Remembering a Giant in Macroeconomics

Olivier Blanchard, former Economic Counselor and Director of the Research Department at the IMF, discusses the life and legacy of Stanley Fischer, former Vice Chair of the US Federal Reserve and Bank of Israel Governor. He speaks with Bloomberg's Tom Keene and Paul Sweeney.

Stanley Fischer, a professor and practitioner of macroeconomics who helped guide central banks in two countries, Israel and the US, and mentored a younger generation of economic decision-makers, has died. He was 81.

He died on Saturday, the Bank of Israel said in a statement, expressing condolences.

Fischer, known as Stan, served as vice chairman of the US Federal Reserve from 2014 to 2017 following eight years as governor of the Bank of Israel, adding to a resume that included time at the Massachusetts Institute of Technology, spells at the International Monetary Fund and World Bank, and a stint as vice chairman of New York-based Citigroup Inc.

The roster of MIT students he taught and advised included Ben S. Bernanke, who would go on to become Fed chair and called Fischer his mentor; Mario Draghi, a future European Central Bank president and prime minister of Italy; Lawrence Summers, who would serve as US Treasury secretary under Bill Clinton; Greg Mankiw, who would lead President George W. Bush’s Council of Economic Advisers; Kazuo Ueda, named Bank of Japan governor in 2023; and IMF chief economists, including Olivier Blanchard, Ken Rogoff and Maurice Obstfeld.

Countless other college undergraduates were introduced to the dismal science

by Macroeconomics, the textbook Fischer wrote in 1978 with his MIT colleague, Rudi Dornbusch. The 13th edition of the book was published in 2018.

“It is hard to think of any other macroeconomist alive who has had as much direct and indirect influence, through his own research, his students, and his policy decisions, on macroeconomic policy around the world,” Blanchard wrote of Fischer in 2023. Fischer and Blanchard co-authored Lectures on Macroeconomics, published in 1989.

Dispatched on several occasions to extinguish economic emergencies around the world, Fischer drew academic lessons from his first-hand experience with countries in crisis.

The pattern began in 1983, when George Shultz, then the US secretary of state, invited Fischer to serve on a joint US-Israeli team of experts helping Israel reverse a prolonged period of weak growth, triple-digit inflation and falling foreign exchange reserves. Their work resulted, in 1985, in an economic stabilization program combining a large reduction in government subsidies with the fixing of the exchange rate, a tightening of monetary policy, and wage and price controls — followed, crucially, by the US supplying a $1.5 billion two-year aid package.

That was a prelude to Fischer’s tenure as the No. 2 official at the IMF, the lender of last resort to countries in economic peril. Starting in 1994, Fischer traveled the globe to help resolve interrelated financial crises in Mexico, Russia, Brazil, Thailand, Indonesia and South Korea. His role meant he often overshadowed his boss, IMF Managing Director Michel Camdessus. But years later, Fischer credited Camdessus with keeping a sense of calm following the collapse of the Mexican peso in 1994, the first IMF crisis Fischer faced.

--------

Watch Bloomberg Radio LIVE on YouTube

Weekdays 7am-6pm ET

Follow us on X

Subscribe to our Podcasts:

Bloomberg Daybreak

Bloomberg Surveillance

Bloomberg Intelligence

Balance of Power

Bloomberg Businessweek

Listen on Apple CarPlay and Android Auto with the Bloomberg Business app:

Apple CarPlay

Android Auto

Visit our YouTube channels:

Bloomberg Podcasts

Bloomberg Television

Bloomberg Originals