Martin Feldstein | |
|---|---|
 Feldstein at the White House in 1982. | |
| Chair of theCouncil of Economic Advisers | |
| In office October 14, 1982 – July 10, 1984 | |
| President | Ronald Reagan |
| Preceded by | Murray Weidenbaum |
| Succeeded by | Beryl Sprinkel |
| Personal details | |
| Born | Martin Stuart Feldstein (1939-11-25)November 25, 1939 New York City, U.S. |
| Died | June 11, 2019(2019-06-11) (aged 79) Boston,Massachusetts, U.S. |
| Political party | Republican |
| Education | Harvard University (BA) Nuffield College, Oxford (BLitt,DPhil) |
| Academic background | |
| Doctoral advisor | W. M. Gorman |
| Academic work | |
| Discipline | Macroeconomics,public economics |
| School or tradition | Neoclassical economics |
| Institutions | Harvard University (1967–2019) National Bureau of Economic Research (1977–1982, 1984–2019) |
| Doctoral students | |
| Notable ideas | Feldstein-Horioka puzzle |
| Awards | John Bates Clark Medal (1977) |
| Website | |
Martin Stuart Feldstein (/ˈfɛldstaɪn/FELD-styne;[4] November 25, 1939 – June 11, 2019) was an Americaneconomist.[5] He was theGeorge F. BakerProfessor ofEconomics atHarvard University and the president emeritus of theNational Bureau of Economic Research. He served as president and chief executive officer of the bureau from 1978 to 2008 (with the exception of 1982 to 1984).[6] From 1982 to 1984, Feldstein served as chairman of theCouncil of Economic Advisers and as chief economic advisor to PresidentRonald Reagan (where hisdeficit hawk views clashed with theReagan administration's large military expenditure policies). Feldstein was also a member of the Washington-based financial advisory body theGroup of Thirty from 2003.[7]
Feldstein was born inNew York City to aJewish family[8] and graduated fromSouth Side High School inRockville Centre, New York. He completed his undergraduate education atHarvard University (BA,summa cum laude, 1961), where he was affiliated withAdams House, and then attendedNuffield College, Oxford (B.Litt., 1963, which waspromoted by tradition to an honorary M.A. in 1963;D.Phil., 1967).[6] He was aResearch Fellow there from 1964 to 1965, an Official Fellow from 1965 to 1967, and was later anHonorary Fellow of the college.[6]
In 1977, he received theJohn Bates Clark Medal of theAmerican Economic Association, a prize which was awarded every two years until 2010 when it began to be awarded yearly.[9] It is awarded to the economist under the age of 40 who is judged to have made the greatest contribution to economic science. That same year, he was elected to theAmerican Academy of Arts and Sciences.[10] In 1989, he was elected to theAmerican Philosophical Society.[11] He was among the ten most influential economists in the world, according toIDEAS/RePEc.[12] He was the author of more than 300 research articles ineconomics and made contributions to health economics, international economics, and the economics of national security. However, he was known primarily for his greater contributions tomacroeconomics,public finance and social insurance.[13] Pioneering much of the research on the working mechanism and sustainability of publicpension systems, he advanced the current understanding of the effects of social insurance. Feldstein was an avid advocate ofSocial Security reform and was a main driving force behind former president George W. Bush's initiative of partial privatization of theSocial Security system. Aside from his contributions to the field of public sector economics, he also authored other important macroeconomics papers. One of his more well-known papers in this field was his investigation withCharles Horioka of investment behavior in various countries. He and Horioka found that in the long run, capital tends to stay in its home country — that is to say, a nation's savings is used to fund its investment opportunities. This has since been known as the "Feldstein–Horioka puzzle."[citation needed]
In 1997, writing about the upcoming European monetary union and the euro, Feldstein warned that the "adverse economic effects of a single currency on unemployment and inflation would outweigh any gains from facilitating trade and capital flows" and that, while "conceived of as a way of reducing the risk of another intra-European war", it was "more likely to have the opposite effect" and "lead to increased conflicts within Europe and between Europe and the United States."[14][15]
In 2003, Feldstein was awarded theDaniel M. Holland Medal in recognition of his contributions to taxation and public finance.[16]
In 2005, Feldstein was widely considered a leading candidate to succeed chairmanAlan Greenspan asChairman of the Federal Reserve Board. This was in part due to his prominence in the Reagan administration and his position as an economic advisor for the Bush presidential campaign.The New York Times wrote an editorial advocating that Bush choose either Feldstein orBen Bernanke due to their credentials, and the week of the nominationThe Economist predicted that the two men had the greatest probability of selection out of the field of candidates.[17] Ultimately, the position went to Bernanke, possibly because Feldstein was a board member ofAIG, which announced the same year that it would restate five years of past financial reports by $2.7 billion. Subsequently, AIG suffered a serious financial collapse that played a central role in the worldwide economic crisis of 2007–2008 and the ensuing global recession. The firm was rescued only by multiple capital infusions by the U.S. Federal Reserve Bank, which extended a $182.5 billion line of credit. Although Feldstein was not explicitly linked to the accounting practices in question, he had served as a Director of AIG since 1988. In March 2007, the Lynde and Harry Bradley Foundation announced that one of four 2007 Bradley Prizes to honor outstanding achievement would be awarded to Feldstein.[18] On September 10, 2007, Feldstein announced his resignation as president of the National Bureau of Economic Research effective June 2008.[19]
Feldstein served as a member of the President's Foreign Intelligence Advisory Board from 2006 to 2009.[20]
Feldstein said in March 2008 he believed the United States was in arecession and it could be a severe one.[21]
As a member of the board of AIG Financial Products, Feldstein was one of those who had oversight of the division of the international insurer that contributed to the company's crisis in September 2008. In May 2009, Feldstein announced he would step down as a director of AIG.[22] He served as a board member forEli Lilly and Company.[23] He also previously served on the boards of several other public companies including JPMorgan and TRW.[citation needed]
On February 6, 2009, Feldstein was announced as one of U.S. president Obama's advisors on thePresident's Economic Recovery Advisory Board.[24] He served as a member on thePresident's Economic Recovery Advisory Board from 2009 to 2011.[6]
He was a consultant to the U.S. Department of Defense.[6]
He served on the board of directors of the Council on Foreign Relations, the Trilateral Commission, the Group of 30 and theNational Committee on United States-China Relations.[20] Feldstein was invited to participate in theBilderberg Group annual conferences in 1996, 1998, 1999, 2001, 2002, 2003, 2005–2008 and 2010 through 2015.[25][26] He was also a member of the JP Morgan Chase International Council, a member of the Academic Advisory Council of the American Enterprise Institute, and a member of the British Academy.
In 2011 he was included in the50 Most Influential People in Global Finance ranking ofBloomberg Markets Magazine.[27]
In 2017, Feldstein joined a small group of "Republican elder statesmen" proposing that conservatives embrace carbon taxes, with all revenue rebated with lump-sum dividends, as a policy to deal with global climate change. The group also includedJames A. Baker III,N. Gregory Mankiw,Henry M. Paulson Jr., andGeorge P. Shultz.[28][29]
"Domestic Saving and International Capital Flows" (1980) made a significant contribution to international economics. Feldstein along withCharles Horioka contributed to the overall understanding of the international capital market by revealing the essence of the flow of capital in the world capital market. By examining the relationship between domestic investment and domestic savings of 21 OECD countries, Feldstein and Horioka provide statistical estimates revealing that almost all incremental savings of a country will remain in that country despite greater investment opportunities abroad. Puzzled by the unexpected direct relationship between domestic savings and investment, Feldstein and Horioka's findings have become known as the "Feldstein-Horioka Puzzle".[30]
"Social Security, Induced Retirement, and Aggregate Capital Accumulation" (1974) made a significant contribution to social insurance. Feldstein facilitated a greater understanding of the effects of social security upon household consumption and savings. The article provides a theoretical analysis of the impact of social security on an individual's decision regarding retirement and the amount of savings necessary for such retirement. Feldstein claimed that Social Security results in individuals deciding to save less for retirement and to retire earlier.[31]
Eight years after Feldstein's study, Dean Leimer and Selig Lesnoy of the U.S. Social Security Administration attempted to replicate his results and uncovered programming mistakes in Feldstein's analysis that invalidated his earlier results,[32] which Feldstein acknowledged and issued a retraction.[33] They also found what they deemed unreasonable assumptions in the construction of the social security wealth variable. After correcting these issues, Leimer and Lesnoy found a much weaker relationship between Social Security and personal savings than Feldstein had originally suggested. In fact, their results indicated that Social Security may have contributed to increased savings.[34]
Feldstein participated in the academic and popular debate on theEuropean Union (EU) and the European common currency from its early stages, with increased interest during the sovereign debt crisis. Taking a political economy perspective, Feldstein argued that the European Union project in general and the creation of theEconomic and Monetary Union (EMU) in particular were driven by a strange mix of pro-European internationalism and the pursuit of strictly national interests.[15] Although nuanced in his criticism, Feldstein can be characterized as a Eurosceptic.[35] Feldstein, an enthusiastic supporter of a single market for goods and services in the EU, argued that this goal does not require a monetary union.[36] Furthermore, the creation of a single currency in the EU would increase political tensions in the union, as not all countries share the anti-inflationary stance of the German policy makers.[37] In military and foreign policy, the objective of achieving a political union (of which the monetary unification is only one aspect) would promote the development of a common foreign and defense policy capable of projecting strength on the international scene.[38] During the sovereign debt crisis, Feldstein argued in favor of a "eurozone holiday" solution whereby the countries most affected by the crisis (such as Greece) would temporarily leave the eurozone, revert to their national currencies, devalue and re-enter at a lower exchange rate a few years later, a policy that would ensure a boost in international competitiveness solid enough to offset the economic recession.[39]
A well-known figure on theHarvard campus, Feldstein taught the introductory economics class "Social Analysis 10: Principles of Economics" for 20 years and was succeeded byN. Gregory Mankiw. The class, since renamed Economics 10, was usually the largest class at Harvard, which remains the case.[40] He also taught courses in American economic policy and public sector economics at Harvard College.
Feldstein may have made one of his greatest impacts by the concentration of his students in top echelons of government and academia, such asLarry Summers, former Harvard president and U.S. Treasury secretary;David Ellwood, dean ofHarvard Kennedy School; andJames Poterba,MIT professor and member of Bush's tax reform advisory panel.Lawrence Lindsey, formerly Bush's top economic adviser, wrote his doctoral thesis under Feldstein, as didHarvey S. Rosen, the previous chairman of the president's Council of Economic Advisers,Douglas Elmendorf, the former Director of the Congressional Budget Office,José Piñera, Chile's Secretary of Labor and Social Security during its pension privatization in 1980–1981,Jeffrey Sachs, Director of the Earth Institute atColumbia University, andGlenn Hubbard, Bush's first chairman of the council and now dean of the Columbia Business School.[41]
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| Political offices | ||
|---|---|---|
| Preceded by | Chair of theCouncil of Economic Advisers 1989–1993 | Succeeded by |
| Academic offices | ||
| Preceded by | President of theAmerican Economic Association 2004–2005 | Succeeded by |
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* indicates acting officeholders | ||
