Rockefeller and incorporated in 1890...
in 1957, he began teaching economics at Stanford University
Stanford University
The Leland Stanford Junior University, commonly referred to as Stanford University or Stanford, is a private research university on an campus located near Palo Alto, California. It is situated in the northwestern Santa Clara Valley on the San Francisco Peninsula, approximately northwest of San...
and then at Paul H. Nitze School of Advanced International Studies
Paul H. Nitze School of Advanced International Studies
The Paul H. Nitze School of Advanced International Studies , a division of Johns Hopkins University based in Washington, D.C., is one of the world's leading and most prestigious graduate schools devoted to the study of international affairs, economics, diplomacy, and policy research and...
in Johns Hopkins University
Johns Hopkins University
The Johns Hopkins University, commonly referred to as Johns Hopkins, JHU, or simply Hopkins, is a private research university based in Baltimore, Maryland, United States...
. In 1961, he went on to staff the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
. 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
Graduate Institute of International Studies
The Graduate Institute of International Studies, best known as HEI , was founded in 1927 as one of the first institutions in the world dedicated to the study of international relations...
in Geneva
Geneva
Geneva In the national languages of Switzerland the city is known as Genf , Ginevra and Genevra is the second-most-populous city in Switzerland and is the most populous city of Romandie, the French-speaking part of Switzerland...
until 1975. In the 1970s, he laid the groundwork for the introduction of the euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
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
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
, the IMF, the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, the European Commission
European Commission
The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....
, the Federal Reserve Board, the United States Department of Treasury and the governments of Canada and other countries. He is currently the Distinguished Professor-at-Large of The Chinese University of Hong Kong.
Among his major contributions are:
- Theoretical work on optimum currency areaOptimum currency areaIn economics, an optimum currency area , also known as an optimal currency region , is a geographical region in which it would maximize economic efficiency to have the entire region share a single currency. It describes the optimal characteristics for the merger of currencies or the creation of a...
s - Contributions to the development of the euroEuroThe euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
- Helped start the movement known as supply-side economicsSupply-side economicsSupply-side economics is a school of macroeconomic thought that argues that economic growth can be most effectively created by lowering barriers for people to produce goods and services, such as lowering income tax and capital gains tax rates, and by allowing greater flexibility by reducing...
- Historical research on the operation of the gold standardGold standardThe gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...
in different eras - Predicted the inflationInflationIn economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
of the 1970s - Mundell-Fleming modelMundell-Fleming modelThe Mundell–Fleming model, also known as the IS-LM-BP model, is an economic model first set forth by Robert Mundell and Marcus Fleming. The model is an extension of the IS-LM model...
- Mundell-Tobin effectMundell-Tobin effectThe Mundell–Tobin effect suggests that nominal interest rates would rise less than one-for-one with inflation because in response to inflation the public would hold less in money balances and more in other assets, which would drive interest rates down...
Awards
Mundell was awarded the Guggenheim FellowshipGuggenheim Fellowship
Guggenheim Fellowships are American grants that have been awarded annually since 1925 by the John Simon Guggenheim Memorial Foundation to those "who have demonstrated exceptional capacity for productive scholarship or exceptional creative ability in the arts." Each year, the foundation makes...
in 1971 and the Nobel Memorial Prize in Economics in 1999. In 2002 he was made a Companion of the Order of Canada
Order of Canada
The Order of Canada is a Canadian national order, admission into which is, within the system of orders, decorations, and medals of Canada, the second highest honour for merit...
.
In 1992, Mundell received the Docteur Honoris Causa from the University of Paris
University of Paris
The University of Paris was a university located in Paris, France and one of the earliest to be established in Europe. It was founded in the mid 12th century, and officially recognized as a university probably between 1160 and 1250...
. Mundell's honorary professorships and fellowships were from Brookings Institution
Brookings Institution
The Brookings Institution is a nonprofit public policy organization based in Washington, D.C., in the United States. One of Washington's oldest think tanks, Brookings conducts research and education in the social sciences, primarily in economics, metropolitan policy, governance, foreign policy, and...
, the University of Chicago, the University of Southern California
University of Southern California
The University of Southern California is a private, not-for-profit, nonsectarian, research university located in Los Angeles, California, United States. USC was founded in 1880, making it California's oldest private research university...
, McGill University
McGill University
Mohammed Fathy is a public research university located in Montreal, Quebec, Canada. The university bears the name of James McGill, a prominent Montreal merchant from Glasgow, Scotland, whose bequest formed the beginning of the university...
, the University of Pennsylvania
University of Pennsylvania
The University of Pennsylvania is a private, Ivy League university located in Philadelphia, Pennsylvania, United States. Penn is the fourth-oldest institution of higher education in the United States,Penn is the fourth-oldest using the founding dates claimed by each institution...
, the Bologna Center and Renmin University of China
Renmin University of China
Renmin University of China; RUC, also known as People's University of China , colloquially Renda , is a major research university in Haidian District, Beijing, China. Its campus neighbors those of Peking University and Tsinghua University....
. He became a fellow of the American Academy of Arts and Sciences
American Academy of Arts and Sciences
The American Academy of Arts and Sciences is an independent policy research center that conducts multidisciplinary studies of complex and emerging problems. The Academy’s elected members are leaders in the academic disciplines, the arts, business, and public affairs.James Bowdoin, John Adams, and...
in 1998. In June 2005 he was awarded the Global Economics Prize World Economics Institute in Kiel
Kiel
Kiel is the capital and most populous city in the northern German state of Schleswig-Holstein, with a population of 238,049 .Kiel is approximately north of Hamburg. Due to its geographic location in the north of Germany, the southeast of the Jutland peninsula, and the southwestern shore of the...
, Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
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
Zhongguancun
Zhongguancun , or Zhong Guan Cun, is a technology hub in Haidian District, Beijing, China.It is geographically situated in the northwestern part of Beijing city, in a band between the northwestern Third Ring Road and the northwestern Fourth Ring Road...
district of Beijing
Beijing
Beijing , also known as Peking , is the capital of the People's Republic of China and one of the most populous cities in the world, with a population of 19,612,368 as of 2010. The city is the country's political, cultural, and educational center, and home to the headquarters for most of China's...
, People's Republic of China
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...
is named in his honor.
International monetary flows
Mundell is best known in politics for his support of tax cutTax cut
A tax cut is a reduction in taxes. The immediate effects of a tax cut are a decrease in the real income of the government and an increase in the real income of those whose tax rate has been lowered. Due to the perceived benefit in growing real incomes among tax payers politicians have sought to...
s and supply-side economics
Supply-side economics
Supply-side economics is a school of macroeconomic thought that argues that economic growth can be most effectively created by lowering barriers for people to produce goods and services, such as lowering income tax and capital gains tax rates, and by allowing greater flexibility by reducing...
; however, among economists it is his work on currency areas and international exchange rate
Exchange rate
In finance, an exchange rate between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency...
s 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
Sveriges Riksbank
Sveriges Riksbank, or simply Riksbanken, is the central bank of Sweden and the world's oldest central bank. It is sometimes called the Swedish National Bank or the Bank of Sweden .-History:...
). 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 rate
Floating exchange rate
A floating exchange rate or fluctuating exchange rate is a type of exchange rate regime wherein a currency's value is allowed to fluctuate according to the foreign exchange market. A currency that uses a floating exchange rate is known as a floating currency....
s, a phenomenon not widely seen since the 1930s "Stockholm School
Stockholm school (economics)
The Stockholm school, or Stockholmsskolan, is a school of economic thought whose antithesis is the gold standard centered Austrian School of Economics. It refers to a loosely organized group of Swedish economists that worked together, in Stockholm, Sweden primarily in the 1930s...
" successfully lobbied Sweden
Sweden
Sweden , officially the Kingdom of Sweden , is a Nordic country on the Scandinavian Peninsula in Northern Europe. Sweden borders with Norway and Finland and is connected to Denmark by a bridge-tunnel across the Öresund....
to leave the gold standard
Gold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...
.
In 1962, along with Marcus Fleming
Marcus Fleming
John Marcus Fleming was Deputy Director of the research department of the International Monetary Fund for many years; he was already a member of this department during the period of Mundell's affiliation. At approximately the same time as Mundell, Fleming presented similar research on...
, he co-authored the Mundell-Fleming model
Mundell-Fleming model
The Mundell–Fleming model, also known as the IS-LM-BP model, is an economic model first set forth by Robert Mundell and Marcus Fleming. The model is an extension of the IS-LM 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
IS/LM model
The IS/LM model is a macroeconomic tool that demonstrates the relationship between interest rates and real output in the goods and services market and the money market...
applied to currency rates.
According to Mundell's analysis:
- Discipline under the Bretton Woods systemBretton Woods systemThe Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states in the mid 20th century...
was more due to the US Federal ReserveFederal Reserve SystemThe Federal Reserve System is the central banking system of the United States. It was created on December 23, 1913 with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907...
than to the discipline of gold. - Demand side fiscal policyFiscal policyIn economics and political science, fiscal policy is the use of government expenditure and revenue collection to influence the economy....
would be ineffective in restraining central bankCentral bankA central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...
s 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
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
over the rate of inflation, partially to finance the Vietnam War
Vietnam War
The Vietnam War was a Cold War-era military conflict that occurred in Vietnam, Laos, and Cambodia from 1 November 1955 to the fall of Saigon on 30 April 1975. This war followed the First Indochina War and was fought between North Vietnam, supported by its communist allies, and the government of...
, 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
Milton Friedman
Milton Friedman was an American economist, statistician, academic, and author who taught at the University of Chicago for more than three decades...
.
This work would later lead to the creation of the euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
, and his prediction that leaving the Bretton Woods system would lead to "stagflation
Stagflation
In economics, stagflation is a situation in which the inflation rate is high and the economic growth rate slows down and unemployment remains steadily high...
" 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
Hyperinflation
In economics, hyperinflation is inflation that is very high or out of control. While the real values of the specific economic items generally stay the same in terms of relatively stable foreign currencies, in hyperinflationary conditions the general price level within a specific economy increases...
environments – and he is both a fiscal and balance of payments
Balance of payments
Balance of payments accounts are an accounting record of all monetary transactions between a country and the rest of the world.These transactions include payments for the country's exports and imports of goods, services, financial capital, and financial transfers...
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. During 2000, he predicted that before 2010, the euro zone would expand to cover 50 countries, while the dollar would spread throughout Latin America, while and much of Asia would look towards the yen. Such predictions have proved highly inaccurate.
Nobel Prize Winner
Robert Mundell won the Nobel Memorial Prize in Economic Science in 1999 for his lecture "A Reconsideration of the Twentieth Century". According to the Nobel Prize Committee, he got the honor for "his analysis of monetary and fiscal policy under different exchange rate regimes and his analysis of optimum currency areas".Robert Mundell got the conclusion in the 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. In first third of the century which is from the beginning to the Great Depression, economics was dominated by the confrontation of the Federal Reserve System with the gold standard. The second third of the century is from the World War II to 1973 when the international monetary system was dominated by fixing the price of gold with the US dollar. The last third started with the destruction of the old system due to the problem of inflation. With the destruction of the old system, a new international monetary system founded finally. Controlling inflation by each country became a main topic during this era.
Television & Extras
Robert Mundell has appeared on CBSCBS
CBS Broadcasting Inc. is a major US commercial broadcasting television network, which started as a radio network. The name is derived from the initials of the network's former name, Columbia Broadcasting System. The network is sometimes referred to as the "Eye Network" in reference to the shape of...
's Late Show with David Letterman
Late Show with David Letterman
Late Show with David Letterman is a U.S. late-night talk show hosted by David Letterman on CBS. The show debuted on August 30, 1993, and is produced by Letterman's production company, Worldwide Pants Incorporated. The show's music director and band-leader of the house band, the CBS Orchestra, is...
. His first appearance was on October 17, 2002 where he gave The Top 10 List on "Ways My Life has Changed Since Winning the Nobel Prize." In March 2004 he told "You might be a redneck
Jeff Foxworthy
Jeffrey Marshall "Jeff" Foxworthy is an American comedian, television and radio personality and author. He is a member of the Blue Collar Comedy Tour, a comedy troupe which also comprises Larry the Cable Guy, Bill Engvall and Ron White. Known for his "you might be a redneck" one-liners, Foxworthy...
" jokes followed in May 2004 with "Yo Mama" jokes. In September 2004 he appeared again, this time to read excerpts from Paris Hilton
Paris Hilton
Paris Whitney Hilton is an American businesswoman, heiress, and socialite. She is a great-granddaughter of Conrad Hilton . Hilton is known for her controversial participation in a sex tape in 2003, and appearance on the television series The Simple Life alongside fellow socialite and childhood...
's memoir at random moments throughout the show. In November 2005 he told a series of Rodney Dangerfield
Rodney Dangerfield
Rodney Dangerfield , was an American comedian, and actor, known for the catchphrases "I don't get no respect!," "No respect, no respect at all... that's the story of my life" or "I get no respect, I tell ya" and his monologues on that theme...
's jokes. On February 7, 2006 he read Grammy Award
Grammy Award
A Grammy Award — or Grammy — is an accolade by the National Academy of Recording Arts and Sciences of the United States to recognize outstanding achievement in the music industry...
nominated song lyrics, the night before CBS aired the 48th Grammy Awards.
Robert Mundell also appeared on Bloomberg Television
Bloomberg Television
Bloomberg Television is a 24-hour global network broadcasting business and financial news. It is distributed globally, reaching over 200 million homes worldwide. It is owned and operated by Bloomberg L.P...
many times.
Robert Mundell has also appeared on China Central Television
China Central Television
China Central Television or Chinese Central Television, commonly abbreviated as CCTV, is the major state television broadcaster in mainland China. CCTV has a network of 19 channels broadcasting different programmes and is accessible to more than one billion viewers...
's popular Lecture Room
Lecture Room
Lecture Room is a popular TV program of China Central Television, mostly featured on CCTV-10, which invites scholars to provide lectures on various disciplines. In its early days, areas featured included biology, physics, economics, history and literature, with lecturers from around the world...
series. Professor Mundell was also a special guest making the ceremonial first move in Game Five of the 2010 World Chess Championship between Viswanathan Anand
Viswanathan Anand
V. Anand or Anand Viswanathan, usually referred as Viswanathan Anand, is an Indian chess Grandmaster, the current World Chess Champion, and currently second highest rated player in the world....
and Veselin Topalov
Veselin Topalov
Veselin Aleksandrov Topalov is a Bulgarian chess grandmaster. He currently has the sixth highest rating in the world, and was the challenger facing world champion Viswanathan Anand in the World Chess Championship 2010, losing the match 6½–5½....
.
Robert Mundell started the Pearl Spring Chess Tournament
Pearl Spring chess tournament
The Pearl Spring Chess Tournament is a double round robin chess tournament event featuring six super-GM players that takes place in Nanjing, China. The first edition in December 2008 was won by Veselin Topalov...
, a double round robin tournament with six players. The first tournament in 2008 was won by the Bulgarian, Veselin Topalov
Veselin Topalov
Veselin Aleksandrov Topalov is a Bulgarian chess grandmaster. He currently has the sixth highest rating in the world, and was the challenger facing world champion Viswanathan Anand in the World Chess Championship 2010, losing the match 6½–5½....
. The next two: 2009–2010 was won by the Norwegian, Magnus Carlsen
Magnus Carlsen
Sven Magnus Øen Carlsen is a Norwegian chess Grandmaster and chess prodigy who is currently the number-one ranked player in the world. In January 2010 he became the seventh player ranked number one in the world on the official FIDE rating list...
.
See also
- List of economists
- Optimum currency areaOptimum currency areaIn economics, an optimum currency area , also known as an optimal currency region , is a geographical region in which it would maximize economic efficiency to have the entire region share a single currency. It describes the optimal characteristics for the merger of currencies or the creation of a...
- Pearl Spring Chess TournamentPearl Spring chess tournamentThe Pearl Spring Chess Tournament is a double round robin chess tournament event featuring six super-GM players that takes place in Nanjing, China. The first edition in December 2008 was won by Veselin Topalov...
, Prof. Mundell's initiative
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