93-600: Olivier Jean Blanchard ( French: [blɑ̃ʃaʁ] ; born December 27, 1948) is a French economist and professor. He is Robert M. Solow Professor Emeritus of Economics at the Massachusetts Institute of Technology , Professor of Economics at the Paris School of Economics , and as the C. Fred Bergsten Senior Fellow at the Peterson Institute for International Economics . Blanchard
186-551: A filibuster . On a second vote to confirm, the 30 dissents came from 11 Democrats, 18 Republicans and one independent. Bernanke was succeeded as chair of the Federal Reserve by Janet Yellen , the first woman to hold the position. Yellen was nominated on October 9, 2013, by President Obama and confirmed by the United States Senate on January 6, 2014. Bernanke has been subjected to criticism concerning
279-549: A VAR representation. The characterization of asset market bubbles under rational expectations, with Mark Watson. The “divine coincidence” result, derived in research with Jordi Gali , that, in the baseline New Keynesian model, stabilizing inflation, which is good on its own, also leads output to be equal to its constrained optimum; this baseline result allows to think about the nature of the trade-off that emerges between inflation and output when other distortions are introduced. The effect of real wage rigidities on fluctuations and
372-399: A fellowship year at Columbia University to study statistics more intensively. During that year he also worked on his Ph.D. thesis, an exploratory attempt to model changes in the size distribution of wage income using interacting Markov processes for employment-unemployment and wage rates. In 1949, just before going off to Columbia, he was offered and accepted an assistant professorship in
465-758: A founding editor of the American Economic Journal Macro from 2007 to 2009. He was a co-editor of the NBER Macroeconomics Annual from 1989 to 1993. He was a member of the advisory board of the Congressional Budget Office from 2016 to 2023, and a member of the Brookings Panel on Economic Activity from 1986 to 2023. Robert Solow Robert Merton Solow , GCIH ( / ˈ s oʊ l oʊ / ; August 23, 1924 – December 21, 2023)
558-837: A four-year term as chairman (after having been nominated by President Bush in late 2005). By virtue of the chairmanship, he sat on the Financial Stability Oversight Board that oversees the Troubled Asset Relief Program . He also served as chairman of the Federal Open Market Committee, the System's principal monetary policy making body. His first months as chairman of the Federal Reserve System were marked by difficulties communicating with
651-415: A major role to movements in aggregate demand in economic fluctuations. His research runs from theoretical research to empirical and policy relevant work. He is the author or editor of 30 books and more than 150 articles. According to IDEAS/RePEc , he is one of the most cited economists in the world. The development, with Nobu Kiyotaki , of micro foundations for the role of nominal price rigidities and
744-533: A mild downturn, banks are likely to significantly cut back lending and other risky ventures. This further hurts the economy, creating a vicious cycle and potentially turning a mild recession into a major depression. Economist Brad DeLong , who had previously advocated his own theory for the Great Depression, notes that the 2007–2008 financial crisis raised the pertinence of Bernanke's theory. In 2002, following coverage of concerns about deflation in
837-650: A scholarship at the age of 16. At Harvard, his first studies were in sociology and anthropology as well as elementary economics. In 1942, Solow left the university and joined the U.S. Army . Because he was fluent in German, the Army put him on a task force whose primary purpose was to intercept, interpret, and send back German messages to base. He served briefly in North Africa and Sicily , and later in Italy until he
930-402: A second term. However, Bernanke was confirmed for a second term as chairman on January 28, 2010, by a 70–30 vote of the full Senate, the narrowest margin, at the time, for any occupant of the position. (For the roll-call vote, see Obama confirmations, 2010 .) The Senate first voted 77–23 to end debate, Bernanke winning more than the 60 approval votes needed to overcome the possibility of
1023-556: A senior adviser. In the same month it was revealed that Bernanke would also join PIMCO as a senior advisor. In his 2015 book, The Courage to Act , Bernanke revealed that he was no longer a Republican, having "lost patience with Republicans' susceptibility to the know-nothing-ism of the far right. ... I view myself now as a moderate independent, and I think that's where I'll stay." Bernanke published in 2022 his latest book titled 21st Century Monetary Policy: The Federal Reserve from
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#17327766038381116-420: A speech delivered on April 7, 2010, he warned that the U.S. must soon develop a "credible" plan to address the pending funding crisis faced by "entitlement programs such as Social Security and Medicare" or "in the longer run we will have neither financial stability nor healthy economic growth." Bernanke said that formulation of such a plan would help the economy in the near term, even if actual implementation of
1209-532: A statement made by Milton Friedman about using a " helicopter drop " of money into the economy to fight deflation. Bernanke's critics have since referred to him as "Helicopter Ben" or to his "helicopter printing press." In a footnote to his speech, Bernanke noted that "people know that inflation erodes the real value of the government's debt and, therefore, that it is in the interest of the government to create some inflation." For example, while Greenspan publicly supported President Clinton's deficit reduction plan and
1302-530: A teenager, Bernanke worked construction on a hospital and waited tables at a restaurant at nearby South of the Border , which was a roadside attraction, amusement park, and fireworks retailer near his hometown in Hamer, South Carolina , before leaving for college. To support himself throughout college, he continued to work during the summers at South of the Border. As a teenager in the 1960s, Bernanke helped roll
1395-795: Is a temporary problem. This disconnect is dangerous." Upon the revelation of the Quince pseudonym during the Starr v. United States trial, The New York Times created a cocktail inspired by Mr. Bernanke's chosen alias: the "Rye & Quince." Bernanke has given several lectures at the London School of Economics on monetary theory and policy. He has written two textbooks: an intermediate-level macroeconomics textbook coauthored with Andrew Abel (and also Dean Croushore in later editions) and an introductory textbook, covering both microeconomics and macroeconomics, coauthored with Robert H. Frank . Bernanke
1488-627: Is an American economist who served as the 14th chairman of the Federal Reserve from 2006 to 2014. After leaving the Federal Reserve, he was appointed a distinguished fellow at the Brookings Institution . During his tenure as chairman, Bernanke oversaw the Federal Reserve 's response to the 2007–2008 financial crisis , for which he was named the 2009 Time Person of the Year . Before becoming Federal Reserve chairman, Bernanke
1581-543: The Students for Fair Admissions v. President and Fellows of Harvard College lawsuit. Signers of the brief include Alan B. Krueger , George A. Akerlof , Janet Yellen , and Cecilia Rouse . Solow was one of the supporters of Joe Biden 's Inflation Reduction Act of 2022 . Solow died at his home in Lexington, Massachusetts , on December 21, 2023, at the age of 99. Solow's model of economic growth , often known as
1674-478: The 2007–2008 financial crisis . The crisis in 2008 also made Ben Bernanke create a pseudonym, Edward Quince. According to the Wall Street Journal, the false name was evidence in a class-action lawsuit against the government by shareholders of AIG, which had been given a Fed-backed bailout when it was near collapse. One of Mr. Quince's emails reads, "We think they are days from failure. They think it
1767-410: The 2007–2008 financial crisis . According to The New York Times , Bernanke "has been attacked for failing to foresee the financial crisis, for bailing out Wall Street, and, most recently, for injecting an additional $ 600 billion into the banking system to give the slow recovery a boost." In a letter to Congress from then- New York State Attorney General Andrew Cuomo dated April 23, 2009, Bernanke
1860-726: The American Economic Association in 1995-1996, and President in 2018-2019. He is a fellow of the Econometric Society and was a council member from 2001 to 2007. He is a member of the American Academy of Sciences . He was made a chevalier de la Legion d’honneur in 2008, and an officier in 2016. He is also a commander de l’ordre du mérite since 2021. He was a co-editor of the Quarterly Journal of Economics from 1979 to 1998,
1953-522: The Bernanke doctrine . As a member of the board of governors of the Federal Reserve System on February 20, 2004, Bernanke gave a speech in which he postulated that we are in a new era called the Great Moderation , where modern macroeconomic policy has decreased the volatility of the business cycle to the point that it should no longer be a central issue in economics. In June 2005, Bernanke
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#17327766038382046-488: The Bush tax cuts , Bernanke, when questioned about taxation policy, said that it was none of his business, his exclusive remit being monetary policy, and said that fiscal policy and wider society related issues were what politicians were for and got elected for. But Bernanke has been identified by The Wall Street Journal and a close colleague as a "libertarian-Republican" in the mold of Alan Greenspan. In 2005 Bernanke coined
2139-608: The Council of Economic Advisers (1961–62) and member of the President's Commission on Income Maintenance (1968–70). His studies focused mainly in the fields of employment and growth policies, and the theory of capital. In 1961 he won the American Economic Association's John Bates Clark Award , given to the best economist under age forty. In 1979 he served as president of that association. In 1987, he won
2232-538: The Department of Economics . He chaired that department from 1996 until September 2002, when he went on public service leave. He resigned his position at Princeton July 1, 2005. Bernanke served as a member of the Board of Governors of the Federal Reserve System from 2002 to 2005. In one of his first speeches as a governor, entitled "Deflation: Making Sure It Doesn't Happen Here", he outlined what has been referred to as
2325-604: The Economics Department at Massachusetts Institute of Technology . At MIT he taught courses in statistics and econometrics . Solow's interest gradually changed to macroeconomics . For almost 40 years, Solow and Paul Samuelson worked together on many landmark theories: von Neumann growth theory (1953), theory of capital (1956), linear programming (1958) and the Phillips curve (1960). Solow also held several government positions, including senior economist for
2418-752: The Great Depression . Bernanke was born in Augusta, Georgia , and was raised on East Jefferson Street in Dillon, South Carolina . His father Philip was a pharmacist and part-time theater manager. His mother Edna was an elementary school teacher. Bernanke has two younger siblings. His brother, Seth, is a lawyer in Charlotte, North Carolina . His sister, Sharon, is a longtime administrator at Berklee College of Music in Boston. The Bernankes were one of
2511-501: The Great Recession Blanchard supported global fiscal stimulus. During its slow recovery, he urged a cautious removal of stimulus and advocated quantitative easing . In 2012, looking at output forecasts and realizations across advanced economies, Blanchard and Daniel Leigh found that the countries where fiscal consolidation was strongest were also those that underperformed relative to forecasts. They concluded that
2604-814: The Nobel Prize for his analysis of economic growth and in 1999, he received the National Medal of Science . In 2011, he received an honorary degree in Doctor of Science from Tufts University . Solow was the founder of the Cournot Foundation and the Cournot Centre. After the death of his colleague Franco Modigliani , Solow accepted an appointment as new Chairman of the I.S.E.O Institute, an Italian nonprofit cultural association which organizes international conferences and summer schools. He
2697-674: The Presidential Medal of Freedom in 2014. Four of his PhD students, George Akerlof , Joseph Stiglitz , Peter Diamond , and William Nordhaus , later received Nobel Memorial Prizes in Economic Sciences in their own right. Robert Solow was born in Brooklyn, New York, into a Jewish family on August 23, 1924, the oldest of three children. He attended local public school and excelled academically early in life. In September 1940, Solow went to Harvard College with
2790-614: The Solow–Swan neoclassical growth model as the model was independently discovered by Trevor W. Swan and published in "The Economic Record" in 1956, allows the determinants of economic growth to be separated into increases in inputs ( labour and capital ) and technical progress. The reason these models are called " exogenous " growth models is the saving rate is taken to be exogenously given. Subsequent work derives savings behavior from an inter-temporal utility-maximizing framework. Using his model, Solow (1957) calculated that about four-fifths of
2883-576: The Torah scrolls in his local synagogue. Although he keeps his beliefs private, his friend Mark Gertler , chairman of New York University's economics department, says they are "embedded in who he (Bernanke) is." Once Bernanke was at Harvard for his freshman year, fellow Dillon native Kenneth Manning took him to Brookline for Rosh Hashanah services. Bernanke was educated at East Elementary, J.V. Martin Junior High, and Dillon High School , where he
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2976-538: The federal funds rate below what it had done. For example, Larry Summers , later named Director of the White House's National Economic Council under President Obama, wrote in the Financial Times on November 26, 2007—in a column in which he argued that recession was likely—that "maintaining demand must be the over-arching macro-economic priority. That means the Federal Reserve System has to get ahead of
3069-495: The AIG bailout". Republican Senator Jim Bunning of Kentucky said on CNBC that he had seen documents which show that Bernanke overruled recommendations from his staff in bailing out AIG. The columnist says this raises questions as to whether or not the decision to bail out AIG was necessary. Senators from both parties who support Bernanke say his actions averted worse problems and outweighed whatever responsibility this may have created for
3162-443: The Federal Reserve. Bernanke focused less on the role of the Federal Reserve and more on the role of private banks and financial institutions. Bernanke found that the financial disruptions of 1930–33 reduced the efficiency of the credit allocation process; and that the resulting higher cost and reduced availability of credit acted to depress aggregate demand, identifying an effect he called the financial accelerator . When faced with
3255-548: The Federal Reserve. I would like to say to Milton and Anna [Schwartz, Friedman's coauthor]: Regarding the Great Depression, you're right. We did it. We're very sorry. But thanks to you, we won't do it again." Bernanke has cited Milton Friedman and Anna Schwartz in his decision to lower interest rates to zero. Anna Schwartz, however, was highly critical of Bernanke and wrote an opinion piece in The New York Times advising Obama against his reappointment as chairman of
3348-639: The Great Inflation to COVID-19, where he assesses the successes as well as failures of the Federal Reserve since its inception. The book received a positive review from the New York Times saying the "book is intended to help future generations of economic policymakers, and it probably will." Bernanke favors reducing the U.S. budget deficit , particularly by reforming the Social Security and Medicare entitlement programs . During
3441-645: The IMF as chief economist in September 2008, two weeks before the Lehman collapse . His formal title was “Economic Counsellor and Head of the Research Department". He stayed until 2015, so that much of his time was spent analyzing the global financial crisis, and later the euro crisis. With the support, first of Dominique Strauss Kahn , then of Christine Lagarde , he was given wide range to think about
3534-401: The IMF should take into account". as the effects of the financial crisis slowly diminish, another trend may come to dominate the scene, namely rising inequality. Though inequality has always been perceived to be a central issue, until recently it was not seen as having major implications for macroeconomic developments. This belief is increasingly called into question. How inequality affects both
3627-579: The Peterson Institute. Olivier has mentored a number of notable students throughout his academic career, including David Laibson , Tobias Adrian , Laurence M. Ball , Roland Bénabou , Ricardo J. Caballero , and Pierre-Olivier Gourinchas , among many others. He is married to Noelle Blanchard, and has three daughters, Marie, Serena, and Julia. Blanchard is one of the leaders of “ New Keynesian economics ”, an approach to macroeconomics that captures and extends Keynes’ general vision and gives
3720-511: The United States from Przemyśl , Poland , and arrived at Ellis Island , aged 30, on June 30, 1921, with his wife Pauline, aged 25. On the ship's manifest, Jonas's occupation is listed as "clerk" and Pauline's as "doctor med". The family moved to Dillon from New York in the 1940s. Bernanke's mother gave up her job as a schoolteacher when her son was born and worked at the family drugstore. Ben Bernanke also worked there sometimes. As
3813-455: The United States in 1973. He obtained a PhD from MIT in 1977, under the supervision of Stanley Fischer and Robert Solow . He was an assistant professor, then an associate professor at Harvard from 1977 to 1983, when he moved back to MIT. He became full professor in 1985, class of 1941 Professor from 1994 to 2010, and Robert Solow Professor of Economics from 2010 to 2020. He has been Robert Solow Professor Emeritus since then. He
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3906-484: The adverse effects of fiscal consolidation, the so called “multipliers”, were larger than those assumed by the IMF and the EU commission , and that fiscal adjustment should be slower. This led to a reassessment of IMF advice. Blanchard also argued that the IMF view that capital controls were bad should be revisited. In particular, he argued that short horizon capital flows were often costly, both when they came in and overwhelmed
3999-604: The board and the management [of Bank of America]." In further testimony, Bernanke said the Fed did nothing illegal or unethical in its efforts to convince Bank of America not to end the merger. Lewis told the panel that authorities expressed "strong views" but said he would not characterize their stance as improper. According to a January 26, 2010, column in The Huffington Post , a whistleblower has disclosed documents providing " 'troubling details' of Bernanke's role in
4092-526: The business news, Bernanke gave a speech about the topic. In that speech, he mentioned that the government in a fiat money system owns the physical means of creating money and to maintain market liquidity . Control of the money supply implies that the government can always avoid deflation by simply issuing more money. He said, "The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost." He referred to
4185-420: The causes of economic growth. For example, rather than assuming, as Solow did, that people save at a given constant rate, subsequent work applied a consumer-optimization framework to derive savings behavior endogenously, allowing saving rates to vary at different points in time, depending on income flows, for example. In the 1980s efforts have focused on the role of technological progress in the economy, leading to
4278-562: The created money to buy financial assets from banks and from the government. On August 25, 2009, President Obama announced he would nominate Bernanke to a second term as chairman of the Federal Reserve. In a short statement on Martha's Vineyard, with Bernanke standing at his side, Obama said Bernanke's background, temperament, courage and creativity helped to prevent another Great Depression in 2008. When Senate Banking Committee hearings on his nomination began on December 3, 2009, several senators from both parties indicated they would not support
4371-402: The credit market and stagnation in investment spending. In addition to stressed credit markets, the failing gold standard also played a crucial role. After World War 1 most countries had their currencies tied to gold as well as fixed exchange rates, however, post-war animosity between many European nations led to non-cooperation regarding the gold standard. Consequently, the gold standard failed in
4464-565: The curve and recognize—as the market already has—that levels of the Federal Funds rate that were neutral when the financial system was working normally are quite contractionary today." David Leonhardt of The New York Times wrote, on January 30, 2008, that "Dr. Bernanke's forecasts have been too sunny over the last six months. [On] the other hand, his forecast was a lot better than Wall Street's in mid-2006. Back then, he resisted calls for further interest rate increases because he thought
4557-422: The depreciating nature of capital which remains constantly positive. The third curve (bottom) conveys savings/investment per worker. As the old machinery wears down and breaks, new capital goods must be bought to replace the old. The point where the two lines meet is known as the steady state level, which means that the nation is producing just enough to be able to replace the old capital. Countries that are closer to
4650-504: The development of endogenous growth theory (or new growth theory). Today, economists use Solow's sources-of- growth accounting to estimate the separate effects on economic growth of technological change , capital, and labor. In 2022, Solow was still an emeritus Institute Professor in the MIT economics department.. Ben Bernanke Ben Shalom Bernanke ( / b ər ˈ n æ ŋ k i / bər- NANG -kee ; born December 13, 1953)
4743-527: The domestic financial system, and when they suddenly went out. This led to a long discussion and a more nuanced position of the IMF stance on capital mobility. Under Blanchard's tenure at IMF, Jonathan D. Ostry and Andy Berg published their findings that "inequality was detrimental to sustained growth." By April 2014, in the World Economic Outlook , Blanchard situated inequality as a "central issue" for "macroeconomic developments and one that
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#17327766038384836-482: The dominant monetarist theory of the Great Depression was Milton Friedman's view that it had been largely caused by the Federal Reserve 's having reduced the money supply and has on several occasions argued that one of the biggest mistakes made during the period was to raise interest rates too early. In a speech on Milton Friedman's ninetieth birthday (November 8, 2002), Bernanke said: "Let me end my talk by abusing slightly my status as an official representative of
4929-547: The dynamic effects of spending and tax changes on both the level and the composition of output, with Roberto Perotti. The effects of debt and deficits on output and welfare in a model in which people have finite horizons. The effects of debt and deficits in an economy where interest rates are low, potentially lower than the growth rate. The way to think about and assess public debt sustainability, using stochastic debt sustainability analysis. Fiscal dominance of monetary policy, with an application to Brazil. The exploration of
5022-548: The economy might be weakening." In a speech at the American Economics Association conference in January 2014, Bernanke reflected on his tenure as chairman of the Federal Reserve. He expressed his hope that economic growth was building momentum and stated that he was confident that the central bank would be able to withdraw its support smoothly. In an October 2014 speech, Bernanke disclosed that he
5115-660: The empirical evidence for the “aggregate matching function”, examining how hires depend on workers looking for jobs and jobs looking for workers. The nature of the Beveridge curve , i.e. the relation between unemployment and vacancies, with Peter Diamond. The mobility of workers across US states in response to demand shocks, with Laurence Katz . The set of optimal labor market institutions, from unemployment insurance to severance payments, with Jean Tirole . Blanchard has argued that, between short run fluctuations and long run growth trends, there are important evolutions at
5208-593: The few Jewish families in Dillon and attended Ohav Shalom, a local synagogue; Bernanke learned Hebrew as a child from his maternal grandfather, Harold Friedman, a professional hazzan (cantor), shochet , and Hebrew teacher. Bernanke's father and uncle owned and managed a drugstore they purchased from Bernanke's paternal grandfather, Jonas Bernanke. Jonas Bernanke was born in Boryslav , Austria-Hungary (today part of Ukraine ), on January 23, 1891. He immigrated to
5301-499: The field, one in the 1990s and one in the 2000s, assessing what he saw as progress, and what he saw as dead ends. After the global financial crisis, he organized a series of conferences on the lessons of the crisis, whether and how we should rethink macroeconomics and macroeconomic policy. MIT Press published those conclusions in a series of books, containing short articles by a wide set of important economists, and summaries by Blanchard and different co-editors. Blanchard joined
5394-505: The future chief executive officer of Goldman Sachs , Lloyd Blankfein , and graduated Phi Beta Kappa with an A.B. degree, and later with an A.M. in economics summa cum laude in 1975. He received a Ph.D. degree in economics from the Massachusetts Institute of Technology in 1979 after completing and defending his dissertation, Long-Term Commitments, Dynamic Optimization, and the Business Cycle . Bernanke's thesis adviser
5487-455: The growth in US output per worker was attributable to technical progress. Solow also was the first to develop a growth model with different vintages of capital. The idea behind Solow's vintage capital growth model is that new capital is more valuable than old (vintage) capital because new capital is produced through known technology. He first states that capital must be a finite entity because all of
5580-534: The induced role of aggregate demand in a general equilibrium model with monopolistic competition ; this model has become the basis for later (and much more sophisticated) models with the same general approach. The derivation of the solution to linear models with rational expectations, with Charles Kahn. The analysis of the co-movements between asset prices and economic activity under the assumption of rational expectations. The identification of demand and supply shocks, with Danny Quah , through long-run restrictions in
5673-633: The influence of macroeconomic (monetary and fiscal) policy. Bernanke then served as chairman of President George W. Bush 's Council of Economic Advisers before President Bush nominated him to succeed Alan Greenspan as chairman of the United States Federal Reserve . His first term began on February 1, 2006. Bernanke was confirmed for a second term as chairman on January 28, 2010, after being renominated by President Barack Obama , who later referred to him as "the epitome of calm." His second term ended on January 31, 2014, when he
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#17327766038385766-484: The issues raised by the two crises, and influence the position of the Fund on issues such as unconventional monetary policy, macro prudential policy, fiscal austerity, the pros and cons of capital flows, the effect of the crisis on emerging market countries. There were two episodes in particular where there was intense internal and external pushback. During his tenure as chief economist, Blanchard reshaped IMF policies. During
5859-540: The macroeconomy, and the design of macroeconomic policy, will likely be increasingly important items on our agenda for a long time to come. In 1989, Blanchard and Stanley Fischer published “Lectures on Macroeconomics”, a review of macroeconomic theory based on their joint graduate course in macroeconomics at MIT. While not conceived as a graduate textbook, it quickly became one and has been widely used in graduate courses up to this day. Blanchard has also written an undergraduate textbook, “Macroeconomics”. The first edition
5952-408: The meaning behind his work, Solow used a graphical design to illustrate his concepts. On the x-axis he puts capital per worker and for the y-axis he uses output per worker. The reason for graphing capital and output per worker is due to his assumption that the nation is at full employment. The first (top) curve represents the output produced at each given level of capital. The second (middle) curve shows
6045-546: The media. An advocate of more transparent Fed policy and clearer statements than Greenspan had made, he had to back away from his initial idea of stating clearer inflation goals as such statements tended to affect the stock market. Maria Bartiromo disclosed on CNBC comments from their private conversation at the White House Correspondents' Association Dinner . She reported that Bernanke said investors had misinterpreted his comments as indicating that he
6138-488: The medium run frequency, reflecting major structural changes or distributional conflicts. This could for example explain the evolution of the share of labor income from the 1970s. In the early 1990s, Blanchard became involved in transition from central planning to a market economy in Eastern Europe. In a book based on a series of lectures, he discussed how to think about the various privatization options, and about
6231-802: The merger by invoking the " Material Adverse Change " (MAC) clause, Paulson immediately called Lewis to a meeting in Washington. At the meeting, which allegedly took place on December 21, 2008, Paulson told Lewis that he and the board would be replaced if they invoked the MAC clause and additionally not to reveal the extent of the losses to shareholders. Paulson stated to Cuomo's office that he was directed by Bernanke to threaten Lewis in this manner. Congressional hearings into these allegations were conducted on June 25, 2009, with Bernanke testifying that he did not bully Lewis. Under intense questioning by members of Congress, Bernanke said, "I never said anything about firing
6324-410: The more demand focused Anglo-Saxon approach to macroeconomic policy. In 2019, at the request of President Macron , Blanchard and Jean Tirole put together an international commission of experts to suggest policies aimed at fighting global warming, improving the retirement system, and improving redistribution. The report, “Les grands defis économiques” came out in 2021. Blanchard was Vice President of
6417-701: The plan might have to wait until the economic outlook improves. His remarks were most likely intended for the federal government's executive and legislative branches, since entitlement reform is a fiscal exercise that will be accomplished by the Congress and the President rather than a monetary task falling within the implementation powers of the Federal Reserve. Bernanke also pointed out that deficit reduction will necessarily consist of either raising taxes, cutting entitlement payments and other government spending , or some combination of both. In 2022 Bernanke
6510-531: The resources on the earth are indeed limited. Within the confines of Solow's model, this known technology is assumed to be constantly improving. Consequently, the products of this technology (the new capital) are expected to be more productive as well as more valuable. The idea lay dormant for some time perhaps because Dale W. Jorgenson (1966) argued that it was observationally equivalent with disembodied technological progress, as advanced earlier in Solow (1957). It
6603-458: The role of monetary policy, with Jordi Gali. The nature of the wage-price spiral , and the conditions under which it can emerge. The analysis of the US inflation episode of the 2020s, with Ben Bernanke . Blanchard has also argued for a higher inflation target for central banks, to decrease the risk of hitting the zero lower bound which dramatically decreases the scope for using monetary policy for stabilization purposes. The characterization of
6696-433: The speed of transition. In an article with Michael Kremer , he argued that the large decrease in output at the start of the transition, despite the shift to a set of market prices, was due to “disorganization”, the failure of supply chains; the mechanism became relevant again in the face of supply chain disruptions during the covid and energy crisis inflation of the early 2020s. Blanchard wrote two surveys of
6789-444: The steady state level, on the left side, grow more slowly when compared to countries closer to the vertex of the graph. When countries are to the right of the steady state level, they are not growing because all the returns they create need to go to replacing and repairing their old capital. Since Solow's initial work in the 1950s, many more sophisticated models of economic growth have been proposed, leading to varying conclusions about
6882-488: The term saving glut , the idea that relatively high level of worldwide savings was holding down interest rates and financing the current account deficits of the United States. (Alternative reasons include relatively low worldwide investment coupled with low U.S. savings.) As the recession began in 2007, many economists urged Bernanke (and the rest of the Federal Open Market Committee ) to lower
6975-462: The “ hysteresis ” hypothesis, namely that transitory shocks may have a permanent effect on participation or unemployment, with Lawrence Summers . The channels through which this may happen, union wage setting with insiders and outsiders, or loss of skills or morale when unemployment is high. The examination of gross flows in labor markets, and the determination of equilibrium unemployment and vacancies, with Peter Diamond . The theoretical foundations and
7068-569: Was "dovish" on inflation. He was sharply criticized for making public statements about Fed direction, which he said was a "lapse in judgment." As the Great Recession deepened, Bernanke oversaw some unorthodox measures. Under his guidance, the Fed lowered its funds interest rate from 5.25% to 0.0% within less than a year. When this was considered insufficient to abate the liquidity crisis , the Fed initiated quantitative easing , creating $ 1.3 trillion from November 2008 to June 2010 and using
7161-634: Was Chair of the economics department from 1998 to 2003. In 2008, he took a leave from MIT to be the Chief Economist of the International Monetary Fund , where he stayed until 2015. In 2015, he became the Fred Bergsten Senior Fellow at the Peterson Institute for International Economics . In 2023, he returned to France, joined the Paris School of Economics , and remains a Senior Fellow of
7254-464: Was a founding trustee of the Economists for Peace and Security . Solow's students include Nobel Prize winners Peter Diamond , George Akerlof, Joseph Stiglitz, and William Nordhaus, as well as Michael Rothschild , Halbert White , Charlie Bean , Michael Woodford , and Harvey Wagner . Solow was one of the signees of a 2018 amicus curiae brief that expressed support for Harvard University in
7347-467: Was a member of the Board of Governors of the Federal Reserve System , proposed the Bernanke doctrine , and first discussed " the Great Moderation "—the theory that traditional business cycles have declined in volatility in recent decades through structural changes that have occurred in the international economy, particularly increases in the economic stability of developing nations, diminishing
7440-452: Was a tenured professor at Princeton University and chaired the Department of Economics there from 1996 to September 2002, when he went on public service leave. Bernanke was awarded the 2022 Nobel Memorial Prize in Economic Sciences , jointly with Douglas Diamond and Philip H. Dybvig , "for research on banks and financial crises", more specifically for his analysis of the Great Depression . From August 5, 2002, until June 21, 2005, he
7533-558: Was an American economist and Nobel laureate whose work on the theory of economic growth culminated in the exogenous growth model named after him. He was Institute Professor Emeritus of Economics at the Massachusetts Institute of Technology , where he was a professor from 1949 on. He was awarded the John Bates Clark Medal in 1961, the Nobel Memorial Prize in Economic Sciences in 1987, and
7626-680: Was awarded the Nobel Memorial Prize in Economic Sciences along with Philip H. Dybvig and Douglas Diamond . Their research suggested that the Great Depression was caused by a variety of factors including credit market stress and a failing gold standard. With a rising External Finance Premium lenders and borrowers were both inclined to protect their financial health due to stressed credit markets. Lenders began tightening credit standards and avoiding risky borrowers while borrowers withdrew their cash. These self-preservation decisions from both lenders and borrowers resulted in further stress on
7719-598: Was born in Amiens (France) . His father was a neurologist, his mother a psychiatrist. Blanchard says he was attracted to economics because of the student protests in France in 1968, showing the importance of economics for society’s welfare, and the attractiveness of thinking about the issues through quantitative methods. He obtained a DES in economics at the University of Nanterre in 1972. He then moved from France to
7812-518: Was class valedictorian and played saxophone in the marching band . Since Dillon High School did not offer calculus at the time, Bernanke taught it to himself. Bernanke scored 1590 out of 1600 on the SAT and was a National Merit Scholar . He also was a contestant in the 1965 National Spelling Bee . Bernanke entered Harvard College in 1971, where he lived in Winthrop House , as did
7905-501: Was discharged in August 1945. Shortly after returning, he proceeded to marry his girlfriend, Barbara Lewis (died 2014), whom he had been dating for six weeks. Solow returned to Harvard in 1945, and studied under Wassily Leontief . As Leontief's research assistant he produced the first set of capital-coefficients for the input–output model . Then he became interested in statistics and probability models . From 1949 to 1950, he spent
7998-402: Was mentioned along with former Treasury Secretary Henry Paulson in allegations of fraud concerning the acquisition of Merrill Lynch by Bank of America . The letter alleged that the extent of the losses at Merrill Lynch was not disclosed to Bank of America by Bernanke and Paulson. When Ken Lewis , the chief executive officer of Bank of America, informed Paulson that Bank of America was exiting
8091-482: Was named chairman of President George W. Bush's Council of Economic Advisers and resigned as Fed governor. The appointment was largely viewed as a test run to ascertain if Bernanke could be Bush's pick to succeed Greenspan as Fed chairman the next year. He held the post until January 2006. On February 1, 2006, Bernanke began a fourteen-year term as a member of the Federal Reserve Board of Governors and
8184-405: Was published in 1997. The ninth edition was published in 2024. The textbook has been translated and adapted in 21 foreign editions. Among the other books, Blanchard and Herbert Giersch (and other authors) co-wrote in 1985 “Employment and growth: A two-handed approach”, emphasizing the role of both supply and demand, and attempting to integrate the supply focused German approach and
8277-433: Was succeeded by Janet Yellen on February 3, 2014. Bernanke wrote about his time as chairman of the Federal Reserve in his 2015 book, The Courage to Act , in which he revealed that the world's economy came close to collapse in 2007 and 2008. Bernanke asserts that it was only the novel efforts of the Fed (cooperating with other US agencies and agencies of other governments) that prevented an economic catastrophe greater than
8370-463: Was successfully advanced in subsequent research by Jeremy Greenwood, Zvi Hercowitz and Per Krusell (1997), who argued that the secular decline in capital goods prices could be used to measure embodied technological progress. They labeled the notion investment-specific technological progress . Solow (2001) approved. Both Paul Romer and Robert Lucas, Jr. subsequently developed alternatives to Solow's neoclassical growth model. To better communicate
8463-697: Was the Director of the Monetary Economics Program of the National Bureau of Economic Research and the editor of the American Economic Review . He is among the 50 most published economists in the world according to IDEAS/RePEc . Bernanke is particularly interested in the economic and political causes of the Great Depression , on which he has published numerous academic journal articles. Before Bernanke's work,
8556-545: Was the future governor of the Bank of Israel , Stanley Fischer , and his readers included Irwin S. Bernstein, Rüdiger Dornbusch , Robert Solow , and Peter Diamond of MIT and Dale Jorgenson of Harvard. Bernanke taught at the Stanford Graduate School of Business from 1979 until 1985, was a visiting professor at New York University and went on to become a tenured professor at Princeton University in
8649-599: Was unsuccessful in efforts to refinance his home. He suggested that lenders "may have gone a little bit too far on mortgage credit conditions". Since February 2014, Bernanke has been employed as a Distinguished Fellow in Residence with the Economic Studies Program at the Brookings Institution . On April 16, 2015, it was announced publicly that Bernanke will work with Citadel , the $ 25 billion hedge fund founded by billionaire Kenneth C. Griffin , as
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