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Fischer to put textbook work on ice while in Fed job

Former Bank of Israel Governor Stanley Fischer delivers remarks during a panel discussion on financial crises at the International Monetary
Former Bank of Israel Governor Stanley Fischer delivers remarks during a panel discussion on financial crises at the International Monetary

By Marilyn W. Thompson and Ann Saphir

(Reuters) - Stanley Fischer wrote the book on macroeconomics. Literally.

A noted scholar, he co-authored "Macroeconomics," one of the world's leading college economics textbooks.

But as he prepares to become vice chairman of the U.S. Federal Reserve - a Senate committee holds a hearing on his nomination on Thursday - he's made a promise that may disappoint anyone who hoped he might be able to pepper the text with insights gleaned at the Fed.

The former Bank of Israel governor vowed in January to put his work as an author on ice while in office, making no edits or revisions. Former Fed Chairman Ben Bernanke, who co-authored his own popular economics textbook, made a similar pledge in 2009.

Under federal ethics rules, government employees cannot take money for writing books on topics related to their official duties. For Fed governors, that includes revisions to economics textbooks, a Fed spokeswoman said. They may, however, still collect royalties on books already written. Fischer declined to comment to Reuters on his textbook pledge.

Luckily, Fischer and his co-author finished revisions for the 12th edition of "Macroeconomics" late last year, including a line that reflected a shift in Fischer's views on the economy-boosting clout of central banks.

The 70-year-old scholar told a panel at the International Monetary Fund in November that the Fed's unorthodox moves to battle the financial crisis and deep 2007-2009 recession debunked the notion that central banks could do no more than slash interest rates to zero. The Fed launched a range of innovative lending programs to stabilize markets and turned to large-scale bond purchases to push down long-term rates once overnight rates dropped to near zero.

"I think the textbooks will have to say something other than what they used to say," Fischer said at an IMF conference in November.

And he made sure of it. Fischer could barely contain a smile as he plugged the textbook's new edition to the audience at the IMF, where he spent seven years as the deputy chief.

"Macroeconomics," written by Fischer and the late German economist Rudiger Dornbusch, appeared in 1978. Both it and Bernanke's "Principles of Economics" are "well-performing, established titles ... with a strong international presence in addition to domestic sales," said Brian Belardi, a spokesman for publisher McGraw-Hill Education.

Richard Startz, a former student of Fischer who now teaches at the University of California Santa Barbara, took over detail work on "Macroeconomics" with the book's seventh edition.

"In recent years, Stan has been busy running one piece of the world or another and that has unfortunately limited the time he can spend on things like textbook revising," Startz said in an email.

Currently priced at $188 on Amazon.com, "Macroeconomics" is used around the globe including in Canada, Australia, India, Japan and across Europe. A preface authored by Fischer and Startz notes that an "underground translation was secretly used" in communist-ruled Czechoslovakia.

"There is no greater pleasure for teachers and textbook authors than to see their efforts succeed as concretely around the world," they wrote.

Book sales account for only a portion of Fischer's income, his financial disclosure statement shows. If confirmed by the Senate, he will earn $181,500 a year in his new job, less than the $211,000 he made leading the Bank of Israel.

Sales of "Macroeconomics" brought in no more than $50,000 last year, and Fischer had small amounts of income for other volumes as well.

Bernanke reported royalty payments in 2012 of between $100,000 and $1 million for "Principles Of Economics." His co-author, Robert H. Frank of Cornell University, said Bernanke did not work on the book while in office, other than taking an occasional telephone call.

Bernanke, who left the Fed at the end of January, is now drawing six figures for speeches and working with a Washington agent to market a memoir of his years at the central bank.

(Reporting by Marilyn W. Thompson and Ann Saphir; Editing by Tim Ahmann and Paul Simao)

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