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Michael Mussa (1944–2012): Challenging Conventional Wisdom

Flemming Larsen (Former Deputy Director, Research Department at the International Monetary Fund)



I had the privilege to work with Mike for close to nine exciting and fulfilling years.

Mike made the Research Department at the International Monetary Fund (IMF) relevant and respected, both inside and outside the Fund. Above all, he gave meaning to the Economic Counselor role by fulfilling his duties with incisive analyses and policy advice.

From the very start, he challenged conventional IMF wisdom.

He effectively used wit to underscore his points. When some Executive Directors criticized Mike for advocating policy activism and fine tuning, he explained how he would use the gas pedal in his old Buick to regulate its speed.

He was particularly critical of IMF surveillance of exchange rates, which was "as firm as an overripe avocado." His seminars on financial markets for the Executive Board were some of his finest moments.

He distrusted financial markets. Whenever a new financial crisis erupted, he would proclaim "happy days are here again." His judgment that "banks are dangerous" was proven right again and again.

On a personal note, I still remember the observation of our youngest son, then in junior high, who attended one of our press conferences on the World Economic Outlook: In listening to Mike he discovered that economics could be funny.

Mike liked to celebrate birthdays and special accomplishments, and his senior staff frequently enjoyed his generosity when he hosted a dinner party in his Watergate apartment. He would always prepare the dinner himself, and treat his guests to a remarkable selection of fine wines from his private cellar. On one occasion, after learning that my wife Birte was born in 1945, he served a 1945 Cheval Blanc.

Because Mike really did take his role as Counselor seriously, relations with management were not always easy. His views were not always convenient, but the Executive Board learned to appreciate Mike.

The author is former deputy director of the Research Department at the International Monetary Fund.

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