Maurice Obstfeld | Clausen Center

Maurice Obstfeld

Class of 1958 Professor of Economics

Department of Economics

Maurice Obstfeld is the Class of 1958 Professor of Economics at the University of California, Berkeley.  Professor Obstfeld serves as honorary advisor to the Bank of Japan's Institute of Monetary and Economic Studies.  He is a Fellow of the Econometric Society and the American Academy of Arts and Sciences. He is also Research Fellow at the Center for Economic Policy and Research (London, England), a Research Associate at the National Bureau of Economic Research (Cambridge, Massachusetts), and an International Research Fellow at the Kiel Institute of World Economics. Professor Obstfeld has published extensively in international economics, macroeconomics and monetary economics. Most recently his work has focused on dynamic open-economy models with nominal rigidities, exchange rates and international financial crises, global capital-market integration in a historical perspective, and monetary policy in open economies.

 

Summary of recent papers:

Trilemmas and Tradeoffs: Living with Financial Globalization

Date: January 2015

Coauthors:

Citation: BIS Working Papers, No. 480

This paper evaluates the capacity of emerging market economies (EMEs) to moderate the domestic impact of global financial and monetary forces through their own monetary policies. Those EMEs that are able to exploit a flexible exchange rate are far better positioned than those that devote monetary policy to fixing the rate - a reflection of the classical monetary policy trilemma. However, exchange rate changes alone do not insulate economies from foreign financial and monetary shocks. While potentially a potent source of economic benefits, financial globalisation does have a downside for economic management. It worsens the trade-offs monetary policy faces in navigating among multiple domestic objectives. This drawback of globalisation raises the marginal value of additional tools of macroeconomic and financial policy. Unfortunately, the availability of such tools is constrained by a financial policy trilemma that is distinct from the monetary trilemma. This second trilemma posits the incompatibility of national responsibility for financial policy, international financial integration and financial stability.

 

In Search of the Armington Elasticity

Date: April 2014

Coauthors: Robert C. Feenstra, Philip Luck, Katheryn N. Russ

Citation: Working Paper

The elasticity of substitution between goods from different countries—the Armington elasticity—is important for many questions in international economics, but its magnitude is subject to debate: the “macro” elasticity between home and import goods is often found to be smaller than the “micro” elasticity between foreign sources of imports. We investigate these two elasticities in a model using a nested CES preference structure. We explore estimation techniques for the macro and micro elasticities using both simulated data from a Melitz-style model, and highly disaggregate U.S. production data matched to Harmonized System trade data. We find that in up to one-half of goods there is no significant difference between the macro and micro elasticities, but in the other half of goods the macro elasticity is significantly lower than the micro elasticity, even when they are estimated at the same level of disaggregation.