By Jeffrey Frankel, December 24, 2020.
Richard N. Cooper (Dick), who passed away Wednesday evening at the age of 86, was always young for his age. Jim Tobin once told me a story about the period when Dick was a senior staff economist at the President’s Council of Economic Advisers (1961-63). He used to bring his bicycle into his office at the Old Executive Office Building. As I remember the story, President Kennedy remarked that apparently high school students could work at the CEA!
As recently as a year ago, Dick was still riding his bicycle around Cambridge. I would join his wonderful (and young!) family on weekend bike rides along the Charles River.
He had very wide-ranging interests in economics. informed by a knowledge of history and science. In recent years he would write and teach courses on such subjects as the economics of climate change policy and economics of China. His book review section, at the back of each issue of Foreign Affairs, was top-priority reading for me.
I first became aware of his writings when I was an undergraduate studying international economics. He had written a well-known 1968 book on The Economics of Interdependence and a 1969 QJE article on the same subject (though much more mathematical). I have always viewed this research as the original foundation of the study of international cooperation or coordination of macroeconomic policy, which was a big topic in the 1980s and underwent a minor revival after the Great Recession of 2008-09.
Dick was modest in his professional persona (though firm in asserting his views in conversation). He could have done a better marketing job if he wanted to be remembered as the father of “International Cooper-ation.” It did not help that he avoided the language of game theory. But that is what the idea is: countries could achieve better outcomes if they agreed on joint settings of macroeconomic policy, compared to the Nash non-cooperative equilibrium in which each sets policy on their own. It is widely known as the prisoners’ dilemma.
What he might have lacked in marketing in the ivory tower, he more-than made up for in implementation in the real world. He was Under-Secretary of State for Economic Affairs during the years 1977-81. He played a role in the canonical example of international coordination of fiscal policies: the “locomotive theory” under which the US, Germany and Japan would be the three locomotives who would together use fiscal expansion to pull the world economic train out of the aftermath of the 1974-75 recession. The theory was arguably put into practice in 1978, in the Bonn Summit of G-7 Leaders. (The idea of coordinated fiscal expansion could be very relevant again today.)
A 1971 paper, “Currency Devaluation in Developing Countries,” is another example where Cooper was way ahead of its time. It has been widely cited for two things: (1) a simple statistical estimate that national leaders are twice as likely to lose office in the year following a devaluation as otherwise, (2) an explication (quite possibly the first) of contractionary effects of devaluation on economic activity, which has become a huge topic of analysis in recent decades. More generally, this study was one of the first to deal with the macroeconomics of emerging market and developing countries, which is now an entire field in itself.
There is so much more one could say. I will conclude with the personality traits for which I will most remember Dick Cooper. He always (usefully) insisted that people clarify precisely what they meant, whether it was in conferences or at the dinner table. He had boundless intellectual curiosity and physical energy. He looked on the bright side of things. I will remember him, not just as a unique academic colleague, but as the excellent father of Jennie and Will, and as a good friend whom I will miss very much.
Written by Jeffrey Frankel.
I never knew Cooper personally but always respected his policy-related work. Sorry he has passed. This is a fine memorial for him, Thank you, Jeffrey.
“He was Under-Secretary of State for Economic Affairs during the years 1977-81.”
My mentor worked for Dick Cooper at the time and had wonderful things to say about his time in DC.
concur with Barkesw
Merry Christmas everyone
IN 1981 I was the economic counselor at the US Embassy in Khartoum when Richard Cooper, then Undersecretary for Economic Affairs, paid a visit to our humble post. It was night when he arrived and I escorted him to the Hilton with a visitors packet and returned home. It was Khartoum and it was dark, as in few street lights. I learned the next morning he had wandered out of the hotel and, crossing the bridge over the Nile into Omdurman, had fallen into large hole in the dark. Nothing was broken and the visit went on as planned. I recall he did not want the usual foofaraw of briefing and all the other stuff that goes with VIP visits. He had briefed himself. He left a strong impression on me and I am saddened to hear of his death.
September 18, 1987
Leave the Dollar Alone
By Richard N. Cooper
With the merchandise trade deficit having hit an all-time high of $16.5 billion in July, common sense would seem to dictate either that the dollar will have to drop some more or that we will need some tough new import restrictions to even things out. But here common sense is wrong.
A further decline in the dollar or greater import restrictions are unnecessary and could be dangerous, seriously damaging the economies of our trading partners and risking global recession. What we need instead is patience.
The dollar has already dropped from its March 1985 peak by 29 percent in real terms and is now back to the level of 1980, when the United States had a healthy trade surplus. For a variety of reasons – not least our huge buildup of external debt that we will have incurred between 1981 and 1991 – that drop may not eliminate the trade deficit altogether. But it should improve the deficit substantially. To reach for more might, paradoxically, achieves less.
If the world can avoid a recession, substantial improvements should be visible soon in the American trade position. In fact, our position has already improved, but statistics are slow to reflect the change.
The reasons are obvious. Trade figures are recorded when goods pass through customs long after they were purchased. Thus, substantial time elapses between a change in economic circumstances, which changes purchasing habits, and an improvement in the recorded flow of trade. The adjustment period has been lengthened even further by foreign suppliers’ willingness to shrink profit margins rather than raise prices.
Economists used to reckon these lags at around 18 months. But they have widened in recent years with the growing sophistication of most export products. For example, a new Boeing 747 ordered today would probably not be delivered until 1989. The lag could be even longer for a product that requires new design work.
Given these long delays, we are still suffering the effects of the rapid appreciation of the dollar in 1984. A substantial part of the drop since 1985 has merely corrected for that rise, and only since mid-1986 has the dollar come down below its 1981 level.
We should see visible improvement in the second half of this year, and substantial improvement in 1988. In fact, the deficit already has improved significantly, though this has been obscured by rising dollar prices for imports. Measured in constant 1982 dollars, the trade deficit in goods and services peaked at $162 billion a year ago and has declined steadily and markedly since, to $128 billion.
But progress on the trade deficit would be jeopardized if the world slips into recession, which might well happen with any further sharp drop in the dollar. The rate of growth in output abroad is critical for American exports, which, apart from agricultural products, are mainly industrial materials and capital goods; the United States sells relatively few consumer goods abroad.
Industrial production declined during the last year in West Germany, the key to the European economy. A further sharp appreciation of European currencies would depress investment there even more, hurting American exports. Moreover, European companies in recession would compete hard for export markets despite their stronger currencies.
A similar danger exists with respect to Japan, where industrial production has been flat for the past year. Exports have declined in real terms and unemployment has risen.
These developments represent serious shocks to an export-led economy. As in Europe, Japan must adapt its economy to rely much less on export-led growth, as it is now trying to do. But excessive exchange-rate pressure could bring on a recession that would work against the interests of Japan, America and the developing countries. The latter especially need buoyant world markets to support their own export-led recoveries….
The wild swings of our exchange rate was a challenge for those of us who favor floating rates. Then again I would argue it was the insane 1981 fiscal stimulus followed by a draconian regime of tight money that led to that massive dollar appreciation and when US macroeconomic policy reversed course later in the decade, the dollar was destined to devalue. The real problem wasn’t the currency but the insanity of Reagan’s macroeconomic swings.
Paul Krugman @paulkrugman
OK, so we’re apparently getting more or less a UK-European Union free trade area for goods, although service trade will de facto face new protective barriers 1/
Pound Rises as Britain and EU Announce a Post-Brexit Trade Deal
The free-trade pact would help both sides avoid tariffs, but Britain would still face economic costs from being outside the European Union.
11:29 AM · Dec 24, 2020
This is better than no deal, although tariffs were never the important issue; the serious costs of Brexit were always going to come from red tape and border checks, which are impossible to avoid unless you have a full customs union 2/
Brexit Meets Gravity
Why Teresa May is trying to keep the customs union
Wrong to be apocalyptic here: traffic flows pretty smoothly at the border between the US and Canada, even though we only have a free trade area. But there will be some costs — probably highest in the next few months, when business is still adjusting 3/
Long run Britain will be a few percent poorer than it would otherwise have been. But it won’t be all that obvious, probably lost in the statistical noise. In return, Britain will get some ability to make its own rules on immigration etc 4/
I’d feel better about this if I thought Britain would use its freedom of action wisely, which it won’t; I’d feel worse about it if the EU were living up to its promise of building a solidly democratic Europe, which it isn’t 5/
Maybe it’s just me, but my sense is that everyone involved has basically made a dreariness and called it peace 6/
Suggested by Paul Krugman:
Away from Home and Back: Coordinating (Remote) Workers in 1800 and 2020
By Réka Juhász, Mara P. Squicciarini & Nico Voigtländer
This paper examines the future of remote work by drawing parallels between two contexts: The move from home to factory-based production during the Industrial Revolution and the shift to work from home today. Both are characterized by a similar trade-off: the potential productivity advantage of the new working arrangement made possible by technology (mechanization or information communication technology), versus organizational barriers such as coordinating workers. Using contemporary data, we show that organizational barriers seem to be present today. Without further technological or organizational innovations, remote work may not be here to stay just yet.
December 25, 2020
Cases ( 19,210,166)
Deaths ( 338,263)
Cases ( 10,169,818)
Deaths ( 147,379)
Cases ( 2,547,771)
Deaths ( 62,427)
Cases ( 2,221,312)
Deaths ( 70,195)
Cases ( 1,632,737)
Deaths ( 29,968)
Cases ( 1,362,564)
Deaths ( 121,172)
Cases ( 535,213)
Deaths ( 14,719)
Cases ( 86,913)
Deaths ( 4,634)
December 25, 2020
Coronavirus (Deaths per million)
UK ( 1,031)
US ( 1,019)
France ( 955)
Mexico ( 935)
Canada ( 388)
Germany ( 357)
India ( 106)
China ( 3)
Notice the ratios of deaths to coronavirus cases are 8.9%, 3.2% and 2.5% for Mexico, the United Kingdom and France respectively.
December 26, 2020
Chinese mainland reports 20 new COVID-19 cases
The Chinese mainland on Friday recorded 20 new COVID-19 cases, including 12 from overseas and 8 locally transmitted, the National Health Commission announced on Saturday.
The 8 locally transmitted cases include 6 in northeast China’s Liaoning Province and 2 in Beijing.
Nineteen new asymptomatic COVID-19 cases were also recorded, while 245 asymptomatic patients remain under medical observation.
No COVID-19 deaths were registered on Friday. Meanwhile, 12 patients were discharged from hospital. The total number of confirmed COVID-19 cases in China has reached 86,933 and the death toll stood at 4,634.
Chinese mainland new imported cases
Chinese mainland new asymptomatic cases
[ There has been no coronavirus death on the Chinese mainland since the beginning of May. Since the beginning of June there have been 7 limited community clusters of infections, each of which was an immediate focus of mass testing, contact tracing and quarantine, with each outbreak having been contained. Symptomatic and asymptomatic cases are all contact traced and quarantined.
Imported coronavirus cases are caught at entry points with required testing and immediate quarantine. Cold-chain imported food products are all checked and tracked through distribution. The flow of imported cases to China is low, but has been persistent.
There are now 328 active coronavirus cases in all on the Chinese mainland, 4 of which cases are classed as serious or critical. ]
December 26, 2020
The New York Times Hasn’t Heard About China’s Vaccines
By Dean Baker
That is the implication of a major piece * on how the coronavirus vaccines are leading to greater worldwide inequality, since the rich countries have reserved the vast majority of the 2021 supplies of vaccines of the leading U.S.-European vaccines. While this is in fact a serious problem, as my co-authors and I have noted, ** China also has produced several effective vaccines and is distributing them to developing countries.
China has already made commitments to supply hundreds of millions of doses to Brazil, Morocco, Indonesia and other developing countries. While it would be best if every country with manufacturing capacity could produce any vaccine, without regard to intellectual property rules, it is bizarre that a piece on access to vaccines in the developing world would fail to mention the vaccines developed by China.
If you want to argue that the info should be shared to save lives that’s fine, but then you also have to convince me China’s government would share any scientific breakthroughs they made with western countries. That’s not an easy sell for me.
thanks for sharing about Mr. Cooper. What a great person both professionally AND personally. I think it must be incredibly hard to balance heavy career weights and still come shining through on family/personal responsibilities. A trait to be admired and replicated whenever possible (speaking for myself, probably not). Also appreciate the research paper links.