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.