Richard Grossman, professor of economics, recently presented a talk titled, “An historical perspective on regulatory competition versus cooperation: the view from economics” at the third annual Conference of the University Research Priority Program. The conference, held June 1-2 at the University of Zurich Institute of Law, was titled, “International Aspects of Financial Regulation: Competition vs. Coordination.”
Grossman’s talk focused on cross-border cooperation between international bank regulators in the wake of the U.S. subprime and European debt crises—an effort to enhance banking stability. Examples include the Basel capital accords and European Stability Mechanism. Grossman put these into historical context by looking at episodes of cooperation—and competition—between federal and state regulators in the U.S. during the 19th and early 20th centuries. He presented evidence on several episodes in which state and federal regulators loosened regulations to help banks under their supervision gain a competitive advantage over banks in neighboring jurisdictions. Although cooperation is feasible in some areas of regulation, Grossman argued that regulators will always be inclined to compete—that is, favor their own banks at the expense of others.
On June 20, Grossman presented a paper at the Third CERP Economic History Symposium, held at Norges Bank, Norway’s central bank, in Oslo.
The paper, co-authored by Grossman and Masami Imai, professor of economics, professor of East Asian studies, is titled “Taking the Lord’s Name in Vain: The Impact of Connected Directors on 19th Century British Banks.”
The paper utilizes data on the presence of prominent individuals—that is, those with political (e.g., Members of Parliament) and aristocratic titles (e.g., lords) — on the boards of directors of English and Welsh banks from 1879-1909 to investigate whether the appointment of well-connected directors enhanced equity value for bank shareholders.
Their analysis of panel data shows that the appointment of connected directors did not increase equity returns (as measured by the capital gain plus dividend yield on bank shares), but rather that the appointment of MPs to directorships had negative effects on bank equity returns.
MarketWatch columnist Howard Gold turned to Professor of Economics Richard Grossman for his take on reforming the Fed. Gold took issue with calls from presidential candidate Sen. Rand Paul and others to “audit the Fed,” but instead advocated for term limits for Fed chair-persons and changes in the pivotal Federal Reserve Bank of New York.
On the matter of term limits for the Fed chair, Grossman spoke of former chairman Alan Greenspan, who stuck around nearly 19 years.
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Professor of Economics Richard Grossman recently presented the keynote address at a conference held at the Austrian National Bank.
The presentation, made on March 11, was titled, “Interest rate cycles and implications for the financial sector: a long-term view.” A summary is available here.
The conference was jointly sponsored by Austria’s central bank (the Oesterreichische Nationalbank), SUERF (the European Money and Finance Forum), and BWG (the Austrian Society for Bank Research).
Richard Grossman, professor of economics, is featured in a radio interview with Share Radio in London Feb. 19.
In the interview, Grossman talks about the consequences of the European Central Bank’s new quantitative easing (QE) policy, which may stimulate an economy when a standard monetary policy has become ineffective.
The ECB’s action follows in the footsteps of the central banks of Japan, the United Kingdom, and the United States, which also have used quantitative easing in the 2000s.
A concern that has been raised about the introduction of QE is that persistent low interest rates will lead to another boom-bust macroeconomic cycle similar to the one that ended in the US subprime crisis. Grossman, who conducts research on historical episodes of financial crises, argues that the European economy is so weak at the moment that the risk of QE causing a crisis is low, and certainly outweighed by the benefits.
Grossman said implementation of the QE may not be noticed right away.
“Over time, this will put a consistent downward pressure on the euro,” which Grossman argues will help European exporters.
Listen to the program here.
Professor of Economics Richard Grossman recently accepted two new posts. He was appointed to be a research fellow in the Economic History Program of the London-based Centre for Economic Policy Research (CEPR). Founded in 1983, CEPR’s mission is “to enhance the quality of economic policymaking within Europe and beyond, by fostering high quality, policy-relevant economic research, and disseminating it widely to decision-makers in the public and private sectors.” Grossman is one of only a few American research fellows at CEPR.
He was also recently appointed associate editor for socioeconomics, health policy and law of the journal Neurosurgery. See here for a bio of Grossman and other editors of the journal.
Richard Grossman, professor of economics, delivered a keynote speech at the 10th Chief Risk Officer Assembly in Munich, Germany on Nov. 19. The speech was based on his book, WRONG: Nine Economic Policy Disasters and What We Can Learn from Them (Oxford University Press), and focused the consequences of government policy for economic risk.
The CRO Assembly is organized by Geneva Association, an insurance industry think-tank, and the CRO Forum, which is made up of chief risk officers from large (primarily European) multi-national insurance and re-insurance companies. The conference took place at the headquarters of Munich RE, one of the world’s largest reinsurance companies. The program seeks to understand the nature of emerging and key strategic risks, and to understand how and where they relate to insurance.
Read more about Grossman in these past News @ Wesleyan articles.
On Oct. 24, Richard Grossman, professor of economics, was a discussant at a conference titled “Organizations, Civil Society, and the Roots of Development,” organized by the National Bureau of Economic Research in Cambridge, Mass.
Grossman commented on a paper by Dan Bogart (University of California at Irvine) titled “Securing the East India Monopoly: Politics, Institutional Change, and the Security of British Property Rights Revisited.” The paper focuses on the history of the English East India Company and ways it yields new insights on the relationship between politics, institutional change, and the security of property rights in Britain.
Richard Grossman, professor of economics, was invited to become a Research Network Fellow of CESifo, a leading European economic research organization based in Munich, Germany.
The CESifo Group consists of the Center for Economic Studies at the Ludwig Maximilian University of Munich, the Ifo Institute of Economic Research, and the CESifo Munich Society for the Promotion of Economic Research. CESifo combines the theoretically oriented economic research with empirical research and is often at the center of economic policy debates in Germany and throughout Europe.
As a fellow, Grossman will be a member of the Network’s Money, Macro, and International Finance area and will join prominent economists from all over the world who collaborate on research through participation at conferences and less formal meetings in Munich. Grossman’s research will be published in CESifo’s working paper series and other outlets.
Professor of Economics Richard Grossman gave a public lecture about his book, WRONG: Nine Economic Policy Disasters and What We Can Learn From Them, at the Center for Economic Studies/Institute for Economic Research at Munich University on April 7. He delivered the talk in German. More information about the Munich Seminars is here. The book was published in November 2013 by Oxford University Press.
A video of the lecture is available here.
Professor of Economics Richard Grossman is the author of an op-ed titled, “The Monetary Cosmopolitans,” published March 27 on Project Syndicate, a website that publishes commentary “by global leaders and thinkers.” Grossman expresses support for a new trend toward countries appointing foreigners, and those with considerable foreign experience, to what is widely considered a country’s second most important post: that of the head of the central bank.
“This represents a major departure from the tradition of filling central banks’ top leadership positions with people who have spent most of their careers there—a tradition that, over time, allowed central banks to be taken over by ‘groupthink.’ With the entrenchment of a particular ideology or mode of thinking, monetary policymakers increasingly missed—by choice or inertia—opportunities to change, reinvigorate, and improve the running of these vital institutions.”
Read more here.
Richard Grossman, professor of economics, spoke about the poor thinking behind nine of the worst economic policy mistakes of the past 200 years at Boston Public Library Dec. 4. Grossman is the author of the newly-published book, Wrong: Nine Economic Policy Disasters and What We Can Learn from Them.
He also spoke about economic policy mistakes at the Seminary Coop Bookstore in Chicago on Nov. 14 and the Museum of American Finance in New York on Nov. 21.
At Wesleyan, he teaches classes in American and European economic history, macroeconomics, and money and banking. Grossman also is a visiting scholar at the Institute for Quantitative Social Science at Harvard University.
Richard Grossman, professor of economics.
Professor of Economics Richard Grossman recently had three op-eds published in major newspapers. All related in different ways to the U.S. Congress’ negotiations over the budget and debt ceiling, and the resulting shut down. Grossman is the author of a new book, Wrong: Nine Economic Policy Disasters and What We Can Learn from Them, published this month by Oxford University Press. Read more about it in this Wesleyan Connection story.
The Hartford Courant on Oct. 4 published an op-ed by Grossman arguing that the Republicans were on an “ideological crusade” in their refusal to pass a continuing budget resolution unless substantial changes were made to the Affordable Care Act. Pointing to examples as diverse as the 19th century Irish famine and Japan’s refusal to confront its ailing banks in the 1990s, Grossman writes: “Republicans should take a lesson from history, which has shown time and time again that such ideological crusades, when applied to economic policy, can have disastrous consequences.”
And on Oct. 19, USA Today published another op-ed calling upon policy makers to regularly conduct “autopsies” of economic policy—particularly when things go wrong, as with the recent government shut-down and near-breach of the debt ceiling. “Although the current shut-down is a pitiful attempt by the Republicans to reverse what is settled law and policy (Obamacare), it is not clear that the Democrats have advanced any sound agenda for solving our national budget issues during the last two years either,” Grossman writes. “It is time to call in a pathologist. Even though digging through the viscera of the political stalemate in Washington would no doubt turn our collective national stomach, it’s an autopsy that is well worth conducting.”
And on Oct. 20, The Boston Globe published another op-ed by Grossman, in which he writes that October should be labeled “Financial Crisis Month.” Over the past two centuries in the U.S. and Europe, October—and, more generally, the autumn months—have seen a string of serious financial crises. Grossman explains the historical reasons behind this trend, from the timing of the harvest to the bursting of asset bubbles. Today, he writes, politicians returning from their summer vacations and doing “stupid things” is most likely to blame for the continued popularity of financial crises in October.