Finding a niche.

Eichengreen, Barry

Becoming a professor was easier than becoming an economist. Growing up in Berkeley I was surrounded by professors; they dominated my parents' dinner parties, though my mother and father themselves were not academics. The conversation touched on book projects, sabbatical plans, and foreign travel. There was the security of a regular paycheck but, so it seemed, no one resembling a boss.

Growing up in Berkeley had its distinctive aspects. An outing for the socially conscious was going down to the university and getting tear gassed. At about this time the high-school curriculum compelled one to choose between natural science, social science and humanities tracks. Social sciences were irresistible for someone growing up in this political petri dish. The natural sciences track, in contrast, would have meant more math. Early decisions have long-term consequences.

UC Santa Cruz, where I was an undergraduate, was another child of the 1960s. Intended as an alternative to factory schools like Berkeley it had no grades, few major and breadth requirements, and little intellectual structure. (1) Students were encouraged to design their own majors. This encouraged healthy disrespect for conventional academic boundaries, something that comes in handy for an economic historian. Santa Cruz also sent me for my junior year to the University of St. Andrews. St. Andrews students met periodically with a tutor to discuss assignments and read papers. My tutor was the Spanish economic historian Geoffrey Parker. In my senior year back at Santa Cruz, the department then hired as a visitor a brilliant graduate student from Stanford, Flora Gill, to teach a course in economic history.

Put an undergraduate in an unstructured environment, and he or she will go in one of two directions. One is off the deep end, which for my classmates meant making candles in Ben Lomand. The other is in search of more structure. This is my best explanation for how I ended up in economics. Economics seemed to have more intellectual structure than the other social sciences, all of which, as a good Santa Cruz undergraduate, I sampled. Not that I actually learned much about what economists do, Santa Cruz not being organized to convey such knowledge.

Sometime around the middle of my senior year there was a sparsely attended meeting of students and faculty to discuss life after college. Various possibilities were described. One was to enroll in more school. A more novel alternative was to look for work. One professor who had spent time in Washington, D.C. suggested that it might be possible to apply what one had learned by working as a research assistant in a government agency. When I asked him how to go about this, he seemed genuinely shocked at having a student follow up on his suggestion. "Write my former boss at the U.S. Department of Labor," he suggested. After some weeks, there was no response. Fortunately this member of the faculty had also been a dissertation fellow at the Brookings Institution. There the director of Economic Studies, the prominent tax-policy expert Joe Pechman, was losing his research assistant before the end of the academic year and was desperate to find someone who could begin in early April. I was graduating a quarter early and therefore available off cycle. I like to think that it was on the intellectual merits that I beat out other candidates for this job, but there is another interpretation.

Joe Pechman was a famously successful example of how to do high-quality policy analysis with limited background in mathematics. Joe substituted intuition, detailed knowledge of the U.S. tax code, and an ability to write clearly and quickly for technical skills. He also moderated a Friday lunch at which a galaxy of Brookings fellows commented on the events of the day. (2) In 1974-5 the conversation ranged over the first OPEC oil shock, inflation, and Watergate. If events like those couldn't awaken an interest in policy, it was hard to imagine what could. Brookings also offered its research assistants free time and a library that just happened to include a complete run of the Journal of Economic History. And it provided a Good Housekeeping Seal of Approval. Many of Joe's previous research assistants, mostly Swarthmore undergraduates (my position was known colloquially as "the Swarthmore chair"), had gone on to graduate school. Thus it was possible for an applicant with no grades and limited coursework in economics to be admitted to a Ph.D. program.

I arrived at Yale already knowing that I wanted to concentrate on economic history and international macroeconomics. This is the hardest part of my intellectual journey to explain. Economic history was not done seriously at Santa Cruz. It was not done at all at Brookings. Macroeconomics in the 1970s was still almost entirely a closed-economy affair. And the combination of economic history and international macroeconomics was virtually unknown. (3) To be sure, I had already had chance encounters with Geoff Parker and Flora Gill. Economic history appealed to someone with a healthy disregard for disciplinary boundaries. Much of what I knew about economics at this point was self-taught, having been gained by checking out journals from the Brookings library, and economic history journals were more accessible than most. For its part, international economics appealed to someone whose parents were first-generation Americans and who had been made aware from a relatively early age that the United States was part of a larger world. There was also the example of my closest childhood friend, Jeff Frankel, who had already discovered international economics as a student of Rudi Dornbusch at MIT.

James Tobin and William Parker dominated my Yale experience. Tobin of course dominated everyone's Yale experience. His belief that economics could be used to make the world more just and equitable affected everyone around him including the graduate students. My own vaguely Keynesian inclinations and belief that economics and economic history can serve the public interest are inherited to a considerable extent from Jim.

Although Tobin was not a member of my dissertation committee, he encouraged me to apply modern macroeconomic methods to historical problems. Much of Tobin's course in monetary economics was organized as Yale-style portfolio theory versus Chicago-style monetarism with Milton Friedman as doppelganger. (4) But we also read one uncharacteristically sympathetic assessment of Friedman, Tobin's review of Friedman and Schwartz's Monetary History of the United States, in which he hailed the book as path-breaking for its systematic application of macroeconomic theory to historical problems

The Yale department's economic historian, Bill Parker, was could lay claim to being the first "new" economic historian, having drawn the Parker-Klein sample of grain-growing farms from the 1840 census and editing, together with Douglass North, the Journal of History when the first articles making explicit use of economic theory were accepted for publication in the 1950s. But Bill was known best for his students, Jan deVries, Joel Mokyr and Gavin Wright prominent among them. (5) Parker at Yale played much the same role as Alexander Gerschenkron at Harvard. (6) He humanized an increasingly technical economics curriculum. He served as a bridge to the historical literature on economic growth and development.

In the wake of Time on the Cross, scholarship in economic history was driven by debates over methodology. Quantification good or bad? Should counterfactuals be explicit? Is there anything left to be learned from the narrative approach? In contrast to many other economic historians, Bill was interested more in substance than methodology. He saw the advantage of picking, choosing and blending methodologies as appropriate for the question at hand. Once the fervor of the Cliometric revolution died down, this was the position to which a more mature subdiscipline gravitated. Bill got there before most, which allowed him to pitch a large tent for students with very different analytical inclinations.

Parker's office was divided into a large library containing pretty much every consequential book in economic history, in which I spent the best part of my graduate-student career, and an ante-room barely big enough for a desk and chair, where Bill napped and occasionally dispensed advice. My own ideas were met mainly with grunts and nods. I learned that some graduate students, like some missiles, are self-guiding, while others must be pointed at the target.

When it came to international finance there was no shortage of role models. There was Carlos Diaz-Alejandro, who had already thought of combining economic history and international economics. (7) There was Paul Krugman, whose spell as a Yale assistant professor coincided with the year I began searching for a dissertation topic. (8) There was Pentti Kouri, the enfant terrible who had completed his MIT Ph.D. in two years. Finally there was Robert Triffin, whose interests in the historical evolution of the international monetary system were closest to my own. Triffin had written the definitive book on the subject. Actually, he had written it three times. (9) Triffin being on leave for most of my years as a graduate student, I encountered him only once, during the qualifying examination that followed coursework but preceded the dissertation, the format for which was two hours of grilling, half an hour from each of four professors. I was warned that Triffin would probably spend his half an hour asking about the Triffin Dilemma, as the dynamic instability of a gold-exchange or gold-dollar standard was known. So I studied this issue. Fortunately, Triffin's questions focused entirely on this one subject.

This left only finding a thesis topic. The time-tested approach to this problem, employed by generations of graduate students, is delay. I delayed by taking a master's in history: Yale offered a program where graduate students in history and economics could spend a year taking courses in the other department, permitting them to call themselves card-carrying economic historians. I took courses from Vann Woodward, Harry Miskimin and John Merriman but ended up no closer to a topic.

I thought I knew what a suitable topic would entail. I wanted to look at a different historical time and place, but I also wanted policy relevance so that what I wrote about that episode would speak to an audience beyond historical specialists. I hoped to draw material from the archives in a language with which I was familiar. The problem should have an international dimension about which I could theorize. The statistical base had to be sufficient to permit econometric analysis. This did not leave many degrees of freedom. I ended up writing on the Great Depression in Britain and specifically on the decision to impose a tariff only after the country abandoned the gold standard in 1931.

Whether the imposition of a tariff under these circumstances was sensible was not obvious. What, after all, could a tariff do for industries suffering from inadequate demand, partly owing to import competition, that currency depreciation could not once sterling was free to float? In early 1931 Keynes had written in favor of a tariff on the grounds that the external constraint had to be relaxed in order for monetary policy to be loosened, but he reversed course once the gold standard was abandoned. In the late 1970s a group of post-Keynesian Cambridge economists around Francis Cripps and Wynne Godley rehabilitated his arguments, suggesting that the UK should impose a general tariff to reconcile expansionary policies with the external constraint. Although sterling had again begun to float, the Cambridge Economic Policy Group argued that it was now real rather than nominal wages that were rigid, the implication being that a tariff could have an effect on relative prices that currency depreciation could not. So, in addition to its historical interest, the topic had points of contact with current policy. With benefit of hindsight I now see that this was not the best way of selecting a dissertation topic. A thesis should be driven by an interesting question, not by a long list of methodological desiderata. (10) Given the number of self-imposed constraints, it is perhaps not surprising that I never managed to develop that dissertation into a book. (11)

I finished my thesis in a fellowship year in Oxford. I read files at the Public Record Office documenting the debate over sterling and the tariff. I visited Lionel Robbins, who recalled himself as having been on the wrong side of his debate with Keynes. Wynne Godley explained his position on the tariff over lunch at King's College. I struck up a relationship with Alec Cairncross, who had studied with Keynes in the 1930s, been in government in both the 1940s and 1960s (two key periods in the evolution of Britain's international monetary relations), and now practiced the kind of economic history to which I aspired. (12) I re-estimated my model of the interwar economy at the Oxford computing center. This meant submitting the punch cards, going out for dinner at a Chinese restaurant, and returning a couple of hours later to see if the program had run. The supervisor that the university assigned me turned out to be Nicholas Crafts, the leading UK-based new economic historian. Nick at the time had attracted an exceptional collection of students, including Steve Broadberry, Mary McKinnon, and Mark Thomas. The seminar regularly adjourned to the pub, followed by the inevitable Chinese meal. This was where I acquired the research agenda that sustained me for the next couple of years.

What that dissertation did succeed at was getting me a job. It used enough archival material to convince historians that I had something to say about the context in which policy was made. And it contained a sufficiently up-to-date theoretical model and convincing econometric analysis of the effects to sell the economists. Or maybe it was the archival analysis that convinced the economists and the theory that impressed the historians. The challenge was presenting the archival analysis, theoretical model, and econometric results in a single seminar. The discussion of archival material typically occupied the first half of the presentation. I can remember my Harvard job talk, where after forty-five minutes I turned my back on the audience to write the first equation on the chalkboard. The door clicked and a chair scraped. The new arrival asked, sotto voice, "Is he only putting up the first equation now?" (13)

Harvard was an exceptional place for an assistant professor of economics. Memories of the mid-1970s, when the department refused tenure to a contingent of radical economists led by Sam Bowles, leading to an embarrassingly public spat, were still raw. The senior members of the department concluded that assistant professors were more trouble than they were worth. 1980 was the first time that the department swallowed hard and hired a standard-sized contingent of new Ph.D.s. (14) But we assistant professors, not being entirely trustworthy, were not invited to faculty meetings. This of course was a great boon. Freed from administrative responsibilities we had more time for research. (15)

What the Economics Department lacked in collegiality the economic historians more than made up for. Bob Fogel had not participated in the decision to hire me because he was already on his way back to the University of Chicago. (16) But Fogel was supportive of my work and characteristically interested in my opinions about his. (17) From Bob I learned how to sustain a research agenda and organize large projects. His successor Jeff Williamson was an example of how to formulate questions of interest to economists, execute that research efficiently, and attract students. Then there was David Landes, the eminent historian of technology, who had moved to the Economics Department following a falling out with his colleagues in History. David hosted the after-seminar sherry hour in his office, where one could inspect the latest finds that he had unearthed in Widener Library. David had little patience for Cliometrics but could play the game. A favorite pastime was guessing how many seconds into the seminar he would ask the first question. If the speaker's opening line was "In this paper I compare agrarian practice in three English villages," the question, typically put in the first minute, was "why three?"

Peter Temin was a regular participant in the Harvard history seminar and central to the Cambridge economic history scene. Just as one waited each week for the David Landes question, one waited for the Peter Temin question. Generally this came about two thirds of the way through the seminar and took the form: "Isn't the issue that you are really raising ...?" followed by a more interesting formulation of the question than the author himself had offered. If the single most important skill a scholar can acquire is figuring out what questions are interesting and how to formulate them, then the little I know about this I learned from Peter. (18)

After four years I had written a series of articles on international aspects of the 1920s and 1930s: on the Bank of England's interest rate policy, on the Bank of France's sterilization of gold, on the collapse of the gold-exchange standard, and on the effects of the devaluation of sterling. These were articles in search of a book, though what form that book should take was not yet clear. My colleague Jeff Sachs, together with Michael Bruno, had just written a book taking an international approach to analyzing another economic slump, that of the late 1970s and early 1980s. At some level our interests were similar, and it seemed inevitable that eventually we would co-author something. By the time we did, Jeff was already in demand as a money doctor; he was spending most of his time on the plane and phone to Bogota. We did our talking and writing between midnight and 5AM, when his more pressing duties were done. One of us then went home to sleep, while the other got back on the phone.

What we did was a cross-country analysis, in the spirit of Bruno and Sachs, of the effects of going oft the gold standard. The data analysis was simple, but cross country variations (comparisons, for example, of economic recovery in counties that were early and late to abandon the gold standard) allowed for powerful tests of a sort that individual country studies did not. (19) The results convinced me both that the gold standard was central to the Great Depression and that abandoning it had been the key to recovery. This pointed also to a problem of political economy: given the advantages, which should have been obvious to contemporaries, of cutting a country's links with the deflationary gold standard system, what was it about its history and politics that had rendered it more or less likely to take that step? (20)

Finally, the fact that one country's decisions had clearly affected outcomes in others meant that it was important to analyze the operation of the gold standard as a system. Here the question was whether the problem was a global gold shortage as suggested by Robert Mundell or the intrinsic fragility of a gold-exchange standard as Robert Triffin had argued. (21)

A thorough analysis of these issues, their interconnections, and how they played out in different countries required a book-length treatment. My view was and is that books should speak to a broader audience than just academic economists. Journals, with their specialized readership, are the best outlets for formal models and econometric analyses. Books best omit this technical apparatus, since they are potentially accessible to a wider audience. (22) The challenge for the author of a monograph is how to characterize the issue, in this case how policy toward the gold standard shaped the Great Depression and in turn what shaped policy toward the gold standard, in a way that is internally consistent and informed by theory but using words rather than equations. It is to be able to sustain that characterization--to draw that red thread through the various chapters so that they work together to advance a single argument. Keeping the thread unbroken also means that not all aspects of the problem can be addressed in a successful book. It means knowing what to leave out. (23)

Some final examples may serve to illustrate how research agendas develop. In 1990 a friend and colleague, Charles Wyplosz, became co-editor of a new European policy forum, Economic Policy and asked me for an article on historical precursors to a European monetary union, an issue that was then rising rapidly on the policy agenda. Surely there were historical precedents, he suggested, from the Latin Union to the Scandinavian Union and the gold standard from which lessons might be drawn. I concluded that this was not the case. If Europe was going to succeed in creating a monetary union, it would have to establish true transnational institution (a European Central Bank) unlike anything that had existed under the Latin Union, the Scandinavian Union, or the gold standard. (24) Doing so would entail significant pooling of national sovereignty, something that was conceivable in contemporary Europe, given the continent's history, but had not been possible in earlier times and places. In turn these observations opened up a set of issues about the connections between monetary, economic and political integration in Europe that occupied me for more than a decade and resulted ultimately in my book The European Economy Since 1945 (Princeton 2007).

Unprecedented is not the same as impossible. I was never among those skeptical Americans who thought a European monetary union was impossible because nothing like it had existed before and because it would never work in North America. Floating exchange rates were not acceptable to Europeans because of their history: the experience of the 1930s caused them to associate floating with Franco-German conflict. The pegged but adjustable rates of the European Monetary System had been feasible so long as capital controls were pervasive, but the Single European Act mandated a single market in capital as well as labor and merchandise, eliminating all scope for such controls. A close look at the history of the gold standard served to remind one of the fragility of pegged rates in a world of high capital mobility. This logic left monetary union as the only alternative.

This point was driven home for me by the 1992 crisis in the European Monetary System (EMS), whose outbreak happily (speaking from a selfish point of view) coincided with the beginning of a sabbatical year. This was the major financial event of my then-young professional life, when George Soros made $1 billion betting against the Bank of England and the process of European integration seemed to be falling off a cliff. (25) Wyplosz and I abandoned our preexisting research agendas to write the history of the crisis in real time. We surveyed financial market participants: Charles' daughters licked the envelopes in which we mailed our survey forms in these pre-Internet days. "The Unstable EMS" appeared in Brookings Papers on Economic Activity in 1993. This was the beginning of the financial crisis industry or at least of my involvement in it. Charles and I coauthored a series of papers together with my Berkeley colleague Andrew Rose in which we developed measures of currency crises and sought to identify their economic and political correlates. (26) This sideline as financial ambulance chaser and historian of financial crises would come in handy in 2008.

A final episode in the development of my research agenda was when I was asked to work as senior policy advisor at the International Monetary Fund. It is my observation that organizations like the Fund (I would also include the World Bank, the regional development banks, and national central banks) quite like having economic historians around. Economic historians are more likely than other economists to actually know something about institutions. (27) They are likely to know which policies are new and novel and which ones have precedents. They are in the business of synthesizing large amounts of material. They tend to be able to convey their thoughts in plain English.

Again the timing was fortuitous from a selfish standpoint. I started at the IMF on July 2nd, 1998, the same day that Thailand devalued and the Asian crisis erupted, and left a year and a few weeks later on the day that Russia defaulted. (28) I had been hired by the Fund's deputy managing director, Stanley Fischer, but worked for the head of the research department, Michael Mussa. Stan and Mike could both lay claim to being the best international macroeconomist of their generation, except for the fact that they were both of the same generation. It is hard to imagine two better exemplars of how to do high quality policy research.

If the IMF is a rolling deck, then the senior policy advisor is its loose cannon. Members of the hierarchy have an incentive to go along in order to get along, not to mention in order to be promoted. But the senior policy advisor has tenure at his university, where he can return after a year. This allows him to say what he thinks. As a reviewer he is expected to criticize and raise objections to policy memos and in-house research products. Not a bad job if you can get it. (29)

In my case the review function was overtaken by events. No sooner did the Asian crisis erupt than the prime minister of Malaysia, Mahathir bin Mohamed, accused hedge funds of fomenting the crisis and demanded that the IMF to investigate. The IMF asked me to investigate, which meant giving me a corporate credit card and a team of Ph.D. economists. (30) We visited the regulators. We visited George Soros in New York. We visited Long-Term Capital Management in Greenwich. (31) We visited Bear Stearns, which booked the majority of the trades for the hedge fund industry. The experience was eye opening for someone who had studied financial markets exclusively through the lens of theoretical models and historical documents.

The exercise was also not unproblematic. It would have been naive to sit down with the manager of a hedge fund and say "We're from the IMF, and we'd like to know whether you and your friends colluded in causing the Asian crisis." These people knew who had sent us and were cagey with their answers. At the same time, seeing that many of the fund managers in Manhattan had offices in the World Financial Center and could be found at 5PM on Friday drinking together in the atrium bar did convey a certain amount of information. It impressed one with the importance of collective psychology. It couldn't help but incline one to the view that there existed such a thing as herd behavior in financial markets.

Our report concluded that while a number of important hedge funds had taken positions against Asian currencies, they were far from alone. We learned, for example, that the same investment bank that was advising an Asian government on how to fend off speculation was itself the main speculator taking a position against it. More generally investment banks took many of the same positions as hedge funds, and they were at least as highly leveraged. The Malaysian constituency was not pleased by the conclusions, which appeared to let the hedge funds off the hook. Others criticized us for lumping hedge funds and investment banks together. After the crises of Bear Stearns and Lehman Brothers in 2008, it is hard not to feel vindicated.

In February 1998, six months into the Asian crisis, then U.S. Treasury Secretary Robert Rubin made a speech at the Brookings Institution calling for a new international financial architecture. Michel Camdessus, the ambitious French technocrat who headed the IMF, wasn't sure what this new financial architecture might entail but he was certain that the Fund should be in charge of it. I was commissioned to write a series of papers on the subject. (32) These soon came to be known as "the non-papers," since papers in the Fund have to undergo interdepartmental review before they can be widely circulated and no radical ideas about a new international financial architecture could have ever survive this vetting. The non-papers called for the IMF to take the lead in promulgating standards for securities market regulation, corporate governance and auditing and accounting practice, and for it then to actively monitor compliance. They called for a greater focus on supervision and regulation of banking systems, banking-sector weaknesses having been at the center of the Asian crisis. They called for the Fund to push its members harder to adopt more flexible exchange rates so that there would be a stronger incentive for banks and corporations to hedge their currency exposures.

Whether these non-papers had any impact on the policy debate is for the reader of this essay to judge. (33) The author, for his part, was characteristically unable to write four extended memos without also seeing the outlines of a book. Toward a New International Financial Architecture was published by Fred Bergsten's Institute for International Economics late in 1999, just three months after I returned to academia. Books like this having a relatively short shelf-life, time was of the essence. I learned that when an author is prepared to give up his royalties, a publisher can move very fast. (34)

As will be clear to those who have gotten to this point, at some level I feel most comfortable in the historian's world where one tells a story, leavens it with anecdotes, and leaves the reader to draw out the broader implications. But the economist in me yearns for general conclusions about how research agendas are formed.

The most general conclusion is of course that there are no general conclusions. There are no universally applicable guidelines for finding a topic, settling on an approach, and moving from one topic to another so that a research question turns into a research program and eventually a body of work. The ideas that engage the researcher's imagination will be shaped by the circumstances in which he lives. The 1970s were when the Bretton Woods System of fixed exchange rates gave way to generalized floating; it is not surprising that these events provoked historical research on the performance of alternative exchange rate regimes. That the 1990s were a decade of financial instability sparked new research on the history of financial crises. The global credit crisis and recession of 2008-9 will undoubtedly trigger new research on the Great Depression. The scholar seeking to speak to a broad audience is always on the lookout for events that will resonate with readers. The economic historian is always on the lookout for precedents. These tendencies are healthy if they are kept in check and do not lead the researcher to leap from topic to topic, a problem with which I am not entirely unfamiliar.

It helps of course to have a core question, as in my case the role of the gold standard in the Great Depression, substantial enough to sustain one's research for a period of years. If that question is sufficiently rich and suggestive, links to other important questions will suggest themselves. In my case those links ran backward to the classical gold standard of the pre-1914 period, which evidently functioned more smoothly and endured longer than its short-lived interwar successor; the questions thrown up by this contrast are obvious. The links also ran forward from the 1931 financial crisis that shattered the gold standard system to the 1992 crisis that shattered the EMS. They ran from there to the incidence of financial crises, both historically and contemporaneously, and to the possibility that the further progress of European integration, extending to the creation of an economic and monetary union, might repair the fissures in the EMS. This is how my own research agenda grew, unpredictably but not entirely without logic.

If one is lucky this process will be pushed along by impetus from outside not just in the form of current events but also in the form of commissions and requests for conference papers. These may come from someone with more detachment and therefore insight into how the researcher's past and future work may link to other issues and who, not incidentally, attaches lower value to the researcher's time. The trick of course is deciding which commissions to accept--those which require extending one's scholarly range in limited but significant ways--and which ones to reject--those which would force the researcher to move far out of his comfort zone and turn into a time sink. (35)

The other problem with commissions, conference papers and coauthors is that they are too interesting. They make it more difficult to pursue to conclusion the task of answering the big question that is at the heart of one's research program. Big questions require sustained attention--for an economic historian they require book-length treatment. And a serious book requires effort over a period of years. My own most intellectually productive periods have been when I attempted to write a big book--in 1985-92 on the gold standard and the Great Depression, in 2000-2007 on the European economy since 1945--while at the same time pursuing other topics, some old and some new.

The challenge is keeping these different balls in the air, all at the same time. It is devoting much of one's research time and effort to a single topic for a sustained period while also working on other subjects. It may be one month on the book followed by one month on other projects. More likely, it will less regular alternation.

Either way, I like to think that I turned out the best appetizers and side dishes when I also had the main course in the oven.

Barry Eichengreen, George C. Pardee and Helen N. Pardee Professor of Economics and Political Science, University of California, Berkeley.

Notes

(1.) Factory-like environment notwithstanding, sometimes I think that I would have been better off with an actual college education.

(2.) The observant reader will have noted that luncheon and dinner party conversation play an ongoing role in this essay.

(3.) One thinks only of Charles Kindleberger and his student Carlos Diaz-Alejandro.

(4.) This had its disadvantages: where graduate students elsewhere were already being taught about rational expectations, Yalies remained largely ignorant of this development, still fighting as we were a rear-guard action against monetarism.

(5.) I myself didn't have any of these eminences as teaching assistants in Bill's course; instead I had Rick Levin, an excellent section leader who eventually chose to forsake economic history for the presidency of Yale.

(6.) The comparison would have annoyed him: whenever he heard Gerschenkron's name, Bill would remind the listener that he himself had been a student of Gerschenkron's predecessor, Abbot Peyton Usher.

(7.) Carlos had organized his Essays on the Economic History, of the Argentine Republic, published in 1970, around the country's terms of trade.

(8.) I remember Paul writing equations on the chalkboard of the seminar room in the Cowles Foundation--a model of balance-of-payments crises, a model of imperfect competition and trade--and claiming that he had come up with these ideas over the preceding weekend.

(9.) Gold and the Dollar Crisis (1960), The Evolution of the International Monetary System: Historical Reappraisal and Future Perspectives (1964), The World Money Maze (1966),

(10.) Though the broad area, the economics and history of the Great Depression, was hardly uninteresting--and it has hardly lost salience in light of subsequent events.

(11.) It also was not accepted for the dissertation session of the Economic History Association, a fact which I happily recount to students when their own dissertations are passed over.

(12.) This resulted in my first book, Sterling in Decline: The Devaluations of 1931, 1949 and 1967, published in 1983.

(13.) This was Jeff Sachs, a member of the Society of Fellows, late not for the first time.

(14.) The others were Jeff Sachs, Andy Abel and Mark Watson, all of who went on to distinguished careers and from whom I learned certain basics of research to which I had not been exposed in New Haven.

(15.) I was also blessed with an appointment as a Faculty Research Fellow of the National Bureau of Economic Research's international finance program. I had to lobby Marry Feldstein, who wasn't entirely sure whether an economic historian qualified for membership in an international finance program (or whether I had the qualifications to function as an NBER research fellow at all). Appointment as a fellow admitted one to the Bureau's summer camp in international finance, attended by the field's leading figures, which helped me to develop contacts and credentials as an international economist and learn more methods.

(16.) Chicago offering more resources for his labor-intensive research.

(17.) I strongly suspect that he still has his tape recordings of the lunches we had at the Harvard Faculty Club to discuss his work.

(18.) When he started working on the connections between the gold standard and the Great Depression, I knew I had made a sensible choice.

(19.) Embarrassingly so. On presenting the paper at the 1984 Cliometrics Conference I was given the "Peter Temin award for drawing the strongest conclusions on the basis of the least data."

(20.) This problem of political economy, with its answer rooted in history and politics, was important in and of itself. But in addition its answer could be used to solve the identification problem. Technically, the problem that the decision to abandon the gold standard might affect the course of a country's depression, but that the depth of its depreciation might also affect its decision of whether to abandon the gold standard.

(21.) It was clear in which direction a Yalie would gravitate.

(22.) In Golden Fetters: The Gold Standard and the Great Depression, 1919-1939 (Oxford 1992), I at least succeeded in omitting the technical apparatus if not always in making the material accessible, or so my wife, who has tried to finish the book several times, likes to remind me.

(23.) But that, of course, is where subsequent research agendas come from.

(24.) I ended up instead writing for Economic Policy an article on the 50 U.S. states as a monetary union, which became part of a rapidly growing literature comparing asymmetric shocks, adjustment through capital and labor mobility and fiscal self-insurance in the United States and the European Union.

(25.) Along, perhaps, with the 1987 stock market crash when the Dow declined by 500 points, a very large amount given the levels of the era, in a single day. That was the same day that I gave my undergraduate lecture on the Great Crash in 1929 for the first time. When I gave the lecture again in 1988, the Dow declined by 250 points.

(26.) I claim credit for having first employed the now-standard indicator of exchange market pressure as a measure of crisis incidence and for the labels now conventionally attached to "first- and second-generation" models of financial crises.

(27.) In a policy environment pure theory only takes one only so far.

(28.) I leave it to the reader to infer cause and effect.

(29.) And a positive reflection on an institution, the IME that does not always enjoy the best image.

(30.) Both were firsts for someone whose experience had been limited to academia.

(31.) Some nine months before its failure. Had we seen that train wreck coming we would have been golden. My report to the Board contained a sentence, reflecting our interviews with regulators, stating that "regulators are confident that hedge funds are prudently managing their risks." This statement was entirely accurate so long as one recalls the first four words, which was not always the case of my subsequent interlocutors.

(32.) Who better, one might ask, than an economic historian to ruminate on the past and future of the international financial architecture?

(33.) Camdessus found their conclusions exciting. This agenda implied an expanded role for the IMF, and along with more responsibilities would come a bigger budget and more staff. He proposed convening an "informal lunch" in his private dining room. The informal lunch turned out to involve three dozen department heads, microphones and a stenographer. The overwhelming reaction was that my ideas were unrealistic. The IMF had always focused on monetary and fiscal policies. To imagine that it could now also focus on the plumbing of financial markets was to misunderstand its role. The Fund had always favored stable exchange rates; to it make it an active proponent of greater flexibility was beyond the pale.

(34.) Even then, not everyone disseminates research like Fred Bergsten. My Berkeley colleague Janet Yellen, who was then chair of Bill Clinton's Council of Economic Advisors, told me about walking into the Oval Office in late 1999 and finding the president with his yellow highlighter and a mysterious black and yellow book. Seeing that the book was called Toward a New International Financial Architecture, she whispered to Robert Rubin, "We'd better get a copy of that and find out what he's reading."

(35.) The trick of course is recognizing which requests are which, something I have never entirely mastered.