Key Writings: Mueller on the Gold Standard
A discussion between Martin Wolf, James Stodder and John D. Mueller about global economic policy including the need for a global currency to counter current account deficits between countries.
My original plan, several months ago, was to do homage before the 20th century ended to the French economist Jacques Rueff, by nominating him as the "rightest" political economist of the century. I had to rethink that plan after the Royal Swedish Academy of Sciences awarded the Nobel Prize for Economics to Robert A. Mundell in October. It would have seemed strange to honor the dead before the living, so I devoted December's LBMC Report to Mundell...
In October, the Royal Swedish Academy of Sciences awarded the Nobel Prize in Economics to Robert A. Mundell. The Nobel Committee cited Mundell "for his analysis of monetary and fiscal policy under different exchange rate regimes and his analysis of optimum currency areas."
It may seem that the Nobel announcement, and press articles and editorials describing the award, have honored Mundell "far above our poor power to add or detract." Nevertheless, I'd like to put in my two cents, not only to acknowledge an intellectual debt, but also because I'm not sure that even his closest friends have succeeded in conveying exactly why Mundell is regarded as a great economist, even by those who have disagreed with him.
Almost all industrial countries today are suffering from permanent unemployment, and most are suffering from currency instability. The two problems are related: an expansive economic policy which leads to a currency crisis is usually intended to reduce unemployment. This report considers how both problems might be solved at the same time -- and more specifically, the circumstances in which currency devaluation will be necessary, useful or ineffective.