Mundell’s academic road
Mundell is a master of modern monetary economics and international economics, from trade theory to international macroeconomics, from monetary theory to optimal currency area theory, to the reform of the international monetary system, in many fields of economics Outstanding contribution. As a winner of the Nobel Prize in Economics and one of the theoretical builders of the European Monetary Union, he is farsighted. As early as the 1960s, he predicted that exchange rate changes and high capital flows would affect the economy in a more open economic system. The policy has a great impact. In the 1960s, Mundell astounded the world and put forward the thesis that “sovereignty and currency are not necessarily linked, and currency will move toward unity”, challenging the view of “how a sovereign country can have no independent currency” that has been regarded as the golden rule. People in economic circles are called “lunatic economists.” His 1961 article on the “optimal currency area” laid a theoretical foundation for the smooth introduction of the euro, which was coming in 2000.
Mundell was born on October 24, 1932. After graduating with a bachelor’s degree from the University of British Columbia, Canada in 1953, he studied at the London School of Economics. In 1956, he received a Ph.D. in economics from the Massachusetts Institute of Technology with a dissertation “On International Capital Flows.” Four Nobel Prize winners in economics, they are Paul Samuelson, Kenneth Joseph Arrow, James Edward Mead and Robert Solo, as well as the leader of the London School of Economics. Binns and economic historian Charles P. Kindleberger. Mundell taught at Stanford University and the Johns Hopkins Bologna Center for Advanced International Studies in Italy. In 1974, he was hired by Columbia University in the United States and served as a professor of economics until his death. He has traveled to North America, South America, Africa, Australia and Asia and gave extensive lectures. In 1997, he was awarded the Distinguished Person Award by the American Economic Association. In 1998, he was elected as a member of the American Academy of Arts and Sciences.
In 1961, Mundell worked for the International Monetary Fund. From 1966 to 1971, he served as professor of economics at the University of Chicago and editor of the Journal of Political Economy, and concurrently as a summer professor of international economics at the International Graduate School in Geneva, Switzerland. After leaving the University of Chicago, Mundell returned to Canada and taught at the University of Waterloo for a while. He served as an advisor to the Monetary Committee of the Economic Commission for Europe in 1970, and was one of the nine advisors who drafted a report on a unified European currency in Brussels from 1972 to 1973. From 1964 to 1978, Mundell served as a member of the Bellagio Princeton International Monetary Reform Research Group. From 1971 to 1987, he was elected chairman of the Santa Colomba International Monetary Reform Conference. In 1997, he co-founded the “Zagreb Journal of Economics”, and in 2005, the “Mundell” magazine named after him was published. Since 1999, he has served as the chairman of the board of directors of the world’s leading strategic consulting organization-World Managers Group. As of 2021, Mundell has been awarded honorary professors and honorary doctorates from more than 50 universities, and has served as a consultant for many international institutions and organizations, including the United Nations, International Monetary Fund, World Bank, European Commission, and U.S. Commonwealth Reserve Board, U.S. Department of the Treasury, etc.
This master of economics has published a large number of books and papers on international economic theories, systematically describing what is a standard international macroeconomic model, and is known as the “father of optimal monetary theory.” He was a pioneer in the theory of combining monetary and fiscal policies, and rewrote the theory of inflation and interest. Mundell and other economists jointly advocated the use of monetary methods to solve the payment balance, and he was also one of the advocates of the supply school. Mundell wrote a lot of articles on the history of the international monetary system, which played an important role in the creation of the euro. In addition, he has written numerous articles on the economics of “transition”.
Mundell is not only an excellent theoretical economist, but he has also dealt with many economic problems and is one of the few economists in the world who has had a direct influence on the formulation of policies. In 1962, the overall economic situation in the United States was not good. President John F. Kennedy adopted the policy proposed by Mundell. On the one hand, he wanted to cut taxes, and on the other hand, he changed the balance of payments through the supply of money. The tax cut policy he advocated produced very good results in the summer of 1964. Since then, the U.S. economy has soared, achieving the longest growth in U.S. history.
Mundell’s representative academic theory
Mundell’s research is original and advanced. When most countries in the world still adopted the “Bretton Woods Agreement” before the mid-1970s to formulate a fixed exchange rate policy, that is, when a fixed exchange rate was adopted, he had already carried out related floating exchange rates. And breakthrough research on the high level of capital flow. In addition to considering when a country should abandon its own currency, it also clarifies the significance of different exchange rate systems adopting different policies. If a floating exchange rate is implemented, monetary policy will play a leading role, and fiscal policy will only play a supporting role. If a fixed exchange rate is used, the situation is the opposite. Under the condition of free flow of funds, monetary policy can be guided by external goals such as exchange rates or internal goals such as price stabilization, but it cannot be guided by the above two goals at the same time.
”Optimal currency area” is an economic geography concept, first proposed by Mundell in 1961, and later revised, supplemented and perfected by many economists. In his article on the “optimal currency area”, he first raised the important question of “when and which regions will give up monetary sovereignty and it will be beneficial to switch to a common currency”. He believes that the advantage of establishing a common currency lies in the reduction of trade transaction costs and the reduction of relative price uncertainties. But he also studied the possible drawbacks of the common currency, the most important of which is that when the demand in a certain area changes or “asymmetric shocks” occur, so that real wages need to fall, it is difficult to maintain the employment rate at a high level. . Therefore, Mundell believes that if the common currency area needs to operate steadily, it must be accompanied by a high labor turnover rate to get rid of the above-mentioned interference. When there is an “asymmetric shock” in a certain area of the common currency zone, if the area has a very high labor turnover rate, it can maintain full employment.
On October 13, 1999, the Royal Swedish Academy of Sciences awarded the annual Nobel Prize in Economics to Mundell
The core content of the “optimal currency area” is that in areas with certain conditions, countries abandon their own currencies and adopt a unified regional currency, which is conducive to arranging exchange rates to achieve the macroeconomic goals of employment, stability and balance of payments. . “Optimal” refers to the complete flow of factors among members of the currency area, especially the free flow of labor can effectively regulate the structural imbalance of the currency area. He believes that in view of the gradual integration of European countries, the formation of a common currency union is most beneficial to the development of Europe, and Europe is the “most appropriate currency area.” All countries in this region will find that it is more convenient to adopt a single currency than to use their own currency. It can be said that the concept of “optimal currency area” originated from thinking about the European Community.
Mundell’s “Optimal Currency Area Theory” promoted the development of supply-side economics and played an important role in the creation of the euro. He became the theoretical founder of the euro. The establishment of the euro area is the best practice of the “optimal currency area” theory, which promotes trade exchanges between countries, reduces transaction costs, and is of great significance to the flow of factors, the circulation of products and services, and the establishment of an open economy. He spoke highly of the birth of the euro. Although he did not personally participate in the creation process of the euro, his prophetic theories and innovative research on the common currency laid the foundation for the issuance of the single European currency, the euro, and he was therefore praised. As the “father of the euro”. He humbly said: “This is too much. I may be the’father of the euro’, maybe just one of several’fathers of the euro’.”
His academic achievements are also the “Mundell-Fleming model”. “, referred to as the MF model, and the “Mundell-Tobin effect”. The “Impossible Triangle” he put forward refers to the difficulties faced by economic, social and fiscal policy objective selection, and it is difficult to achieve three objectives at the same time. In terms of financial policy, it is impossible to have both of free capital flow, fixed exchange rate and independence of monetary policy. Looking back on Mundell’s road to success, we can see that this genius, known as a giant in economics, is full of a critical spirit of traditional theories.
On October 13, 1999, the Royal Swedish Academy of Sciences awarded Mundell the annual Nobel Prize in Economics in recognition of his “analysis of monetary and fiscal policies under different exchange rate systems and the’optimal currency area'”. Great contribution made. The award speech of the Royal Swedish Academy of Sciences is 7 pages long, and one paragraph highly praised: “Robert Mundell established the theoretical basis for determining realistic and feasible policies, including monetary policy and fiscal policy, under the conditions of an open economy. He said, The research on the two issues of monetary dynamics and the optimal currency area has inspired generations of researchers. Although Mundell’s achievements were achieved decades ago, they are still in international macroeconomics textbooks. Core position.”
Mundell has beautiful silver hair and shiny blue eyes. When speaking at the forum, the vivid face was full of charm, and the conversation was wise and humorous. However, in his usual life and life, his performance is quite different. It is not an exaggeration to say that he is “Ma Daha”. According to Mundell’s contribution to the economics circle, the 1999 Nobel Prize is long overdue. In fact, he was included in the list of candidates as early as the early 1980s, but was rejected because of his “weird behavior and disorderly behavior”. For example, after he was elected to the American Academy of Econometrics, he didn’t even know the honor because he didn’t open the notice at all. For another example, after being elected as the chairman of the American Economic Association, he even forgot to attend the inauguration ceremony, and the admirers waiting to hear his speech waited in the auditorium. From 1967 to 1971, while teaching at the University of Chicago and concurrently editor of the “Journal of Political Economy”, the academic journal was eventually closed down because of often too lazy to read the manuscript reply. When he was in class, he did whatever he wanted, no matter what he said, and he didn’t change the exam papers. Mundell likes to paint and painted more than 400 oil paintings in 18 months from 1974 to 1975. The paintings are colorful, bright and lively, and their style is even crazier than Vincent van Gogh.
The laziness of this economic master is also well known. He likes to be alone in the country house while watching TV and drinking, not knowing whether he is sober or slightly drunk. In addition to shopping in the supermarket and back to school to give lectures, he can watch TV at home for a few days. The two anchors of the TV station have become “the smartest people in America” in his eyes. Mundell paid the price for his “doing his own way”, which made the Nobel Prize nearly 20 years late. Although everyone felt sorry for him, he himself didn’t care. What made him a headache was how to use the nearly $1 million bonus. After careful consideration, he finally spent money to repair his mansion in Italy, buy a pony for his son, and deposit the remaining money in the account in euros.
Although Mundell has a very high status in the economic world, he often behaves strangely in the public. For a while, he put his silver hair on his shoulders. At the solemn Nobel awards ceremony, he sang on a whim and became the only winner to sing at the Nobel awards ceremony in the 20th century. At the Stockholm Concert Hall, the capital of Sweden, the Nobel Prize winners and more than 1,000 guests from the Swedish royal family, government departments and the Nobel Prize Committee gathered together. He sang affectionately the song “Pain and Joy” written by Canadian Paul Ranko: “Do you think I did a lot? But I have to sing shyly: No, I am nothing, I just walk my own way.” Expressing the feeling of winning, the atmosphere of the ceremony reached a climax.
Mundell is concerned about China’s reforms
Follow China’s reforms
After winning the Nobel Prize in Economics in 1999, Mundell gradually faded out of the sight of Westerners. He paid attention to China most of the time and expressed his preference for China more than once in public. In March 2005, Mundell became an American economist who formally obtained the “Green Card” in Beijing. This is the first time that Beijing has applied for a “Foreigner’s Permanent Residence Permit” since the People issue certificates. He said at the awarding ceremony of the permanent residence permit in China: “I have lived in different parts of the world for more than 70 years. It is a more important opportunity for me to settle down in Beijing. Beijing is the center of China’s political culture and international exchanges. And China will be the world’s largest consulting market.”
In 2007, Mundell delivered a speech on “China’s Macroeconomic Policy in the World Economy” at the “China Transportation Finance Development” Forum, and opened it at the forum. The prologue. He talked about China’s financial reform on the development of the transportation industry, the change and free convertibility of the RMB exchange rate, and China’s foreign exchange reserves, and answered questions raised by the audience on the spot.
Mundell has always been a strong supporter of China’s current economic system and frequently published his views on China’s economic development and exchange rate system. He not only gave firm support to the RMB exchange rate policy, but also provided support for the reform of commercial banks, the construction of capital markets, and Economic reform measures such as the transformation of state-owned enterprises are greatly appreciated. The book “Monetary and Financial Market Reform in the Transitional Economy: The Case of China” has also aroused strong responses from the international economics community. Regarding the recent concern about the appreciation of the renminbi, Mundell, as an economist, has repeatedly put forward his own opinions and suggestions.
Mundell has been following China’s reforms for a long time and has published many papers. He not only participated in the large-scale Boao Forum for Asia, Beijing Science and Technology Expo Forum and Beijing International Finance Forum, but also visited the small and medium-sized Hainan University Teachers Forum and Sohu Economics. People” forum and Shenzhen Global Brain Bank Forum have become “forum masters”. He believes that China is an important economic force in the world, and the renminbi should remain unchanged. He applauded the establishment of the China Banking Regulatory Commission to supervise commercial banks and separate monetary policy from supervisory functions, creating a firewall between the two; suggesting that an economy be formulated When making policies, we must always pay attention to maintaining exchange rate stability and controlling fiscal deficits. He paid close attention to the development of China’s economy, and promoted the establishment of the first international entrepreneurial university in China and even in the world named after the Nobel Prize winner-Mundell International Entrepreneur University.
Mundell is very concerned about the growth of young Chinese scholars. He is the Bowen Chair Professor of the Chinese University of Hong Kong and the Honorary Dean of the Shenzhen School of Financial Engineering of Nankai University. The Mundell International Entrepreneur University in Zhongguancun District, Beijing is also named after him. He has also been employed as a consultant and honorary advisor for Tsinghua University, Nanjing University, Renmin University of China, University of Science and Technology Beijing, Shenzhen University, Inner Mongolia University, etc. Professor. In 1995, he worked as a foreign teacher at Renmin University of China for 4 months. On November 3, 2004, he was invited to visit Wuhan University of Technology and gave a speech. On October 13, 2006, at the Grand Auditorium of the Shouyi Campus of Zhongnan University of Economics and Law, an academic report was given to teachers and students on the theme of “Asian Currency Issues”.
Mundell said in an exclusive interview in 2010: “In the face of the financial crisis, I think the Chinese government has done a good job. Instead of letting the renminbi appreciate, it stabilized the value of the renminbi.” Mundell said that in the post-financial crisis In this era, China will increase the role of the renminbi, and this increase is natural. China plays an important constructive role in the Asian economy, and it also plays an important role in the world economy.
In 2012, Mundell was invited to the China Securities Regulatory Commission to give a speech on the future of US dollar, euro, renminbi and world currency capital. He proposed for the first time “the creation of a world currency DEY-INTOR with the US dollar, euro and RMB union” to improve the efficiency of global economic integration and respond to future international currency crises. The main content of this idea is to establish a tripartite exchange rate stabilization mechanism for the U.S. dollar, the euro and the renminbi, that is, to incorporate the renminbi into the exchange rate stabilization mechanism for the euro and the U.S. dollar to establish a currency zone. In this area, the three monetary authorities jointly form a committee to manage various monetary policies that need to be coordinated and establish a coordination mechanism for collective monetary policies to maintain the stability of the exchange rate of the euro and the US dollar.
Mundell predicted in 2013 that China will become the world’s largest economy by 2025. He said, “Now, China’s output is almost half that of the United States. If China’s economy is still developing at the current pace, in about ten years, China’s GDP may be the same as that of the United States. By 2022 to 2022. Around 2025, it is likely to surpass the United States.” Mundell’s vision in the field of international finance is to publicly propose that the International Monetary Fund should deposit the renminbi in the special drawing rights (SDR) mechanism, and form a relationship with the U.S. dollar and the euro in the future. Globally diversified “DEY system” to establish a more stable and fair world exchange rate mechanism.