Frederic Mishkin discusses his recent infamy:
The economist’s reply to the “Inside Job”, by Prof Frederic Mishkin, Economists Forum: “You ought to be in pictures” is something no one has ever said to me. And as one of a number of economists making uncomfortable cameo appearances in the new Hollywood documentary, “Inside Job,” I now know why.
In July 2009, I agreed to be interviewed ... for a film that was presented to me as a thoughtful examination of the factors leading up to the 2008 global economic collapse. About five minutes after the microphone was clipped to my lapel, however, it became clear that my role in the film was predetermined - and I would not be wearing a white hat.
Rather than examining the facts of the financial crisis, the filmmaker focused on a study I co-authored that was commissioned and published by the Icelandic Chamber of Commerce in May 2006. The report, which I welcome people to read, examined a variety of risks to Iceland’s financial stability about 28 months before its financial crisis hit.
It would be great to be able to say that I predicted the collapse of Iceland’s economy more than two years before it happened, but I didn’t. However, my co-author and I did correctly identify several risks to Iceland... And many of the excesses of the Icelandic banks that led to their collapse had yet to emerge at the time the report was written. ...
I would have been pleased to discuss these later developments in Iceland’s economy... We might have also discussed why the financial crisis occurred, and why policymakers and the economics profession (myself included) did not fully recognize the inadequacies of prudential regulation and supervision of the financial system... Instead, the filmmaker made insinuations that I didn’t disclose that I was compensated for the study - even though he learned the precise amount of the fee in a 2006 from a public disclosure that I made. Even odder, a big deal was made of an inconsistency in my curriculum vita, where the title of the Iceland study first appeared in 2006 with the phrase “Financial Instability” and later as “Financial Stability” (the accurate language). I had discovered and corrected this typo long before the interview.
Hopefully, interviews like the one I experienced will not dissuade economists and academics from participating in the important public discourse... Academic economists (myself included) did get some things right in the run up to the crisis. ... Of course, we in the economics profession need to recognize where our theories and empirical research proved inadequate, and then revise them... This is the sort of work that I’ll be focusing on for now. It’s all too clear I have no future on the silver screen. [full statement]