Stanley Fischer, economist who tackled global crises, dies at 81

Boston Globe

9 hours ago

After all, he was, in the words of The New York Times, 'the closest thing the world economy has to a battlefield medic.'
Dr. Fischer, who served as head of Israel's central bank and as vice chair of the Federal Reserve Board in addition to his IMF time crafting bailouts for stuttering economies from Thailand and Indonesia in Far Asia to Russia to Brazil, died May 31 in Lexington. He was 81.
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The cause was complications of Alzheimer's disease, his son Michael told The New York Times.
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For all the bold line entries on his CV, Dr. Fischer's influence perhaps was greatest in developing a generation of economists, policy makers, and deep thinkers at the Massachusetts Institute of Technology.
The roster of students he taught and advised included Ben S. Bernanke, who would go on to become Fed chair and called Dr. Fischer his mentor; Mario Draghi, a future European Central Bank president and prime minister of Italy; Greg Mankiw, who would lead President George W. Bush's Council of Economic Advisers; Christina Romer, chair of the council in the Obama administration; Kazuo Ueda, named Bank of Japan governor in 2023; and IMF chief economists, including Olivier Blanchard, Ken Rogoff, and Maurice Obstfeld.
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Countless other college undergraduates were introduced to the dismal science by 'Macroeconomics,' the textbook Dr. Fischer wrote in 1978 with his MIT colleague, Rudi Dornbusch.
'No one had more cumulative influence on the macroeconomic policy makers of the last generation than Stanley Fischer,' Lawrence Summers, who as a Harvard student would audit his classes, told Bloomberg News. 'All of us were shaped by his clarity of thought, intellectual balance, personal decency, and quality of character.
'People all over the world who never knew his name lived better, more secure lives because of all that he did through his teaching, writing, and service to make policy better,' said Summers, who served as Treasury secretary under Bill Clinton and president of Harvard University.
'In one lifetime, he did the work of many.'
With the Teton Mountains behind them, Ben Bernanke, then Federal Reserve chairman, chatted with Dr. Fischer outside of the Jackson Hole Economic Symposium in 2012.
Ted S. Warren/Associated Press
Dr. Fischer was known for his genial, consensus-seeking style. Yet his prescriptions at the IMF included austerity measures that hit heavily on the poor and working class in beleaguered nations.
'Look, I know we've become everyone's favorite whipping boy,' Dr. Fischer told the Times in 1998. 'But remember that in most cases governments call us in only after they discover they are in a mess, usually because they didn't do things they needed to do long ago. If the problems were easy to solve, they'd do it themselves.
'And it's our job to convince people to do things that we believe, and they probably know, are good for them. Even if those things are politically unpopular -- and they usually are.'
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The cures Dr. Fischer pushed for financial crises were broadly in line with the Washington Consensus, a set of 'best practices' compiled in 1989 by John Williamson, a British economist. They were also dubbed the 'Massachusetts Avenue Consensus,' referencing the influence of its promulgators at MIT and Harvard.
Those guidelines called for openness to free markets, global trade, and foreign investment.
In a 2003 lecture on globalization, Dr. Fischer generally defended the IMF's approach by arguing that opening up to foreign trade and investment had lifted multitudes out of poverty in China and India.
In many ways, he was the intellectual heir to British economist John Maynard Keynes, whose calls for government intervention to steer the economy resonated from the 1930s through the 1960s but came under harsh attack in the 1970s.
Dr. Fischer's research in the 1970s focused on that split among economists. If unemployment was too high, the Keynesians argued, central banks could stimulate the economy by priming the money supply. Critics countered that such stimulus would prompt workers to expect higher inflation and demand pay increases; the result would be faster inflation and no sustainable rise in employment.
Dr. Fischer argued that wages were 'sticky' because of long-term contracts and didn't adjust immediately when a central bank changed its policy. Thus, he wrote in an influential 1977 paper, a well-timed stimulus program could boost job creation in the near term without igniting inflation.
'MIT economists tend to believe governments can do a variety of things well and can improve the situation versus a pure laissez-faire policy,' he told Institutional Investor in 1994.
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In addition to serving as the No. 2 officer at the International Monetary Fund from 1994 to 2001, the head of Israel's central bank from 2005-13, and vice chair of the Fed from 2014-17, Dr. Fischer was chief economist of the World Bank in the late 1980s and vice chair of Citigroup in the early 2000s.
He was influential partly because of his diplomatic nature, Blanchard, one of his former students and later a colleague at MIT, wrote in 2023. Even when the field of macroeconomics 'was going through wars of religion, there was no sense of 'us versus them' but instead an openness to alternative views,' Blanchard wrote.
Dr. Fischer, then vice chair of the Federal Reserve, spoke with Federal Reserve Chair Janet Yellen during an open meeting in Washington in 2016.
Cliff Owen/Associated Press
Stanley Fischer was born into a Jewish family on Oct. 15, 1943, in Lusaka, Northern Rhodesia, then a British protectorate, which became Zambia after independence in 1964. He grew up partly in Mazabuka, a town southwest of Lusaka, where his parents operated a general store. His father, Philip Fischer, was an immigrant from Latvia. His mother, Ann (Kopelowitz) Fischer, was of Lithuanian descent. The family moved to Southern Rhodesia, now Zimbabwe, when Stanley was about 13.
He joined a Jewish youth group and in 1960 visited Israel as part of a program for young leaders.
At the London School of Economics, Dr. Fischer earned bachelor's and master's degrees in economics. For his doctoral studies, he moved to MIT, in part to study with one of his intellectual heroes, Paul Samuelson, who would earn the Nobel in economic science.
Dr. Fischer married Rhoda Keet in 1965. They had met as teenagers in a Jewish youth group. He left the Fed in 2017 partly to take care of his wife, who had Lewy body dementia. She died in 2020. In addition to his son Michael, Dr. Fischer leaves two other sons, David and Jonathan, and nine grandchildren.
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After earning his doctorate at MIT in 1969, Dr. Fischer moved to the University of Chicago as a postdoctoral researcher and assistant professor. 'At MIT you did the mathematical work,' he told the Times in 1998, 'and at Chicago you asked the question of how this applies to the real world.'
His work in Chicago gave him a clearer understanding of that school's free-market theories and critique of Keynesian economics.
He returned to MIT in 1973 as an associate professor. Gradually, he became a magnet for graduate students.
'Stan had acquired near-guru status,' Blanchard said in an MIT statement.
Blanchard would recall how Dr. Fischer would help them with their work while they jogged alongside the Charles River.
'Fischer is rightly remembered as an unparalleled scholar, policy maker, and teacher. But it was his empathy, humanity, and thoughtfulness that stick with me,' said Obstfeld, one of those former students. 'He apparently kept all of his students' doctoral dissertations long after they graduated. When he moved from New York to Israel — surely with many better things to do — I received mine in the mail with this note from Stan: 'For the grandchildren.''
Michael J. Bailey of Globe staff contributed to this obituary. Material from The New York Times and Bloomberg News was also used.