Move to the US: The IMF and SAIS, 1986-2002
In late 1986, Corden left ANU to take up a two-year appointment as a Senior Adviser in the Research Department of the IMF.[198] Towards the end of his stint at the Fund, Corden, strongly encouraged by Dorothy, accepted a Professorship at the Johns Hopkins School of Advanced International Studies (SAIS) in Washington, D.C.
His main responsibility at SAIS was teaching. Corden (2018) makes it abundantly clear that he enjoyed this and, just as in his Oxford days, he was much appreciated by his students at SAIS—winning teaching awards in several years. However, he also pursued his research in international macroeconomics, not least co-authoring (with his former Nuffield colleague Ian Little plus Richard Cooper and Sarath Rajapatirana) a book summarising the results of a major World Bank project on macroeconomic developments in 18 developing countries.In Little et al. (1993), Corden wrote three chapters dealing mainly with inflation and exchange rate policies. In order to make his analysis more coherent, he focused on six countries with episodes of very high inflation, namely Argentina, Brazil, Chile, Indonesia, Mexico and Turkey. His stint at the IMF provided him with much useful background information to enable him to discuss the policies and varied experiences of these countries. The book did have an impact: it is the tenth most cited of Corden's publications on Google Scholar.
Corden (1994) was originally intended to be the fourth edition of Inflation, Exchange Rates and the World Economy. However, he decided to write a new and bigger book instead. It has four main sections: (1) open-economy macroeconomics, (2) the European Monetary System (a precursor to the euro) and monetary integration, (3) the managed-floating, high-capital-mobility nonsystem and (4) protection and competitiveness.
One topic treated in the book has contemporary resonance: Does the current account matter? The Trump administration continually cites current account imbalances with the US's major trading partners such as China, Canada, Mexico and the EU as justification for large tariff hikes.
Corden (ibid.) would classify this argument under what he calls ‘the Old View' of the current account with the rider that President Trump's concern is with the loss of manufacturing jobs in the US which he attributes to unfair competition. The ‘New View' takes a different tack. It treats the current account as the net outcome of saving and investment choices, both private and public. A current account deficit can be caused by an increase in investment or a drop in savings or a combination of both. Indeed, it could be caused by a combination of a larger public sector deficit and weak private investment. Thus, the large Trump tax cut in 2018 might well result in a larger current account deficit and lower employment in US manufacturing, even though there might be some gains in employment in specific sectors such as autos and steel which have experienced steep tariff increases.[199]In September 2000, Corden gave the Ohlin Memorial Lecture in Stockholm on the topic of exchange rate regimes. These lectures formed the basis of his final academic book. Corden (2002) sets out a framework against which the choice of a specific exchange rate regime can be assessed. It first outlines the theory and then reviews the experiences of various countries in Latin America, Asia and Europe in terms of their choices of exchange rate regimes.
The book opens with three alternative approaches to the choice of exchange rate regime and monetary policy: the nominal target, the real target and exchange rate stability. The nominal anchor comes into play when a country seeks to curb high inflation. With a real target approach, a country seeks to achieve a real goal, either output or employment. The third approach seeks to stabilise expectations.
Corden then discusses the pros and cons of three exchange rate regimes: a free float, a fixed rate and a fixed but adjustable rate. The country case studies enable him to analyse how selected countries in the different regions reacted to asymmetric shocks under alternative exchange rate regimes. This leads Corden to conclude that countries should avoid opting for a fixed but adjustable regime since they have often collapsed with very serious negative impacts on the real economy. At the same time, he draws the agnostic conclusion that countries need not opt for either a truly fixed rate regime or a free float.
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