AN INTERVIEW WITH STANLEY FISCHER

This interview was completed in May 2004, well before Stan Fischer had any idea he would become Governor of the Bank of Israel, a position he took up in May 2005. The interview took place in April 2004 in my office at the Russell Sage Foundation in New York City, where I was spending a sabbatical year. We completed it while running together in Central Park during the following weeks.Our meeting at Russell Sage was just like the many meetings we have had over the years. I was not sitting with a Master of the Universe, a world VIP, but with the same Stan Fischer I had first met in 1973 when he was a young associate professor, freshly imported from Chicago. There was the same ability to listen carefully, the same ability to talk and to explain simply and straightforwardly. In addition, there was the accumulated wisdom of a professional life spent developing and applying macroeconomics to the very real world.When I arrived as a PhD student at MIT in 1973, it was clear that Stan would quickly play a central role in the department. Within a few years, he was one of the most popular teachers, and one of the most popular thesis advisers. We flocked to his office, and I suspect that the only time for research he had was during the night. What we admired most were his technical skills (he knew how to use stochastic calculus)—, and his ability to take on big questions and to simplify them to the point where the answer, ex post, looked obvious. When Rudi Dornbusch joined him in 1975, macro and international quickly became the most exciting fields at MIT. Imitation is the sincerest form of admiration, and this is very much what we all did.When I came back to MIT in 1982, this time as a faculty member, Stan had acquired near-guru status. Teaching the advanced macro courses with him, and writing “Lectures on Macroeconomics,” which we finished in 1988, was one of the most exciting intellectual adventures of my life. We both felt that there was a new macroeconomics, more micro-founded and full of promises and that we understood its architecture and its usefulness. Although we had not thought of it as a textbook, it quickly became one, and it is nice to know that it still sells surprisingly well today.As the years had passed, Stan had taken more and more interest in applying theory to the real world, working with Rudi on hyperinflation, being involved in the economics of peace with George Shultz in the Middle East. In 1988, he decided to jump from academia to the real world, and became Chief Economist of the World Bank. After a brief return to MIT, he then returned to Washington in 1994 to become First Deputy Managing Director of the IMF, where he remained until 2001. That part of his life has been well documented in newspapers and magazines: While at the IMF, he was on the front lines during the Mexican crisis, the Russian crisis, the Asian crises, and many others. From the peeks I got of him during those times, what strikes me most is how he remained the same as he had been at MIT: calm, careful about the facts, analytical, using macroeconomic theory even in the middle of the most intense fires. Many thought and hoped that he would become the managing director of the IMF. Antiquated rules and country politics prevented it from happening. The IMF's loss turned out to be the private sector's gain. In 2002, Stan joined Citigroup, where he is the President of Citigroup International. He is still active in macro policy debates and remains one of the wise men of our profession.