Tag: Mundell

Categories
Chicago Funny Business

Chicago. Economics Christmas Skit Material, 1969

While no date is given for the following two pages, we can be confident that the material was prepared and one presumes performed at the Chicago Economics Department Christmas Party of 1969. Photos from the December 1970 Christmas party have been posted by Robert J. Gordon–they do not correspond to the texts below.

The events of campus unrest at Columbia, Cornell, Harvard and San Francisco State referred to all took place 1968-69, so the earliest possible date for this skit would have been in December 1969.

I have added the “true” lyrics to the chosen tunes as well as links to videos with the corresponding melodies for readers who wish to try their luck in the privacy of their own offices. Replication probably requires a cocktail or two to establish the appropriate a-critical mood. 

Your sober scribe was not particularly amused. OK, maybe the lighting, costuming, and orchestral arrangements were fantastic–hard to know. I pity though the poor future historians of present economics who will have to deal with audio and video evidence and not just the written record. 

________________________

SONGS FOR SKIT

University of Chicago
Economics Department
Skit Song Lyrics

“The Merry Minuet
(They’re rioting in Africa…)
https://youtu.be/L8-BI89mb9A
They’re rioting at C’lumbia

La La La La La La La

They’re shooting up Cornell

La La La La La

They’re plowin’ up ole Harvard Yard

La La La La La La La

And Hiyakowa’s catching hell.

La La La La La

Academia is festering with strife and discord

The faculty hate students cause they’re paranoid

But we can be certain and brimming with cheer

That none of this nonsense will ever happen here.

 They’re rioting in Africa
They’re starving in Spain
There’s hurricanes in Florida
And Texas needs rain
The whole world is festering with unhappy souls
The French hate the Germans,
the Germans hate the Poles
Italians hate Yugoslavs,
South Africans hate the Dutch
And I don’t like anybody very much
But we can be thankful and tranquil and proud
That Man’s been endowed with the mushroom shaped cloud
And we know for certain that some lovely day
Some one will set the spark off and we will all be blown away
They’re rioting in Africa
There’s strife in Iran
What nature doesn’t do to us
Will be done by our fellow man!

 

University of Chicago
Economics Department
Skit Song Lyrics

 Santa Claus is Coming to Town
https://youtu.be/HSmsq2iq4bQ
You’d better watch out
You’d better not strike
You’d better not riot
I’m (or We’re) telling you why
The National Guard is coming to town.
They know what you’ve been smoking
They know when you’ve been bad
They know when you’ve been sitting-in
So get out…do you understand!!
They’re making a list
And checking it twice
They’re going to find out
Whose [sic] Commie or nice
The National Guard is coming to town.		 Oh! You better watch out
You better not cry
You better not pout
I’m telling you why
Santa Claus is coming to town
He sees you when you’re sleeping
He knows when you’re awake
He knows if you’ve been bad or good
So be good for goodness sake!
He’s making a list
Checking it twice
Gonna find out
Who’s naughty or nice
Santa Claus is coming to town

 

 

University of Chicago
Economics Department
Skit Song Lyrics

 On Top of Old Smokey
https://youtu.be/P51eCjKN2Kw
On top of a mountain
In central Vermont
Resides Milton Friedman
Of wisdom the fount.
The scene is idyllic
On that mountain peak
But here in Chicago
The outlook is bleak.
Since Telser to Belgium
Has decided to roam,
Just Zecher and Gorden [sic]
Are left here at home.
No thesis prospectus
Are we able to give
Faculty all neglect us
As their prerogative.
Heed our ultimatum
Before it’s too late
Move the MONEY workshop
To the Green Mountain State.		 On top of old smokey
all covered with snow
I lost my true lover
for courting too slow
For courting’s a pleasure
and parting’s a grief
And a false hearted lover
is worse than a thief
For a thief will just rob you
and take all you save
But a false hearted lover
will lead you to the grave
And the grave will decay you
and turn you to dust
Not one girl in a hundred
a poor boy can trust
They’ll hug you and kiss you
and tell you more lies
Than cross lines on a railroad
or stars in the skies
So come all your maidens
and listen to me
Never place your affections
on a green willow tree
For the leaves they will wither
and the roots they will die
You’ll all be forsaken
and never know why.

 

 

University of Chicago
Economics Department
Skit Song Lyrics

Mickey Mouse Club Song
https://youtu.be/x4C_lUy58Rw
Who’s the leader of the club
That’s made for you and me
M-i-l-t-o-n Da Da Da Da De[e]
Uncle Miltie,
Uncle Miltie
Forever let us sing his praises high
[…high, high, high]
He’s the man with just one theory
When others must use two
M-i-l-t-o-n Da Da Da Da Do[o]
Milt the Stilt (Paul the Small)
Milt the Stilt (Paul the Small)
In our hearts we know which one is  right […] [right, right, right]
Velocity is constant
The Phillips curve’s a fraud
M-i-l-t-o-n Da Da Da Da Da[w]
Money matters,
money matters
As long as prices
do not rise too fast.
What’s the purpose of the club
That’s made for you and I
U of C Ph.D. M-O-N-E-Y
Permanent Income,
Permanent income
It makes it all worthwhile, or so they[…]
[…]say. [say, say, say]
Rules and not discretion
And let me tell you why
M-I-L-T-O-N  M-O-N-E-Y		 Who’s the leader of the club
That’s made for you and me
M-I-C-K-E-Y M-O-U-S-E
Hey! there, Hi! there, Ho! there
You’re as welcome as can be
M-I-C-K-E-Y M-O-U-S-E
Mickey Mouse! (Donald Duck)
Mickey Mouse! (Donald Duck)
Forever let us hold our banner
High! High! High! High!
Come along and sing the song
And join the jamboree!
M-I-C-K-E-Y M-O-U-S-E
Mickey Mouse club
Mickey Mouse club
We’ll have fun
We’ll meet new faces
We’ll do things and
We’ll go places
We’re marching all around the world
Who’s the leader of the club
That’s made for you and me
M-I-C-K-E-Y M-O-U-S-E
Hey! there, Hi! there, Ho! there
You’re as welcome as can be
M-I-C-K-E-Y M-O-U-S-E
Mickey Mouse! (Donald Duck)
Mickey Mouse! (Donald Duck)
Forever let us hold our banner
High! High! High! High!
Come along and sing a song
And join the jamboree!
M-I-C-K-E-Y M-O-U-S-E(yay Mickey)
(yay Mickey)
(yay Mickey Mouse Club!)

 

 

University of Chicago
Economics Department
Skit Song Lyric

 

O Tannenbaum (O Christmas Tree)

https://youtu.be/27JleM39TPY
Now that we’ve lost our faculties
To real world positions
We can observe to ascertain
What were their life ambitions
Lester Telser for his amusement
Investigated advertisement
So now we find him having fun
On the avenue called Madison.
Those who had taught development
Have left to form a settlement
With Harberger as President
An economist in residence
With [Larry] Sjastaad in an advisory task
They’re sure to find their golden path
And on their farms up with the sun
Are Teddy Schultz and Gale Johnson.
Bob Fogel has aspired to be
The president of the Santa Fee
Gregg Lewis we all should know
Leads the AFL and CIO
And Friedman’s gone up to Ely
To found his university
Big Harry with his knife so free
Now runs a toothpick factory.

[Handwritten addition:]

Uzawa + Mundell have gone to instigate at the Sorbonne
And [Erwin] Diewert is a lumberjack
Up near the straits of Mackinac

Geo. T who’s of urban fame [George S. Tolley]
Has taken over Lindsay’s game [NYC mayor]
And since there is no more faculty
We’ve all enrolled at MIT.

 O Christmas Tree, O Christmas tree,
How lovely are your branches!
O Christmas Tree, O Christmas tree,
How lovely are your branches!
Not only green in summer’s heat,
But also winter’s snow and sleet.
O Christmas tree, O Christmas tree,
How lovely are your branches!
O Christmas Tree, O Christmas tree,
Of all the trees most lovely;
O Christmas Tree, O Christmas tree,
Of all the trees most lovely.
Each year you bring to us delight
With brightly shining Christmas light!
O Christmas Tree, O Christmas tree,
Of all the trees most lovely.
O Christmas Tree, O Christmas tree,
We learn from all your beauty;
O Christmas Tree, O Christmas tree,
We learn from all your beauty. 

 

Your bright green leaves with festive cheer,
Give hope and strength throughout the year.
O Christmas Tree, O Christmas tree,
We learn from all your beauty.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Some dialogue:

Opening scene, faculty seated around a table, one member is reading a newspaper:

One faculty member: (reading newspaper, shakes head) The students are revolting!

(All concur)

Another member: But thank God—ah I mean Milton—that we’re at Chicago. Our students are well behaved, well ordered, normal, continuous and homothetic.

Another: (questioning) But how do you know about their sex lives?

(Pause for a few seconds, for all the uproarious laughter, then break into song—“They’re rioting at Columbia….” [See above].)

(After song, and during, students enter, their spokesman present list of demands to Stigler).

Student spokesman: We’ve come to present our nonnegotiable demand schedule for reform in the department.

(All faculty in shock and dismay)

We have decided to bring the free market economy into the university. Therefore:

(1) We demand that prelim grades be bought and sold freely—thereby bringing greater efficiency into the production of economists.

(2) We demand the immediate return of all industrial organization exams from the public enterprise post office.

And (3) We demand the removal of all artificial floors and ceilings in the Department.

Stigler: (unrolls list of demands and exclaims) Heck—we’re saved. Your demand schedule is upward sloping (a pause)

(turns sheet of paper to audience)

And therefore nonexistent.

(All faculty sigh in relief)

 

Source: Harvard University Archives, Papers of Zvi Griliches, Box 129, Folder “Faculty skits, ca. 1960s”.

 

Categories
Chicago Columbia Economist Market Economists

Chicago. Harry Johnson opposes major appointment to be offered to Gary Becker, 1964

HarryJohnsonGaryBecker

From the perspective of today it is rather difficult to imagine that the idea of bringing favorite son Gary Becker back to the University of Chicago from Columbia could have faced any, much less, serious resistance from within the economics department. But as the following letters from Zvi Griliches’ papers in the Harvard archives show, Harry Johnson’s displeasure with this prospect was a force taken most seriously by several of his colleagues, at least in the Spring of 1964. Perhaps more was at play than Johnson’s principle objection to a Becker hire:

“…his accomplishments consist mainly in doing more competently what various members of the department already do, and have been doing for a long time, and not in doing well what the department does not do and ought to be doing if it expects to attract good students and maintain its leadership among the graduate schools of the continent, I think that it would be a grave error of strategy in the development of the department to go after him.”

Johnson offered another interesting claim with regard to 1964 Chicago faculty expectations for a Ph.D. thesis:

“I have noticed among some of the graduate students the notion that the Ph.D. thesis is to be completed with the minimum of intellectual input and a few single-equation regressions. This is contrary to the intention of the Ph.D. regulations (‘the quality and length of a good journal article’)…”

Perhaps the birth of the concept of a job-market-paper?

_____________________

THE UNIVERSITY OF CHICAGO
CHICAGO 37 • ILLINOIS
DEPARTMENT OF ECONOMICS

May 20, 1964

To: Al Harberger, Zvi Griliches

From: Al Rees

Re: Gary Becker

The question of an appointment for Gary will be discussed at a Department Meeting on June 4. I enclose a copy of a confidential memo from Harry in which he opposes the appointment. Harry will be in Italy on June 4 and cannot present his views in person. I would very much like to have your reaction before the meeting.

You should also know that appointments are being offered this week to Jimmy Savage and to Hans Theil, both at high salaries and both joint with the School of Business. There seems to be a very high probability that both will be accepted.

I am somewhat concerned about the number of tenure posts the Administration will let us have; in particular, I do not want to do anything that might “freeze out” Larry Sjaastad, for whom I have very high hopes.

Another consideration is the effect on Harry of making a senior appointment that he opposes. He seems to feel somehow outnumbered and is still actively considering a move to London.

Gregg has already put to you the case for Gary; in any case you know his stengths too well to need to be reminded of them.

[signed] Al

_____________________

 UNIVERSITY OF CHICAGO

Date May 19, 1964

CONFIDENTIAL

To: A. Rees
From: H.G. Johnson
In re: [Economics] Department Meeting, June 4th

As I will not be at the departmental meeting on June 4th, I am taking the unusual course of putting on paper my views about certain matters due for discussion, on which I would have spoken.

I. A. (1) The thesis prospectus seminar on Choudhri was dissatisfied with the prospectus; it considered making him prepare a new prospectus, but decided instead to make him get agreement from the three members of his Committee on a new draft. Earl Hamilton was in favor of another prospectus seminar, but was overruled. I have had second thoughts, and believe that the matter should be reconsidered, for the following reasons:

(a) next year’s money workshop will be in different hands than this year’s; I am worried that, in the rush to get students past their prospectus seminar, we will land next year’s workshop with a batch of poorly thought out prospectuses that will have to be patched up with great labor.

(b) Choudhri has an excellent record; he should be able to do much better, and we should make him do better–if we let him get by with low-quality work, we are doing his future career a disservice.

(c) I have noticed among some of the graduate students the notion that the Ph.D. thesis is to be completed with the minimum of intellectual input and a few single-equation regressions. This is contrary to the intention of the Ph.D. regulations (“the quality and length of a good journal article’), bad for student morale, and inimical to good teaching. An example in this case would be salutary, and it would do Choudhri himsèlf little harm and probably some good.

I. A. (1) I would like to recommend strongly that we go after R. A. Mundell for the Ford Fellowship for 1965-66. Mundell is one of the most original and elegant moentary theorists going: he has contributed to the theory of economic policy under fixed and floating exchange rates, and started off the analysis of optimum currency areas, and he has made a number of contributions to the price theory of money and of inflation. He is also a first-class international trade and general value theorist, and a man who is always ready for an intelligent argument. Apart from our mathematical economists, we have no-one here with Mundell’s interest in pure monetary and value theory; and we have no-one with his practical experience at the IMF. I should add that I have suggested Mundell partly because I have talked with him, and he would like to spend 1965-66 in this area.

I. B. (2) Just as strongly, I feel that the department should not pursue the proposal to offer a tenure appointment to Gary Becker. I have a high respect for Becker’s theoretical abilities; but as his accomplishments consist mainly in doing more competently what various members of the department already do, and have been doing for a long time, and not in doing well what the department does not do and ought to be doing if it expects to attract good students and maintain its leadership among the graduate schools of the continent, I think that it would be a grave error of strategy in the development of the department to go after him. 

In addition, I would point out that Becker is probably the most distinguished graduate this department had had in recent years, and that going after him would be a repetition of the cannibalization-of-the-young policy that in my judgment has seriously weakened this department in the past decade or so. Unless we get our good graduates established in good departments in other Universities, we are going to have to live with the present image of the Chicago School in the profession at large, and we are not going to have representatives in other good universities steering good students towards us. If we persistently try to bring our own best back, we will defeat ourselves in the long run in two ways: we will not get the students; and we will not get the top-quality men we should get either, because we are bound to miss out on some of our own, and the fact that a new non-Chicagoan will necessarily be one of a minority outgroup will make the place unattractive to such men.

I am also fairly sure that Becker would not come, because he is intelligent enough to know that he should not come and begause he is well entrenched at Columbia, where a number of senior men are due to be replaced and will be replaced by men of his own

_____________________

THE UNIVERSITY OF CHICAGO
CHICAGO 37 • ILLINOIS
DEPARTMENT OF ECONOMICS

June 15, 1964

Professor Zvi Griliches

The Maurice Falk Institute for
Economic Research in Israel
17, Keren Hayesod Street
Jerusalem, Israel

Dear Zvi:

I have your letter of June 7.

At the Department Meeting a week ago last Friday, we took no action on Richard Moorsteen other than agreeing to invite him to come to Chicago for a visit next fall. We agreed to invite Bob Mundell to join our faculty for the year 1965-66 on the Ford Foundation Professorship.

The Department took no action on my proposal to offer a major appointment to Gary Becker. It is likely that the question will come up again next fall and you will be here then to state your own point of view.

It is quite clear now that Theil is not going to give us his decision until after his return to the Netherlands. At the moment I am fairly optimistic that when he makes his decision, it will be favorable. Theil has been offered a quite good package, I think, and I judge from conversations with him that he feels he also has a good package.

Furthermore, Judy got the impression that Laura Theil would be favorable to coming here.

You ask in the postscript to your letter whether I got a raise. I presume that what was in your mind was the question: Will I get a raise if the chairmanship is offered to me and I accept it?

I can’t answer your  question for sure since the chairmanship has not been offered to me. Indeed, I have taken steps at this end to try to insure that it won’t be offered to me. If it is offered to me, it is very unlikely I will accept it. Indeed, I can’t imagine that the terms on which it would be offered would be sufficiently attractive to induce me to accept.

Sincerely,

[signed] Gregg

H.G. Lewis

HGL/agm

Source: Harvard University Archives, Papers of Zvi Griliches, Box 129, Folder „Correspondence, 1960-1969“.

Image Sources: Harry Johnson (Archives of two giants of economics donated to the U Chicago Library. U Chicago News, October 25, 2018); Gary Becker (University of Chicago Booth School Nobel Laureate Page for Gary Becker).

Categories
Chicago Columbia Economists

Columbia. George Stigler reviews the department of economics, 1978

 

Somewhere between bibliometric departmental rankings and formal visiting committees lie the relatively casual responses to requests for outside opinions solicited by university administrators. In this post George Stigler provides his brief assessment of where the Columbia economics department was at the end of 1978 and what could be done to improve its relative standing.

Stigler’s message was essentially to add “More Cowbell“, i.e. outside hires of senior heavy-weights as opposed to the selection and cultivation of internal candidates for promotion.

As a former active “area expert” on the GDR economy, I am delighted to have found this explicit obiter dicta that expresses Stigler’s contempt for regional studies. 

“I also approve of [the Columbia economics department’s] conscious policy of withdrawing from the quite excessive number of special geographical area commitments into which Columbia entered.” 

Also worth noting is that Edmund Phelp’s “departure” from Columbia  lasted only 1978-79. Because of a salary dispute, Phelps left Columbia for New York University. Perhaps Stigler’s letter helped warm the Columbia administration to accepting Phelp’s terms (which they did and Edmund Phelps indeed returned the next year).

_________________________

Stigler’s View of Columbia from Chicago

December 8, 1978

Professors Louis Henkin and Steven Marcus
Columbia University
211 Low Memorial Library
New York, New York 10027

Dear Professors Henkin and Marcus:

Let me attempt to reply to your inquiries about the Department of Economics.

  1. The department was probably rated too low in 1969, and I think it is about as strong today relative to other universities, yielding a ranking around 9th or 10th. The department has suffered 2 major losses in the past decade or so (Becker and Phelps) but made a number of excellent appointments of younger people and one almost major appointment (Mundell, who dominated international trade theory in the 1960’s but has apparently stopped working). The department lacks flashy, controversial figures and this may account for its unduly low ratings. But the fact is that it is a good department.
  2. I would not quarrel with its size or general balance. I also approve of its conscious policy of withdrawing from the quite excessive number of special geographical area commitments into which Columbia entered.
  3. The department is especially strong in international trade. I consider it seriously weak in the basic fields of microeconomics and industrial organization, even though Lancaster is very good,—I would consider this its top need. There is some weakness in macroeconomics: Cagan is no longer a major figure, and Phelps’ departure emphasizes the weakness in the area. Mincer is superb in labor economics.
  4. There is strength in the intermediate levels, with good appointments such as Taylor and Calvo and Rodriguez. I do not know many of the assistant professors, and have only a mild suspicion that they are mostly not first class.

On reflection, in the last decade the department has not made a single appointment (except possibly Dhrymes and still more uncertainly Mundell) who would be considered a catch by the other major economics departments. While Harvard was getting Jorgenson and Griliches and Arrow, and Chicago was getting Becker and Lucas and Rosen, Columbia was making good junior appointments. I believe that it is a rule that a major department will make most of its senior appointments from outside, not by promotion. If I am right, the department will not rise in relative standing until it is ready and able to draw in major scholars at the height of their productive careers. It now contains major scholars such as Vickrey and Mincer—will it be able to replace them?

Sincerely,

George J. Stigler

GJS:ip

 

Source:  University of Chicago Archives. George Stigler Papers, Box 3. Folder “U of C, ECON./MISCELLANEOUS”.

Image Source: George J. Stigler, University of Chicago Photographic Archive, apf1-13366, Special Collections Research Center, University of Chicago Library.

Categories
Funny Business M.I.T.

M.I.T. Robert Solow’s last skit “Dr. Rudi Tells You How”, late 1980s

 

 

The following skit by Robert Solow has been transcribed from his original handwritten text in the Economists Papers Archive at Duke University and shared with Economics in the Rear-View Mirror by Roger Backhouse.

It is identified in its upper-right hand corner on the first page as “Solow’s Last Skit”. The manuscript bears no date, but there are two clues that point to its having been written sometime in the late 1980’s.

  • The short-lived currency unit of Argentina, the Austral [b. June 15, 1985; d. December 31, 1991], is mentioned at the end of the skit.
  • The late 1980s also marked the heyday of the petite radio and television therapist, Dr. Ruth Westheimer, who spoke with a charming German accent about issues surrounding sexual health. One supposes nothing could have been more or less natural than imagining Rudiger Dornbusch, born in Krefeld, Germany, to be the Dr. Rudi dispensing professional advice to fellow economists.

Robert Solow has received much ribbing for the following remark from his 1966 “Comments.” Guidelines: Informal Controls and the Market Place, eds. George P. Shultz and Robert Z. Aliber. Chicago: University of Chicago, pp. 62-66.

“…everything reminds Milton [Friedman] of the money supply. Well, everything reminds me of sex, but I try to keep it out of my papers”.

Now read the text below and you will see that Robert Solow was definitely no prude when it came to joking about economists (still clearly “A Man’s World”):

  • “Ed Presspott”: time inconsistency as analogue to hypoactive sexual desire disorder (HSDD);
  • “Dr. Rudi”: not consistently overshooting (I apologize if you cannot unread this);
  • “Bob Barrell”: completely predictable routine, needing to spice up his act;
  • “Tom Corporal”: obsessed with finding the right technique;
  • “Larry Winters” as a compulsively promiscuous co-author.

From a comment left (15 Feb 2022) at Tyler Cowen’s Assorted Links (includes this post).

“I attended that skit party! Stan Fischer played Bob Barrel, and Jeff Wooldridge played Tom Corporal.”

_______________________

Solow’s Last Skit

Doctor Rudi Tells You How

(A) We present, in person, the world-famous author of the best-selling book “How to Repudiate Your Debts and Blame the Lender.” Dr. Rudi has been telling people how to run their—NO, NOT WHAT YOU EXPECTED—how to run their professional lives ever since he discovered that they would pay to listen. For a happy, uninhibited professional life, for fun-filled trips to Rio, for the pleasure of striking terror into the hearts of international bankers and making them pay, just listen to Dr. Rudi. Remember that Dr. Rudi swings like a pendulum do. Now for our first seeker after help with his professional life. Please state your name.

(P) [Edward C. Prescott] I’m Ed Presspott.

(R) And what is your problem, Mr. Presspott. Don’t be shy. Dr. Rudi has heard everything. Nothing shocks him.

(P) I feel so ashamed. I can barely bring myself to look in the mirror.

(R) Ah, you look in the mirror. The mirror is in the ceiling, no doubt?

(P) No, my regular shaving mirror, in the medicine cabinet.

(R) In the medicine cabinet? That’s a brand new one. Even Dr. Rudi has never heard of that before. There is no end to perversion. How does he get that mirror off his ceiling and into the medicine cabinet? Must ask [Stanley Fischer] Dr. Stan. Well, then, Mr. Presspott, why are you ashamed to look into the mirror—chuckle, chuckle,–that you keep in the medicine cabinet?

(P) I’m dynamically inconsistent. I didn’t think I could bring myself to say it. You’re wonderful, Dr. Rudi. Yes, let’s face it, I’m dynamically inconsistent.

(R) All the time?

(P) Yes. No. Yes. No. A lot, anyway. It just comes over me.

(R) You better tell me about it. Everything. Hold nothing back.

(P) Take last week. Monday, Tuesday, Wednesday were just routine. Of course my tastes and technology changed a couple of times, the way they always do. I adjusted, the way I always do. Kept the old markets cleared, the old prices flexible. Told everyone I was going to the movies on Thursday. Seemed like the best thing to do. Really did. Often go to the movies on Thursday. I really do. I really do. I really do. No, I don’t. I’ve got to tell someone, Dr. Rudi. I don’t go to the movies on Thursday. I don’t really go to the movies. Hardly ever. Somehow on Thursday I don’t feel like going to the movies. On Monday it seemed like the best thing to do. So I told everyone I would. But most Thursdays, I don’t know, it just comes over me that going to the movies might not be the best thing to do after all. Sometimes I make myself go, but most of the time I don’t. I know it’s wrong, but I don’t go. I’ve never told this to anyone before, Dr. Rudi, not even to [Finn Kydland] Kid Finland.

(R) So when you don’t go to the movies on Thursday, what do you do? I have to know if I’m going to help you.

(P) I just sit there in a sweat, even though it’s Minneapolis at 200° below zero. I just sit there in a sweat and worry about what the other people are thinking.

(R) Maybe they don’t know.

(P) Of course they know. It’s common knowledge. I can practically hear them whispering that old Presspot has lost his dynamic consistency. And they laugh, they laugh. I even tried telling them on Monday that I wouldn’t go to the movies on Thursday. But you know how it is, on Monday morning, with all that market clearing ahead of me, I really feel like going to the movies on Thursday. How do I know what I’ll feel like on Thursday? Help me, Dr. Rudi, help me.

(R) You just have to stop feeling guilty, Pressport. Lost of people are dynamically inconsistent. Even Dr. Rudi. Do you think I overshoot every time? Of course not. Sometimes I just can’t be bothered to overshoot. Dynamic consistency is the hobgoblin of little minds as dear Ralph Waldo Mundell used to say. No guilt, Presspott. No guilt. If it feels good, it feels good. Render unto Thursday what is Thursdays, as Jesus Mundell used to say. No guilt.

(P) Thank you, Dr. Rudi, thank you. I feel better already.

(R) And one more thing, Presspott.

(P) Yes, Dr. Rudi?

(R) Get that mirror out of the medicine cabinet and back on the ceiling where it belongs. Next client, please.

(A) You, sir, you look troubled. What is your name?

(B) [Robert Barro] Barrel, Bob Barrel, and I am sorely troubled.

(A) Tell it to Dr. Rudi, Barrel. You’re as good as cured.

(R) Let it hang out, Barrel. Well, maybe it would be better if you just told me about your problem.

(B) It’s simple. Dr. Rudi. Everything I do is anticipated. I am so predictable that everything I do is anticipated by everyone. Well, you know what happens.

(R) What happens?

(B) Nothing. That’s the problem of course. Nothing real happens. I’m death[?] on the price level, of course, but there’s no fun in that. Anyone can screw up the price level. I want to do something real.

(R) Sneak up on them. Barrel. Surprise them.

(B) I’ve tried. I wait until the last minute and then I try something completely out of character. Sometimes I smile, or make a joke. But nothing real happens. Nominal, nominal, nominal. So then I ask people on the street: how come nothing real happened? Didn’t I do something surprising? And they all say the same thing: We figured you would try to do something unanticipated, so we were waiting. You’re lucky you even have a nominal effect, Barrel. You’re predictable, Barrel, predictable. Before I can even say I resent that, they say you resent that. It’s obscene.

(R) No, it’s not obscene, Barrel. Nothing is obscene. Everything is OK. It’s OK to be predictable. It’s OK to be boring. It’s OK to be sober. Sometimes even the great Mundell is…boring. Maybe your grandchildren will be unpredictable.

(B, R together)  B: I’ve already taken them fully into account.
R: You’ve already taken them fully into account.

(B) See what I mean. Am I doomed to leave no real effects behind me?

(R) Yes (Thank God). You must learn not to care. Think nominal. Nominal is beautiful. Real is ugly. Real is Keynesian.

(B, R together)  There are no Keynesians.

(R) Stick with the price level, my boy, and the price level will stick with you. And one more thing—

(B) Yes, Dr. Rudi?

(R) No more boring predictable papers, please. Next sufferer.

(A) Here is a lost-looking soul. What is your name, sir, and are you seeking advice from Dr. Rudi?

(C) [Thomas Sargent] Corporal is my name, Tom Corporal. Science is my game. But yes, I have a bit of a problem. I’m sure there’s a theorem somewhere that will take care of it. If worst comes to worst we can always change the problem.

(R) Tell Dr. Rudi about it.

(C) Well, I might as well. I told you that science is my game. Control theory. Stochastic processes. See a sum of squares, minimize it.

(R) Small is beautiful as good old Kurt[?] Mundell used to say.

(C) Never heard of him, but if he was a minimizer he was OK.

(R) So what is the problem?

(C) Learn a new technique every month.

(R) Every month! What do you need me for?

(C) It’s my life. I perfect my technique. I am obsessed with doing it right, exactly right. I bring all my technique to bear on it, and I find I can’t do it at all.

(R) Well, this sounds more like my kind of problem.  Not at all, eh?

(C) Oh I turn out the papers and the books all right. But nobody believes any of it. Neither do I. I try to work up some conviction.

(R) Conviction is better than guilt, as old Judge Mundell used to say. You gotta have conviction.

(C) Sometimes I can’t even work up a simple declarative sentence. But at least I’m doing it right.

(R) I thought you weren’t doing it at all.

(C) Maybe it’s the same thing. Anyway, I have another math book at home and I bet the key to the universe is in it somewhere. If I could only find a well-posed question I’m sure I could find a well-posed answer.

(R) My boy, listen to Dr. Rudi. One or two techniques is all you need. The great Mundell got by with no technique at all. Solow with even less.

(C) You mean it’s done with mirrors?

(R) On the ceiling, yes.

(C) Angle of incidence equals angle of reflection, eh.

(R) Any angle you like, Tom baby. Forget the technique and start to believe. That will get their attention. And then…

(C) And what then, Dr. Rudi?

(R) Tell them to repudiate their debts and blame the lenders.

(C) I believe, Dr. Rudi, I believe.

(R) But stay out of Brazil and Argentina, that’s my territory.

(C) It’s the Austro-Hungarian Empire for me. Wait till I tell [Neil Wallace] Neil.

(R) Next sinner, please.

(A) Here is a distinguished looking gentleman. Dr. Rudi rarely sees patients who seem so self-possessed yet so youthful. Sir, it is hard to believe that you have any problem at all, let alone the sort of thing that Dr. Rudi could help you with. What is your name, Sir?

(W) [Larry Summers] Larry Winters, but don’t ask me to spell it. Spelling is not my thing.

(A) Ah you don’t have to spell it. Everyone knows Larry Winters. But surely you don’t have any problems. When could you squeeze them in?

(W) Well, I’d rather talk to Dr. Rudi.

(R) Come in, tell me in complete confidence what brings you here. No one will know but our world-wide audience.

(W) Dr. Rudi, to tell you the truth I can’t stop writing. Every day I write like one possessed. Since January 1 I have written 89 articles and that doesn’t count National Bureau Working Papers. I don’t even have time to think.

(R) Ah, so you have discovered the Fundamental Secret?

(W) You mean that you don’t have to think in order to write?

(R) So wise, so young!

(W) I learned it from my teachers.

(R) Those who can, do. Those who can’t, teach.

(W) Those who can’t teach, teach economics.

(R) You know that too?

(W) I learned it from my teachers.

(R) So you can’t stop writing. Compulsive promiscuity. As the late Dr. Sigmund Mundell said, the sins of the children are visited upon the fathers. Perhaps it was not Mundell. Perhaps it is not even true. Have you tried to understand this compulsion? The famous Bishop Mundell used to say that when he felt the impulse to write he would lie down until it went away.

(W) When I lie down I just keep writing.

(R) We must locate the source of this compulsion. Think.

(W) No time.

(R) What do your friends say about this? Sometimes they have insights denied to oneself.

(W) Some of them think I’m trying to catch up with [Martin Feldstein] Feldstein. Some of them think I’m trying to stay ahead of [N. Gregory Mankiw] Mankiw.

(R) You see—those are both difficult but sound objectives. I myself try mostly to emulate the great Gustave Mundell who always wrote one chapter before and another chapter after.

(W) Before and after what?

(R) What a pleasant surprise for you when you find out.

(W) Must go. I have three NBER Working Papers to finish today.

(R) But if we talked some more, I might find a way to cure you of this obsession.

(W) Cure? I don’t want to be cured. I like writing.

(R) But then why did you come to see Dr. Rudi?

(W) I thought we might get a joint paper out of it.

(A) And so we come to the end of another session with Dr. Rudi. If you have a question you would like to put to Dr. Rudi, write it down and send it to this station together with 5 billion Austral [Argentinian currency unit between June 15, 1985 and December 31, 1991], or better yet a box top, any box top. Thank you for your support.

 

Source:  Duke University. David M. Rubenstein Rare Book & Manuscript Library. Economists’ Papers Archive. Papers of Robert M. Solow. Box 83.

Image Sources:  Robert Solow from the Library of Economics and Liberty; Rudiger Dornbusch from FAZ, April 12, 2014; Dr. Ruth Westheimer from the Encyclopedia of Jewish Women.

Categories
Chicago Exam Questions

Chicago. Graduate Prelim Exam for International Trade, 1970

 

Determining authorship for a committee’s prelim exam is difficult. The fact that this copy of the exam was found in Lloyd Metzler’s papers is a sign that he likely had a hand in composing at least part of the exam. One can see an inconsistency in British/US spelling (labour vs. labor) that leads me to conclude that Harry Johnson was also likely a co-author.

___________________

INTERNATIONAL TRADE
Preliminary Examination for the Ph.D. and A.M. Degrees
Winter 1970

WRITE THE FOLLOWING INFORMATION ON YOUR EXAMINATION PAPER:

Your code number and NOT your name
Name of Examination
Date of Examination

(Write in Black Ink)

Results of the examination will be sent to you by letter.
Answer all questions. Time: 4 yours

  1. Answer question (a) or (b)
    1. Assume a Heckscher-Ohlin model economy in which one of the two products is the capital good, population is constant; and a certain fixed proportion of the existing capital stock wears out each year. The economy devotes a certain proportion of the value of its annual output to gross saving.
      1. Analyse the long-run equilibrium of the economy, in isolation from foreign trade.
      2. Analyse the effects of the opening of trade at fixed terms of trade on the economy’s long-run equilibrium.
      3. Comment on the implications of your analysis for the conflicting views that free trade is the best policy, and that tariffs promote economic development.
    2. Assume, in contrast to the Heckscher-Ohlin model, that while labour is mobile between the two industries capital is specific to its industry (and in the closed economy fixed in quantity in each industry).
      1. What can you conclude about the effects of the opening of free trade on factor prices, assuming factors immobile?
      2. How are these conclusions altered by the assumption that capital in one industry is internationally mobile but remains sector-specific (i.e. a certain stock of capital is confined to the automobile industry, but can locate in either “Canada” or “The United States”?
      3. What would be the effects of the imposition of a tariff on Canadian imports of automobiles, on the location of production and on factor prices?
  1. Answer question (a) or (b)
    1. Keynes argued that in a system of flexible exchange rates involving a forward market, the forward rate has a constitutional weakness of the demand side. Thus, he said that while there are many asset holders with foreign assets who would like to hedge by selling forward exchange, there are few holders of foreign liabilities who would like to hedge by purchasing forward exchange.
      1. Assuming that interest rates are the same at home as abroad, what does this imply with respect to the discount or premium of the forward rate, all rates being measured in terms of the domestic-currency price of the foreign currency?
      2. Discuss the validity of Keynes’ argument, first on the assumption that inter-market arbitrage exists, and second on the assumption that it does not.
    2. A given country produces two commodities, food and manufactures, with two factors, labour and land. Suppose that food is land-intensive in the sense that the optimal ratio between land and labour is higher than in manufactures for all factor price ratios. Suppose further, that the production functions for both commodities are homogeneous of the first degree so that increasing the inputs of labour and land by fifty per cent in any commodity, increases output, also by fifty per cent.
      1. Given fixed amounts of labour and land, prove that the product-substitution schedule has the characteristics of a diminishing returns schedule, despite the fact both food and manufactures are produced at constant cost.
      2. How do you account for this appearance of diminishing returns?
      3. Suppose that Country A has a larger land-labour ratio than Country B. Is it possible that A may nevertheless import food, the land-intensive commodity and export manufactures, the labor-intensive commodity? Indicate graphically how this may occur. Is this result inconsistent with the Heckscher-Ohlin theorem that international trade raises the prices of the low-cost factors and lowers the prices of the high-cost factors? Explain.
      4. Is it a possible explanation of the Leontief paradox, which shows that the United States exports labour-intensive commodities and imports capital-intensive commodities?
  1. Suppose the world is composed of two large blocs and a few other countries. Suppose that the two large blocs do not intervene in the exchange market. Analyze, in the context of the optimum currency area literature, the consideration which would persuade one of the outside countries to peg their currency to one rather than the other currency area.
  2. It has been shown by Mundell that if one factor is internationally mobile and a country imposes a tariff on imports, the result will be the termination of international trade. What happens if the country simultaneously imposes a tax on the earnings of the factor that moves?
  3. “The ‘Keynesian’ theory of devaluation developed by Joan Robinson, James Meade, A. C. Harberger, H. G. Johnson and others depends on the assumption of ‘money illusion’ on the part of the labour force. If that assumption is replaced by the assumption that wages in the long run are determined according to the theory of marginal productivity, a completely new theory of devaluation has to be developed.”
    Discuss this quotation, and if you agree with it sketch the nature of the new theory required.
  4. “The optimum tariff argument for protection is the only valid first-best economic argument for a tariff. All the other arguments are either second-best economic arguments, non-economic arguments, or non-arguments.”
    Discuss, giving examples. How would you describe the infant-industry argument?
  5. Discuss the main arguments for and against the following proposed solutions for the adjustment problem of the international monetary system:

(i) the “wider band”
(ii) the “crawling peg”
(iii) a rise in the price of gold

  1. Answer question (a) or (b)
    1. “The established version of the theory of effective protection is unsatisfactory because it attempts to combine a general equilibrium theory of demand with a partial-equilibrium theory of supply. If the usual Heckscher-Ohlin assumptions about production are made, the theory falls apart.”
      Discuss this quotation.
    2. or
      1. Discuss the controversy between Johnson and Metzler concerning the transfer problem under the conditions postulated by Keynes. (You need not indicate what you regard as the correct result but only what were the main points of the controversy.)
      2. What changes were made by Metzler in the orthodox or prevailing theory, generally but erroneously attributed to Ohlin? Show that these changes are in accord with Johnson’s “Suggestions for Simplifying Balance of Payments Theory.”

 

Source:Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Papers of Lloyd Appelton Metzler, Box 9, Folder “Exams 302”.

Image Source: Tariff reform–Cleveland and Thurman, ca. 1888  from Library of Congress Prints and Photographs Division Washington, D.C. 20540 USA