His concepts have been promoted with evangelical fervor within the Seventies notably by two economists: Arthur Laffer, who grew to become identified for the “Laffer curve,” postulating that decrease tax charges would generate greater authorities revenues, and Jude Wanniski, an editorial author for The Wall Road Journal, whose opinion pages took up Professor Mundell’s trigger after a collection of lunches and dinners on the Midtown Manhattan restaurant Michael’s, which have been later described by Robert Bartley, The Journal’s opinion editor, in his guide “The Seven Fats Years” (1992).
Professor Mundell’s argument gained floor partly as a result of mainstream Keynesian economists have been on the defensive, having a tough time accounting for the sudden mixture of slower progress and rising inflation throughout a lot of the Seventies. Professor Mundell argued, in distinction to the traditional knowledge, that low tax charges and simple fiscal insurance policies must be used to spur financial growth, and that greater rates of interest and tight financial coverage have been the correct instruments to curb inflation.
That method, with outcomes which can be nonetheless being debated at present, was embraced within the Nineteen Eighties by President Ronald Reagan, who, in coverage strikes that got here to be often called Reaganomics, lower tax charges sharply and backed the Federal Reserve Chairman Paul A. Volcker as he raised rates of interest to deliver inflation below management.
Stepping on ‘Mental Toes’
All through his profession, Professor Mundell continuously battled with the giants of the career, together with Milton Friedman of the College of Chicago and Martin Feldstein of Harvard. However he additionally craved recognition and welcomed the status — and the $1 million award — that the Nobel Prize conferred.
In his 2006 interview, he mentioned that successful the Nobel “was notably pleasing to me as my work has been fairly controversial and little doubt stepped on lots of mental toes.”
He added: “Much more than that, once I say one thing, folks hear. Perhaps they shouldn’t, however they do.”
On the Nobel banquet, Professor Mundell, wearing white tie and tails and accompanied by Ms. Natsios-Mundell and their 2-year-old son, Nicholas, ended his speech by serenading the stunned however delighted company with a verse from Frank Sinatra’s signature tune.