Maurice Obstfeld

The Numbers Must Add Up

Maurice Obstfeld, chief economist at the International Monetary Fund (IMF), speaks during a Bloomberg Television interview at the World Bank Group and IMF annual meetings in Lima, Peru, on Friday, Oct. 9, 2015. Obstfeld discussed how the world watches the Federal Reserve, offers his response to criticism of pessimistic forecasts from the IMF and the possibility of a recession in the United States.. Photographer: Guillermo Gutierrez/Bloomberg *** Local Caption *** Maurice Obstfeld
Maurice Obstfeld, chief economist at the International Monetary Fund, says we live in worrying times.
  • Why it matters

    Why it matters

    Maurice Obstfeld says Greece’s budget numbers need to add up over the long term and Europe needs to keep its borders open for the monetary union to survive.

  • Facts


    • Maurice Obstfeld became chief economist of the International Monetary Fund in September of last year.
    • Before that, Mr. Obstfeld was part of U.S. President Barack Obama’s Council of Economic Advisors.
    • He is also a professor at the University of California at Berkeley.
  • Audio


  • Pdf

From his desk at the IMF’s headquarters in Washington, Maurice Obstfeld stares at an empty shelf. That’s because most of his books are still in California, where he is still a professor at the University of California at Berkeley. As the International Monetary Fund’s chief economist since last year, Mr. Obstfeld tells us that bringing over the books isn’t worth the expense. The IMF probably has better ways to spend its money.

The 64-year-old U.S. economist has German roots. His parents fled the Nazis. In the United States, he developed a name for himself as one of the most influential experts on trade issues and the global financial system. His textbook “International Economics: Theory and Policy,” written with Paul Krugman and Mark Melitz, remains one of the seminal texts for teaching the subject.

From 2014 to 2015, he was a member of President Barck Obama Council of Economic Advisors. In September he moved just a couple of blocks down the famed Pennsylvania Avenue in Washington, from the White House to the IMF’s headquarters. He says he doesn’t regret the move.

The interview below was carried out before the recent release of a telephone transcript  – courtesy of Wikileaks – that revealed the IMF’s anger over Greece’s lack of reform progress and has rocked the boat in European circles.

But Mr. Obstfeld is quite clear himself: “The numbers on the budget have got to add up, no matter what.” While Europe should give Greece more flexibility to tackle the refugee crisis, Greece still urgently needs to tackle pensions and other structural reforms to get on a firm footing for the long term, he said.

Handelsblatt: Before you took this job, you were already a leading global economist and advisor to U.S. President Barack Obama. What motivated you to change to the IMF?

Maurice Obstfeld: First of all, it was a huge privilege to work for the president. I would have been very happy to stay until the end of his administration but this opportunity came up and I felt it was an opportunity to leverage whatever skills I have to help a broader set of countries than just the United States. I worked for a long time on the international system and on the Fund, so it was a great opportunity. I should add that the president was very encouraging in my taking this job. He is a big fan of what the Fund does and he is very happy to see someone from his administration to go out and contribute to the Fund’s work.

As an advisor to Mr. Obama, looking at the numbers the U.S. economy is producing, it looks like a pretty strong recovery. But at the same time, some people are very unhappy. Did you get a sense of this hidden in the data while you were working for the president?

I don’t think it’s deeply hidden. If you look at the data, real wage growth has been very slow, median wages have stagnated for a very long time. Even though we have seen rapid job growth for many months, the people who get the jobs are not necessarily those who have been long-term unemployed or who have left the labor force. We also saw this steady downward trend of participation, which is in part related to demographics – the baby boom generation reaching retirement age.

Want to keep reading?

Subscribe now or log in to read our coverage of Europe’s leading economy.