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AN INTERVIEW WITH ROBERT E. LUCAS, JR.
- Bennett T. McCallum
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- Journal:
- Macroeconomic Dynamics / Volume 3 / Issue 2 / June 1999
- Published online by Cambridge University Press:
- 01 June 1999, pp. 278-291
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Bob Lucas is widely regarded as the most influential economist of the past 25–30 years, at least among those working in macro and monetary economics. His work provided the primary stimulus for a drastic overhaul and revitalization of that broad area, an overhaul that featured the ascendance of rational expectations, the emergence of a coherent equilibrium theory of cyclical fluctuations, and specification of the analytical ingredients necessary for the use of econometric models in policy design. These are the accomplishments for which he was awarded the 1995 Nobel Prize in Economic Sciences. In addition, he has made outstanding contributions on other topics—enough, arguably, for another prize. Among these are seminal writings on asset pricing, economic growth and development, exchange-rate determination, optimal fiscal and inflation policy, and tools for the analysis of dynamic recursive models.
Clearly, Bob Lucas is very much a University of Chicago product; he studied there both as an undergraduate and as a Ph.D. student and has been on the faculty since 1975. Also, he has served as chairman of the Chicago Department of Economics and two terms as an editor of the Journal of Political Economy. Nevertheless, I and several colleagues at Carnegie Mellon like to point out that Bob was a professor here in the Graduate School of Industrial Administration from 1963 until 1974, during which time he conducted and published the central portions of the work for which he was awarded the Nobel Prize. Consequently, I could not resist asking Bob a few questions about his GSIA years in the interview.
Many researchers in the economics profession have been impressed and inspired by Lucas's technical skills, but the clarity and elegance of his writing style also deserve mention, plus his choice of research topics. The latter is reflective of Bob's utter seriousness of purpose. Each of his projects attacks a problem that is simultaneously of genuine theoretical interest and also of considerable importance from the perspective of economic policy. There is nothing frivolous about Lucas's research, as he had occasion to remind me during our interview.
As is well known to those who have been around him, Bob Lucas is a person who never uses three words when one will suffice—but that one will usually be carefully chosen. This characteristic shows up in the interview below. As a departure from standard MD Interview practice, and with the Editor's permission, this interview was conducted at a distance—i.e., via mail and e-mail. It yielded a smaller number of pages than have previous interviews, but I think that readers will find them stimulating. The process of obtaining them was somewhat challenging but highly informative and thoroughly enjoyable for me.
AN INTERVIEW WITH ALLAN MELTZER
- Interviewed by Bennett T. McCallum
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- Journal:
- Macroeconomic Dynamics / Volume 2 / Issue 2 / June 1998
- Published online by Cambridge University Press:
- 01 June 1998, pp. 238-283
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Allan Meltzer's career in economics has featured outstanding contributions in an astonishingly wide range of activities. As the basis of all of these, of course, lies his work in economic research. Perhaps most well known is Allan's long line of papers in monetary economics, many written together with Karl Brunner, which helped to establish the broad and widely accepted approach once known as monetarism. But several other areas have, at different times, attracted his main research efforts; among these are business-cycle analysis, financial intermediation, analytical political economy, and the history of economic thought. Recently, he has become deeply immersed in a major historical project — the writing of an extensive history of the Federal Reserve System and its monetary policymaking. A second type of outstanding accomplishment has been Allan Meltzer's work as a conference-series creator and organizer. In the 1970's, he and Karl Brunner founded the Carnegie-Rochester Conference Series on Public Policy, which has been unusually fruitful as an incubator of new ideas and talent. Together, Brunner and Meltzer also founded the Interlaken Seminar on Analysis and Ideology, which for many years brought together economists, political philosophers, and other social scientists. Allan was a major contributor to Brunner's organization of the Konstanz Seminar on Monetary Theory and Policy — still a creative force in European economics — and with colleagues he created and ran the Carnegie Mellon Conference on Political Economy from 1979 to 1990.
As if all this were not enough for three or four normal beings, Allan and Karl created the Shadow Open Market Committee. At its inception this was a unique institution, but it has since served as a model for other groups designed to provide policy analysis for a wider public audience. In terms of that latter objective, Allan has been and continues to be one of the economists most frequently sought out and quoted in the national and international press. He maintains an amazingly fresh and extensive store of knowledge about economic and social affairs the world over, one that he shares generously with other scholars.
Allan Meltzer has not spent much time in full-time governmental positions, but has served extensively as a consultant or advisor to the U.S. Treasury and the Council of Economic Advisors, as well as official agencies in several other nations, including most notably the Bank of Japan. Also he has for several years spent a good bit of time at the American Enterprise Institute. For over 40 years, however, his principal professional home has been the Graduate School of Industrial Administration at Carnegie Mellon University.
From the foregoing account, it will be obvious that Allan Meltzer is equipped with an enormous supply of energy and enthusiasm, as well as analytical ability. A closely related characteristic, familiar to all those who are lucky enough to spend time with him, is an unfailing attitude of optimism and cheerfulness.
My interview with Allan took place on May 14, 1997, in his office, with its pleasant corner location in the new wing of GSIA's building. We talked in the afternoon and continued somewhat longer than intended because there was so much of interest to discuss. Even after 16 years of having nearby offices and multiple conversations — on days when we both are in Pittsburgh — I found it instructive and enjoyable to learn more about Allan Meltzer's remarkable career. The interview was taped, transcribed, and edited lightly.
2 - Designing a Central Bank for Europe: a cautionary tale from the early years of the Federal Reserve System
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- By Barry Eichengreen, University of California at Berkeley and CEPR, Bennett T. McCallum, Carnegie-Mellon University, Eugene N. White, Rutgers University
- Edited by Matthew B. Canzoneri, Georgetown University, Washington DC, Vittorio Grilli, Birkbeck College, University of London, Paul R. Masson, International Monetary Fund Institute, Washington DC
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- Book:
- Establishing a Central Bank
- Published online:
- 05 March 2012
- Print publication:
- 30 July 1992, pp 13-48
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Summary
Introduction
Important questions concerning the structure and operation of a European central bank (ECB) remain to be answered. How much independence should national central banks retain during the transition to a single currency? What voting or mediation rules should be used to resolve conflicts among the national representatives on the ECB's governing council? What role should be played by existing central banks in implementing pan-European policies once the ECB comes into operation?
The Delors Report and the provisional statutes of the ECB, drafted by the governors of European Community central banks in Basel in November 1990, provide clearer answers to some of these questions than others. According to the Delors Report, during the transition to a single central bank (‘Stage 2’ of the process of monetary unification in the language of Brussels), national central banks will retain full nominal independence in the sense of continuing to issue their own national currencies and to intervene in domestic financial markets, but little real autonomy in that exchange rates will become immutably fixed and hence money supplies and interest rates will be determined by market forces. According to the draft statutes of the ECB, the policies of the new institution will be decided by votes cast by members of the bank's council, consisting of the 12 governors of the existing central banks and 6 executive directors appointed by the European Council. Voting will be by simple majority.
16 - The optimal inflation rate in an overlapping-generations economy with land
- Edited by William A. Barnett, Kenneth J. Singleton
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- Book:
- New Approaches to Monetary Economics
- Published online:
- 04 August 2010
- Print publication:
- 31 July 1987, pp 325-339
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Summary
Abstract: This paper is concerned with the optimal inflation rate in an overlappinggenerations economy in which (i) aggregate output is constrained by a standard neoclassical production function with diminishing marginal products for both capital and labor, and (ii) the transaction-facilitating services of money are represented by means of a money-in-the-utility-function specification. With monetary injections provided by lump-sum transfers, the famous Chicago Rule prescription for monetary growth is necessary for Pareto optimality; but a competitive equilibrium may fail to be Pareto optimal with that rule in force because of capital overaccumulation. The latter possibility does not exist, however, if the economy includes an asset that is productive and nonreproducible – that is, if the economy is one with land. As this conclusion is independent of the monetary aspects of the model, it is argued that the possibility of capital overaccumulation should not be regarded as a matter of theoretical concern, even in the absence of government debt, intergenerational altruism, and social security systems or other “social contrivances.”
Introduction
Most of the existing analyses of the optimal inflation rate that have been carried out in models with finite-lived individuals have reached conclusions that seem to contradict the famous Chicago Rule for optimal monetary growth. An exception is provided by McCallum (1983, p. 38), which suggests that analysis of overlapping-generations models is supportive of the Chicago Rule provided these models take account of the transactionfacilitating (i.e., medium-of-exchange) services of money.