Remembering Michael Mussa.
Bergsten, C. Fred
Michael Mussa, who died January 15 after a long struggle with heart
disease, left an indelible legacy at the Peterson Institute for
International Economics and in the world of economics at large. Before
joining the Institute in 2001 as a senior fellow in charge of our
biannual forecasts, Mike was a legend at the International Monetary
Fund, where he was chief economist for nearly a decade. At the Institute
he was deeply engaged in all our activities for a decade and never
failed to improve, and even inspire, our internal debates and written
products.
Mike was a very popular and persuasive participant in our seminars
and briefings, where he could be counted on for lucid analysis and
pungent humor. "My favorite economic policy tool is prayer,"
he once said. "It is not demonstrably less effective than the
others and it carries none of the bad side effects." In an essay on
trade for the American Economic Review in 1993, he memorably wrote:
"In Washington, the truth is just another special interest, and one
that is not particularly well-financed."
Mike was probably best known to the outside world in recent years
for his semi-annual global economic forecasts. In 2009, he challenged
those who said there would be little or no recovery from the recession,
and lately asserted he had been proven right even though the recovery
has been disappointing largely because the housing sector remains weak.
More recently, he expressed doubts about the efficacy of sizeable
further economic and fiscal stimulus for the U.S. economy.
Mike was often scathing in his criticism of what he considered to
be public policy failures in regulating financial institutions,
responding to recessions, or rescuing troubled countries. As Mervyn
King, governor of the Bank of England, noted, Mike "forced the
international community to face up to the realities" of the Latin
American debt crises of the late 1990s. "Mike refused to be
intimidated by any political considerations," said King.
Mussa was one of the first economists to demonstrate empirically
how the short-run variability of exchange rates differed systematically
under alternative currency regimes. He also made important advances in
the profession's understanding of how expectations rendered the
behavior of exchange rates similar to that of other asset prices, such
as equity prices. He argued that official intervention in exchange
markets could affect exchange rates by changing the market's view
about the future stance of monetary policy.
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Born in Los Angeles in 1944, Mike had multiple careers. From 1986
to 1988, he served as a member of the Council of Economic Advisers under
President Ronald Reagan. Previously, he had been a professor of
economics at the University of Chicago Business School and at the
University of Rochester. He also served as a visiting faculty member at
the Graduate Center of the City University of New York, the London
School of Economics, and the Graduate Institute of International Studies in Geneva, Switzerland. He received numerous honors and awards for his
contributions to international economics, maeroeconomics, monetary
economics, municipal finance, and economic forecasting.
On the occasion of Mike's sixtieth birthday, the International
Monetary Fund held a conference to acknowledge both his scholarly work
and his ability to communicate difficult economic issues in a
down-to-earth way, with a dose of good humor. We will miss his wit, his
deep intellectual curiosity, and his knowledge about history, political
science, and government. Most of all we will miss his friendship and
vital presence as a colleague.
--C. FRED BERGSTEN
Director, Peterson Institute for International Economics
