Christy Romer Remembers
Posted on May 23rd, 2011 in Uncategorized | 2 Comments »
Writing in the New York Times yesterday, economist Christy Romer, who was denied tenure by Drew Faust, delves into Fed policy towards the dollar.
She begins by referencing a statement by Ben Bernanke that the “U.S. favors a strong dollar,” then recounts this wonderful anecdote:
Listening to that statement, I flashed back to one of my first experiences as an adviser to Barack Obama. In November 2008, I was sharing a cab in Chicago with Larry Summers, the former Treasury secretary and a fellow economic adviser to the president-elect. To help prepare me for the interviews and the hearings to come, Larry graciously asked me questions and critiqued my answers.
When he asked about the exchange rate for the dollar, I began: “The exchange rate is a price much like any other price, and is determined by market forces.”
“Wrong!” Larry boomed. “The exchange rate is the purview of the Treasury. The United States is in favor of a strong dollar.”
For the record, my initial answer was much more reasonable.
I wonder sometimes if the reason Larry Summers is writing a book—in the interview I had with him recently, he told me the publisher is Farrar Strauss Giroux—isn’t to fend off the recollections of those who worked alongside him…
2 Responses
5/24/2011 5:54 pm
No fan of Summers here, but I suspect you misinterpret this anecdote. My interpretation is that he was giving her not the economically correct answer but the politically correct one in the context of the inquisition that she was going to face. And that both understood that at the time.
She may be settling scores now (and that is also reasonable given everything I’ve heard about Summers, some but certainly not all or even most from you), but the interpretation that he was instructing her in economics makes no sense at all. She may not have been a Clark medal winner, but she can certainly go head to head against him in any economic debate that doesn’t depend solely on volume and speed of riposte.
5/27/2011 7:38 am
I agree with you that Summers was giving her political advice, Marcel. But if you read to the end of the piece,Romer makes clear her opinion about all this. “Perhaps it is time for a more adult conversation about all this.”
Ambiguous, though, I’ll admit.