|
IN MEMORIAM
BRUCE D. SMITH
Bruce David Smith, a world-renowned economist and dedicated
teacher, died in Rochester, Minnesota on July 9, 2002, at
the age of 47, after a long battle with colon cancer. Bruce
was well-known for his pioneering research on financial
intermediation and its role in monetary theory and growth.
Especially noteworthy were his contributions, by himself
and with numerous co-authors, on the importance of financial
intermediation to the growth and stability of developing countries.
Bruce was born on September 21, 1954, and grew up in St. Paul,
Minnesota, the oldest of five. His parents, Sam and Marian Smith,
were role models in their devotion to family and the importance
they placed on education. Sam, a chemist at 3M, loved the research
process, and Bruce often referred to him as an inspiration. In
high school, Bruce was a champion debater, and although he briefly
considered law school, by the time he graduated with a B.A. in
economics from the University of Minnesota in 1977, he was committed
to graduate study in economics. Bruce obtained his Ph.D. in economics
from the Massachusetts Institute of Technology in 1981, where he
was a student of Stanley Fischer. In 1987, Bruce married Valerie
R. Bencivenga, also an academic economist, and they were happily
married until separated by Bruce’s death. Bruce’s career began as an assistant professor at Boston
College (1981-82). From there, he moved to the research department
at the Federal Reserve Bank of Minneapolis (1982-86). It was there,
among colleagues who included Thomas Sargent, Edward Prescott,
Neil Wallace, John Boyd, and Warren Weber, that Bruce’s life-long
research interests in monetary history, monetary theory, and financial
intermediation blossomed. It was also there, in what was at the
time an iconoclastic research environment, that Bruce’s distinctive
style of economic modeling began to take shape. Bruce visited Carnegie-Mellon
in 1985-86 and accepted an assistant professorship there beginning
in 1986. However, early in 1986, Bruce met Valerie, who was an
assistant professor at the University of California at Santa Barbara;
as a consequence, he visited UC Santa Barbara in 1986-87, and then
both Bruce and Valerie moved to the University of Western Ontario,
where Bruce was an associate professor from 1987-1990. In this
period, Bruce met Costas Azariadis when Costas visited from the
University of Pennsylvania; Bruce and he began a fruitful collaboration
and friendship that lasted until Bruce’s death. In 1990,
Bruce moved to Cornell University, where he was promoted to full
professor in 1994. At Cornell, Bruce formed a close professional
relationship and friendship with Karl Shell, with whom he shared
an interest in monetary theory and growth theory. In 1996, Bruce
moved to The University of Texas at Austin as the Fred Hofheinz
Regent’s Professor of Economics, a chair he held until his
death in 2002. Bruce’s scholarly research consists of nearly one hundred
published papers. These included widely-cited papers about monetary
history, the causes and consequences of banking panics, the impact
of financial market development on per-capita income and growth,
the impact of inflation on financial market development, the macroeconomic
effects of various types of credit market imperfections, and the
optimal conduct of monetary and exchange rate policy.
Five aspects of Bruce’s body of research
stand out. One is Bruce’s passionate interest in the
importance of financial intermediation in economic growth and
stability in the developing world and formulating optimal monetary
policy. Bruce’s last
singly-authored paper, “Taking Intermediation Seriously,”1 argues
that models which do not explicitly include financial intermediation
can be misleading as a guide to monetary policy. A second is
his distinctive style; Bruce’s models were often highly
complex, but they were structured to capture characteristics
of the environment that are crucial to developing intuition about
the results and essential to a discussion of policy. This leads
to the third aspect: an emphasis on policy. The large majority
of Bruce’s papers
deal with economic policy, including such issues as whether stock
market transactions should be taxed in developing countries,
whether it can ever benefit a developing country to cut itself
off from capital flows, under what circumstances “dollarization” makes
a country better off, what determines whether the “Friedman
rule” is optimal monetary policy, whether “moral
hazard” is
worse with a commercial banking system or with universal banking,
and what inflation rate triggers an adverse effect on financial
market development. Fourth is Bruce’s love of economic
history. Bruce viewed economic history as a laboratory for understanding
aspects of the theory of financial intermediation and monetary
theory that he argued remain relevant for policy in the contemporary
world. Finally, one cannot comment on Bruce’s body of research
without mentioning the large number of researchers with whom
he collaborated. Bruce loved working with others. He usually
faxed his work-in-progress to his co-authors, who tell stories
about long faxes dense with algebra rolling off the fax machine
beginning the day after he started a project.
The Federal Reserve Bank of Minneapolis published the complete
list of Bruce’s published research as of the date of his
death,2 available
at the following Web site: <http://woodrow.mpls.frb.fed.us/research/qr/qr2644.pdf>.
Subsequently, at least a half-dozen more projects that were in
progress when Bruce died were completed and published by Bruce’s
co-authors. Throughout his career, Bruce served the public through his involvement
with the Federal Reserve system. Over the years, he was a visiting
scholar at the Federal Reserve Banks of Minneapolis, Cleveland,
Kansas City, Atlanta, St. Louis, and New York. At the Federal Reserve
Bank of Cleveland, Bruce helped formulate the goals of a long-term
project studying the theory and practice of central banking. Bruce
also completed several research projects for the World Bank, on
diverse topics including the effects of stock market development
on growth in developing countries, the effects of deposit insurance
in developing countries, and the effect of differences in market
structure (competition versus monopoly power) on the stability
of the banking system. In addition, he gave lectures to staff at
the International Monetary Fund and the Central Intelligence Agency. Bruce served on the editorial boards of several journals, including
the Journal of Economic Theory (associate editor, 1993-2002), Economic
Theory (editorial board, 1992-96 and co-editor, 1996-2002),
Journal of Financial Intermediation (associate editor, 1995-2002), Macroeconomic
Dynamics (associate editor, 1996-2002), and the Journal
of Economic Growth (associate editor, 1994-2000). Bruce was particularly well-known and beloved for his attentive
devotion to his numerous Ph.D. students, with many of them going
on to take faculty positions at research universities. One of his
students, Gaetano Antinolfi (who as of the date of this memorial
is an associate professor of economics at Washington University)
writes the following in a memorial to Bruce published in Macroeconomic
Dynamics: Bruce was, with Karl Shell, the co-chair of my dissertation committee
at Cornell. Therefore, I was lucky enough to witness first-hand
and benefit from Bruce’s famous devotion to his students
and their work. In fact, I would like to broaden this view, and
emphasize that more generally Bruce was naturally devoted to the
young… [S]o many at the beginning of their career benefited
crucially from Bruce’s input. His own satisfaction was in
being able to help those who were eager, younger, and less experienced
than he was … Three years ago, witnessing the amount of
time and energy that Bruce dedicated to us, I felt embarrassment,
and I told him so. Bruce replied to me that when he was a young
Ph.D…., he had been lucky in meeting senior members of the
profession who challenged him. coached him, and became his mentors
and then his friends. He said to me, “Please don’t
worry, I am just giving back what I received and what I was taught
to do.” Bruce was by nature positive and encouraging. He had a great attitude,
and he always thought he had been lucky. I saw him for the last
time in Austin at the beginning of June 2002. Bruce was not feeling
well; medical complications and treatments that he mentioned dismissively
must have been taking their toll. In spite of this, he wanted to
meet with Todd Keister and me to discuss a project the two of us
were working on. Later on, I received an email in which he encouraged
us to pursue our project, and apologized once more because he had
not been well enough to socialize outside work. This was Bruce.3
1Bruce D. Smith, “Taking
Intermediation Seriously,” Journal of Money, Credit,
and Banking, v.35 (6), part 2 (December, 2003), pp.1319-1357.
2"The
published work of Bruce D. Smith,” Federal Reserve
Bank of Minneapolis Quarterly Review, v.26 (February, 2002).
3Gaetano Antinolfi, “In
Memory of Bruce Smith,” Macroeconomic Dynamics,
v.7, iss. 1 (Feb. 2003), pp. 1-2.
<signed>
Larry R. Faulkner, President
The University of Texas at Austin
<signed>
Sue Alexander Greninger, Secretary
The General Faculty
This memorial resolution was prepared by a special committee
consisting of Professors P. Dean Corbae (chair) and Valerie
R. Bencivenga.
|
