Opening remarks by the Governor Erkki Liikanen, at the Bank of Finland and Banca d'Italia Conference on Challenges of the Global Crisis to Macroeconomic Theory and International Finance, Helsinki 11 June 2010

Governor Erkki Liikanen
Bank of Finland

Bank of Finland and Banca d’Italia Conference on 
Challenges of the Global Crisis to Macroeconomic Theory and International Finance
Helsinki 10-11 June 2010

Dear friends,

After an ECB Governing Council meeting a year ago Mario Draghi told about Jorge Braga de Macedo's initiative. He wanted a memorial conference to be organized as a tribute to the academic work of Pentti Kouri. We both agreed. Rather soon we came to the conclusion that the Bank of Finland and Banca d’Italia should co-organise the conference. It should also be held in Finland.

We asked Ignazio Visco and Seppo Honkapohja to prepare a programme in close contact with Jorge. Here we are today. We want to thank Ignazio, Seppo, Jorge and all others who have helped to organize this event.

About 14 years ago Pentti Kouri published his memoirs in Finnish. His career in the field of economics covers about 30 pages, no more than 10% of the book. As you know, his lifetime activities extended to many other areas, from art to business. Still today our focus is on Pentti Kouri’s work as an academic.

As early as in spring in 1970 Kouri was asked by the Bank of Finland to come for an interview for the IMF's young professionals programme. Already in August of the same year he moved to Washington to start to work at the IMF. We are happy to have with us another young professional of the time, Patrick Honohan, today the Governor of the Irish Central Bank.

Already his early papers in IMF created a lot of attention among academic economists. In spring 1972 he was invited to the Wing spread - conference at Chicago University, where he met many of the great names of economic science. Professor Edmund Phelps, the 2006 Nobel Laureate was among them. We are happy to welcome Professor Phelps as the first speaker to our conference. Among others participating in the Chicago conference on 1972 were Rudi Dornbusch, Jacob Frenkel and Stanley Fischer, the present Governor of the Bank of Israel.

In autumn 1973, Pentti Kouri was accepted to the PhD programme at the MIT. Stanley Fischer was his thesis supervisor. He tells that Pentti was among his first students. Stan continues: “He came almost every day after 4 o’clock to talk. Pentti had an incredibly wide scope of interest. So it was very interesting. But finally in April, I told to him that it is nice to talk but not much has happened with your thesis. Only two months later he came back with a very good thesis”.

Pentti Kouri writes in his memoirs that he had great time in Cambridge, Massachusetts, and that Mario Draghi became one of his closest friends and remained so.

Pentti Kouri got his PhD from MIT and moved briefly back to the IMF. We have two other PhD’s from MIT from that period with us today, Professor Francesco Giavazzi and the Chief Economist of IMF Olivier Blanchard. Governor José de Gregorio from the Bank of Chile got his PhD from MIT in the 1980’s. We are very happy to have you as speakers in our conference.

In summer 1975, Pentti Kouri got an offer from Stanford which he accepted. In the same summer he organized, with Franco Modigliani, a seminar for academic and central bank economists in Haikko, 50 kilometres east of Helsinki. The seminar was hosted by Mauno Koivisto, the then-Governor of the Bank of Finland, later president of the Republic of Finland.

Pentti Kouri taught at Stanford for two years. It was at Stanford that the former governor of the Bank of Mexico and former president of the BIS, Guillermo Ortiz became his friend. Bengt Holmström was also finishing his dissertation at Stanford at that time. We welcome both Guillermo and Bengt to this conference.

During his Stanford years Kouri often visited the Institute for International Economic Studies in Stockholm, which was directed by Assar Lindbeck. Pentti Kouri made a lot of friends in Sweden. We are happy to have Assar Lindbeck on our panel today.

Pentti wrote in his memoirs that he was asked then to write an assessment on Franco Modigliani for the Nobel committee. He continued (in 1997), that all other economists he assessed got a Nobel Prize with the exception of Robert Mundell, who deserved it. As we now know, the Nobel Committee agreed with him and Robert Mundell became the 1999 Nobel Laureate.

Two years later James Tobin invited Pentti Kouri to Yale. He got an associate professorship in Yale in autumn 1977. In January 1978 in democratic Finland his academic career was interrupted by military conscription. He spent the whole year in the grey uniform of the Finnish army.

Pentti Kouri returned to Yale in the beginning of 1979. Professor Jorge Braga de Macedo was then his student and friend. Also James Galbraith was a PhD student at Yale at that time. Jorge will chair the last panel of this conference today.

From Yale Pentti Kouri moved to New York University where he got his tenure in autumn 1979. At the same time he was also awarded a professorship at the University of Helsinki. He held two parallel professorships for four years.

Pentti Kouri was a leading young researcher in the field of international economics and finance of his time. This is illustrated by the fact that Pentti’s work was cited in seven out of the eleven major survey articles in the well-known Handbook of International Economics (Volume 2) in 1985.

I want to welcome you all to Helsinki.

And I want to invite Governor Mario Draghi, who is also the president of the Financial Stability Board, to chair the first session.