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Obituary: Economist Anna Schwartz 1915-2012

Professor Geoffrey Wood pays tribute to Economist and City Honorary Graduate Anna Schwartz

Anna Schwartz, who has died at the age of 96, was one of those few economists who changed our understanding of the world. Her seven-decade association with the US National Bureau of Economic Research was remarkable enough in its duration; all the more so for the work she produced there, both independently and in collaboration with others including a young colleague called Milton Friedman.

They teamed up to examine the role of money in the business cycle, and the first product of the partnership was A Monetary History of the United States 1867-1960. Its appearance in 1963 came at a time when the influence of money on economic activity and prices was either played down or denied by most economists. Their book swept away the consensus. Few would now deny the importance of monetary control in managing inflation.

A further work by Schwartz and Friedman followed in 1970 and a third, which examined the UK as well, came out in 1982. All three volumes combined analytical insight and rigour with a weight of evidence.

Schwartz also changed minds over regulation - though not to a great enough extent among policy makers, as the recent global upheavals have shown. In studies Schwartz emphasised that stable price levels are essential for financial stability. The uncertainty engendered by an absence of the former makes the latter unattainable. But even if we have price level stability, from time to time individual financial institutions will fail.

Drawing on evidence from more than two centuries, she showed that individual failures need not have huge consequences for the economy. Institutions, however large, should therefore be allowed to fail. This should be an expected part of the policy regime.

Had this recommendation been adopted before the recent crisis, rather than as is happening now after the event, the world could have been spared much trouble.

Anna Jacobson Schwartz was born in New York's Bronx borough on November 10 1915 to Hillel and Pauline Jacobson. Her father was a religious scholar. She gained a BA from Barnard College, New York, in 1934 and her MA from Columbia University in 1935. A year later she married Isaac Schwartz, an accountant, with whom she had two sons and two daughters. Her husband died in 1999; she is survived by her children, seven grandchildren and six great-grandchildren.

She was an Honorary Graduate of City University London and gave the Henry Thornton Lecture at Cass (then City University Business School) in 1981.

Over her lifetime she covered many areas including work on the international transmission of inflation, the role of government in monetary policy, and measuring banks' output. All of which are issues more relevant than ever.

Cass Professor Emeritus of Economics Geoffrey Wood

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