Stan Fischer’s departure from the Fed: End of an era


Stan Fischer announced yesterday that he is leaving his position as Vice Chair of the Fed.  The Fed and the international monetary system will be weaker for his departure from official responsibility.  It is the end of an era.

Stan’s has been a singular career.  As an MIT professor he coauthored, with his close friend Rudi Dornbusch, the macro textbook that defined the basics of the field for a generation.  With Olivier Blanchard, he wrote the treatise that defined the state of the art for graduate students.  His lectures were models of lucid exposition and balanced judgement.  My view of monetary economics was shaped by my experience auditing his class in the Fall of 1978. Legions of central banking greats, starting with Ben Bernanke and Mario Draghi, were not just his students but his disciples.

It would have been enough but Stan was only getting started.  He went from MIT to the World Bank as chief economist. I as his successor saw how much respect he earned from every economist in the Bank.  When the US Treasury needed to suggest to IMF Managing Director Michel Camdessus a Deputy, it was obvious to me that Stan was the right choice.  Ultimately, Michel and Stan formed a close partnership that saw the world through the emerging markets turmoils of the 1990s.  Every finance minister in the developing world had ambivalence about the IMF but all respected, trusted and took advice from Professor Fischer.

It would all have been more than enough.  But  after a brief private sector stint, it was off to Israel where Stan ran an effective monetary policy,  guided a government’s economic policy as its chief adviser, and remained a fixture on the international monetary scene.  After doing all that was asked, Stan returned to the USA.  Before long he was at the Fed, which has never had a more respected vice chair.  He will be sorely missed.

In a just world Stan would have served at some point as Fed Chairman or Managing Director of the IMF.    Fate is fickle and it did not happen.  But Stan through his teaching, writing, advising and leading has had as much influence on global money as anyone in the last generation.   Hundreds of millions of people have lived better because of his efforts.  It was a privilege to be his student 40 years ago and is a joy to be his friend of four decades.

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