Martin Feldstein

Martin Feldstein
Born	(1939-11-25) 25 November 1939 New York City, New York, U.S.
Died	11 June 2019(2019-06-11) (aged 79)
Occupation(s)	Economist, professor
Years active	1960s–2019
Known for	Chair of the Council of Economic Advisers; President of the National Bureau of Economic Research; Feldstein–Horioka puzzle

Martin Stuart Feldstein (; November 25, 1939 – June 11, 2019) was a prominent American economist. He held the position of George F. Baker Professor of Economics at Harvard University and was president emeritus of the National Bureau of Economic Research, where he led as president and CEO from 1978 until 2008, excluding the years 1982 to 1984. During that interval, Feldstein served as chair of the Council of Economic Advisers, acting as chief economic consultant to President Ronald Reagan. In this role, he championed deficit reduction policies that frequently clashed with the administration’s defense spending goals. Additionally, starting in 2003, he was a member of the financial advisory body known as the Group of Thirty.

Career

In 1977, Feldstein was honored with the John Bates Clark Medal by the American Economic Association, an award given to economists under 40 who have made significant contributions to economic science. That same year, he gained election to the American Academy of Arts and Sciences. Later, in 1989, he became a member of the American Philosophical Society. Recognized by IDEAS/RePEc as one of the top ten most influential economists worldwide, Feldstein authored more than 300 research papers, with substantial input in health economics, international economics, and national security economics. His foremost influence lay in the fields of macroeconomics, public finance, and social insurance. He was a trailblazer in studying public pension systems and a vigorous proponent of Social Security reform, playing a key role in shaping President George W. Bush’s efforts toward partial privatization.

Among Feldstein’s important contributions to macroeconomics is the "Feldstein–Horioka puzzle," developed alongside Charles Horioka, which revealed that capital investment tends to remain within its country of origin over extended periods.

In 1997, Feldstein expressed concerns that the establishment of the European monetary union and adoption of the euro might negatively impact unemployment and inflation rates, potentially escalating tensions both within Europe and between Europe and the United States.

He was awarded the Daniel M. Holland Medal in 2003 for his significant work in taxation and public finance.

By 2005, Feldstein emerged as a strong contender to replace Alan Greenspan as Chairman of the Federal Reserve Board, bolstered by his experience during the Reagan administration and advisory role in Bush’s presidential campaign. Nevertheless, Ben Bernanke was ultimately appointed, possibly influenced by Feldstein’s long-standing directorship at AIG, which encountered financial reporting issues followed by a major collapse during the 2007–2008 financial crisis. Although not directly involved in AIG’s accounting problems, Feldstein had been serving on its board since 1988. In March 2007, he received a Bradley Prize recognizing exceptional accomplishment. He announced his departure from the presidency of the National Bureau of Economic Research effective June 2008.

From 2006 to 2009, Feldstein was a member of the President's Foreign Intelligence Advisory Board.

In March 2008, he publicly predicted that the United States was likely experiencing a severe economic recession.

As a board member overseeing AIG Financial Products—a division central to AIG’s crisis—Feldstein resigned from AIG’s board in May 2009. He also held board positions at major corporations such as Eli Lilly and Company, JPMorgan, and TRW.

On February 6, 2009, Feldstein was appointed as an advisor to President Obama’s President's Economic Recovery Advisory Board, serving until 2011.

Later Roles

He provided consultancy services to the U.S. Department of Defense.

Feldstein held board memberships at several prestigious organizations, including the Council on Foreign Relations, the Trilateral Commission, the Group of 30, and the National Committee on United States-China Relations. Over nearly two decades, from 1996 through 2015, he attended numerous annual meetings of the Bilderberg Group. His affiliations also extended to the JP Morgan Chase International Council, the Academic Advisory Council of the American Enterprise Institute, and the British Academy.

In 2011, Bloomberg Markets Magazine recognized Feldstein as one of the 50 Most Influential People in Global Finance.

By 2017, he joined a coalition of senior Republican figures—including James A. Baker III, N. Gregory Mankiw, Henry M. Paulson Jr., and George P. Shultz—who promoted implementing carbon taxes with proceeds redistributed as lump-sum payments to citizens as a strategy to combat global climate change.

"Domestic Saving and International Capital Flows"

The 1980 publication Domestic Saving and International Capital Flows made a notable impact on international economic theory. In collaboration with Charles Horioka, Feldstein examined data from 21 OECD nations to assess how domestic investment correlates with national savings. Their findings demonstrated that a substantial portion of additional savings tends to remain within the originating country despite opportunities for global investment. This strong positive correlation became widely known as the "Feldstein-Horioka Puzzle."

"Social Security, Induced Retirement, and Aggregate Capital Accumulation"

Feldstein’s 1974 research explored how Social Security influences household consumption patterns, saving behaviors, and retirement timing. He concluded that Social Security incentives encourage earlier retirement and reduce individual savings rates. However, in 1982, Dean Leimer and Selig Lesnoy uncovered programming flaws in Feldstein’s original model that undermined these results—a correction Feldstein accepted and incorporated. After revising the analysis, they identified a more modest connection between Social Security and saving habits, even suggesting that Social Security might have fostered increased savings under certain conditions.

European Union, Eurozone, and Sovereign Debt Crisis

Feldstein actively contributed to early discussions concerning the European Union (EU) and its common currency during periods of sovereign debt turmoil. From a political economy standpoint, he viewed the EU initiative and establishment of the Economic and Monetary Union (EMU) as outcomes of a complex interplay between pro-European internationalist ideals and national self-interests. While his position was nuanced, Feldstein generally expressed Euroscepticism. He endorsed creating a unified market for goods and services but argued this did not necessitate adopting a single currency. He cautioned that monetary union could exacerbate political strains since member states do not uniformly adhere to Germany’s stringent anti-inflation policies. Moreover, Feldstein emphasized that monetary integration represented only one element within a broader political unification effort aimed at forging common foreign and defense policies to strengthen global influence. During the sovereign debt crisis, he advocated for a temporary "eurozone holiday" allowing struggling countries such as Greece to leave the eurozone briefly, devalue their currencies to regain competitiveness, then rejoin later at reduced exchange rates—thereby facilitating economic recovery from recessionary pressures.

Teaching

As a leading educator at Harvard, Feldstein led the foundational economics course "Social Analysis 10: Principles of Economics" for two decades before N. Gregory Mankiw took over. Now called Economics 10, it continues to be Harvard's most populous lecture. Additionally, Feldstein instructed courses on American economic policy and the economics of the public sector.

His pedagogical impact is evident through his numerous students who advanced to prominent roles in government and academia. Among them are Lawrence Summers, former president of Harvard and U.S. Treasury secretary; David Ellwood, dean of the Harvard Kennedy School; and James M. Poterba, an MIT professor and advisor on tax reform. Other distinguished protégés include Lawrence Lindsey, who served as chief economic adviser to President Bush; Harvey S. Rosen, former chair of the president's Council of Economic Advisers; Douglas Elmendorf, ex-Director of the Congressional Budget Office; José Piñera, Chile’s Secretary of Labor during pension system privatization; Jeffrey Sachs, head of Columbia’s Earth Institute; and Glenn Hubbard, Bush’s initial CEA chairman and dean at Columbia Business School.

External links

• Faculty profile at Harvard University
• Profile at the National Bureau of Economic Research
• Profile and Papers at Research Papers in Economics/RePEc
• Column archive at Project Syndicate
• Feldstein Says U.S. Dollar Needs to Depreciate, Jan Zilinsky, The Harvard Crimson, January 12, 2007

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