The Nobel prize-winning economist on why Obama must lower corporate income tax, and on tough but essential adjustments in Europe.

After all these years, I have finally been able to sit down for an hour with Robert Mundell, the great theorist of currency unions and the godfather of the euro. “We’re in very serious danger. The world is in a depression in the Big Three of America, Europe and Japan, a mini-depression that we have not seen since the 1930s,” he said, speaking at the Lindau conference, where half the world’s Nobel economist are gathered on one tiny island with cobbled streets looking across Lake Constance to the Alps. Few economists inspire such devotion and fury as Professor Mundell. [The Telegraph]

Robert Mundell talks about the U.S. and European economies and Federal Reserve policy. He speaks from Lindau, Germany, with Francine Lacqua on Bloomberg Television’s “Countdown.” Nobel laureate Robert Mundell said he doesn’t expect the U.S. or Europe to slide into recession again. “I think we’re in a double-dip slowdown, I don’t see a recession coming,” Mundell told Francine Lacqua on Bloomberg Television’s “On The Move” today from in Lindau, Germany. Mundell, who is professor of economics at Columbia University in New York, also said that the U.S. should cut its corporate taxes and make permanent the tax cuts enacted by former President George W. Bush to boost its economy [Bloomberg]

The Nobel laureate explains what is needed to save Europe’s single currency and calls for greater global coordination of monetary policies, in conversation with Robert Pringle.
[Central Banking Journal]

Professor Robert Mundell from Columbia University, the father of Euro and Nobel Prize Laureate in Economics in 1999, paid a 3-day academic visit to the Finance and Statistics College of Hunan University from June 20 to 22. On the afternoon of June 21, Professor Mundell delivered a speech entitled “Financial Crisis and the Prospect of International Monetary System” to about 600 teachers and students on North Campus of Hunan University.

According to Professor Mundell, since euro zone and US dollar zone have taken up 40 percent of the world economy, a stable exchange rate between euros and US dollars can promote the development of global economy. European Central Bank (ECB) and US Federal Reserve Bank can reach an agreement to intervene in the exchange rate in a certain range in order to avoid exchange rate fluctuation. He said that China can also join the mechanism of a stable exchange rate after the full convertibility of RMB under the guidance of a more prudent and consistent monetary policy. [source: Hunan University]

Professor Robert Mundell urges gold convertibility for the euro, the currency which he fathered, as well as for the dollar. This is a major step forward. Thought leaders are abandoning “old monetarism,” which was vainly fixated on quantity. [Source: Forbes] 

Mundell recently endorsed the gold standard on Pimm Fox’s Bloomberg Television “Taking Stock.”

Pimm Fox:  You’ve written about the role of gold in the world economy, Professor Mundell.  Do you think that we’re going to see any kind of return to the gold standard?

Mundell:  [T]here could be a kind of Bretton Woods type of gold standard where the price of gold was fixed for central banks and they could use gold as an asset to trade central banks.

The great advantage of that was that gold is nobody’s liability and it can’t be printed.  So it has a strength and confidence that people trust.  So If you had not just the United States but the United States and the euro tied together to each other and to gold, gold might be the intermediary and then with the other important currencies like the yen and Chinese yuan and British pound  all tied together as a kind of new SDR that could be one way the world could move forward on a better monetary system.

Bloomberg Television’s “Taking Stock.” Pimm Fox talks with Mark Grant, managing director at Southwest Securities Inc., and Nobel Prize-winning economist Robert Mundell of Columbia University talk about the outlook for Mario Draghi as president of the European Central Bank, the role of gold in the global monetary system and the possibility that Greece may withdraw from the euro.  (Source: Bloomberg)

100 Years of the American Economic Review:
The Top 20 Articles

The American Economic Association (AEA) is pleased to announce the 100th anniversary of the American Economic Review (AER), first published in 1911. The AER, a general-interest economics journal with articles on a broad range of topics, is among the nation’s oldest and most respected scholarly journals in the economics profession. To commemorate the 100th anniversary, the American Economic Review centenary issue will include a paper on the 20 most important articles from the AER’s first 100 years of publishing.

A Theory of Optimum Currency Areas (1961), by Robert Mundell, was selected for the Top 20.

This paper explains that selecting the optimal geographic area for a single currency involves balancing two considerations. Macroeconomic stability is enhanced if the currency area has a high degree of internal factor mobility relative to the cross-border factor mobility. Taken by itself, this could lead to an excessively large number of currency areas, in the sense that there would be substantial transaction costs and valuation costs involved in making cross-area purchases. The optimal size of a currency area involves balancing these two considerations. Mundell discussed the potential application of this to the European countries some 30 years before the euro was introduced. [100 Years of the American Economic Review: The Top 20 Articles]

Hong Kong, Nov 19, 2010. Nobel Prize-winning economist Robert Mundell says China’s currency has strengthened to the stage where it is “almost de facto convertible” and should be included in the international reserve basket held by the International Monetary Fund (IMF). ”The world’s theoretical currency is the Special Drawing Rights (SDR) of the IMF, a basket of major currencies that includes the US dollar, the euro, the pound sterling and the yen. China has not been in this and should be,” said Professor Mundell, predicting that the renminbi is likely to be central to the IMF SDR review in 2011. [MarketWatch.com]

Global monetary relations are in disarray. Exchange rates fluctuate wildly among the world’s major trade partners, spawning talk of protectionism and a currency war. Gold is soaring as the dollar slides, and economists debate whether the biggest threat to U.S. recovery is deflation or inflation. We need a giant of economics to help explain all this and recommend a remedy. Where in the world is Robert Mundell when you need him? As it turns out, Mr. Mundell—the Columbia University professor who advocated the hard-money, low-tax policy mix that broke stagflation in the early 1980s, and who received the Nobel Prize … [Wall Street Journal]