Rise of the undaunted empiricist

• Author: Simon Willson
• Position: Senior Editor on the staff of Finance & Development
• Pages: 4-7

Page 4

For the first 41 years of its existence, Germany's Sachverständigenrat, or Council of Economic Experts, was popularly known as the "Five Wise Men." If that sobriquet was a veiled invitation to the country's female economists to attempt entry into a hitherto all-male preserve, the council was into its fifth decade before anybody accepted. Beatrice Weder di Mauro was appointed in June 2004 as the council's first female member. "Friends of mine suggested that now they had better call us the Five Wise Guys," Weder di Mauro says.

The council's gender barrier was not the only hurdle Weder di Mauro cleared by taking her seat on the panel that advises the German government and parliament on economic policy issues. Born in Basel, Switzerland, Weder di Mauro was also the first non-native council member and, then aged 38, one of the youngest council members ever appointed. Not surprisingly, after setting such precedents, she is now one of the best-known economists in the world's third-largest economy.

Today, the Five Wise Guys are at the leading edge of the macroeconomic reforms that could turn the euro area into the world's next economic powerhouse. Because the German economic advisory council has a much higher public profile than that of comparable institutions, such as the U.S. Council of Economic Advisers, Weder di Mauro's council tenure started in a blaze of publicity. But the gloss soon faded as the council researched and recommended a series of radical fiscal and labor market reforms. And whatever celebrity Weder di Mauro may initially have bestowed on a structure as technocratic as Germany's economic advisory council has been absorbed and become part of the panel's own heavyweight persona.

Known for her direct and persistent style of inquiry and research, Weder di Mauro brought to the German council a record as a pathfinder in exploring the role of banks in transmitting financial contagion. She had, in addition, investigated the effects of corruption on developing economies-using the term directly in the days when it was usually referred to by the euphemism of "governance." She also brought to the German council a keen sense of how best to disseminate findings and results. In an assertively independent council that partly relies on the mass media to channel its findings and recommendations, this is a powerful asset.

Something about panels

Weder di Mauro's early research was characterized by a comprehensive approach, irrespective of the scale of the project. Gregory Kisunko, a senior public sector specialist at the WorldPage 5 Bank, worked with Weder di Mauro on a 1996-97 worldwide survey on perceptions of links between political uncertainty, investment, and growth. His recollections depict a driven and single-minded empiricist undaunted by trifling taglines such as "Data not available."

"This was the first and the largest effort to collect raw data on the topic of institutional uncertainty, and she was pushing very hard for extending the country coverage as wide as possible," Kisunko remembers. "The data collection exercise was heroic because it required an organized effort spanning more than 70 countries." Colleagues had been "excited and energized by the novelty and magnitude of her ideas. We all had ideas, but she was always one of those leading the pack."

Unusually, Weder di Mauro's position on the German advisory council is her second tour in such a role in a major European economy. She was appointed in 2002 to Switzerland's Kommission für Konjunkturfragen, the Economic Advisory Board of the Swiss government, and served for two years. What intrigued her enough about national economic advisory panels that she would serve on two, back to back? "It is extremely interesting to do work that is relevant for the policymaking of a country and, at the same time, still keep a foothold in the academic world," Weder di Mauro says. "It's not always easy, though, because what is relevant very often is not interesting for research, and vice versa."

The German advisory council is unique, Weder di Mauro asserts, because it is independent (see Box 1). The government appoints council members, but they have a five-year term deliberately at odds with the four-year election cycle. The council has two main channels of influence, Weder di Mauro believes. One is the public-the council is one of the institutions quoted by the mass media whenever there are new economic developments. The other is its inside route to government. "People often ask whether I feel that our recommendations are being implemented right away," Weder di Mauro observes. "I don't think that's the only way to measure the council's influence. Very often it's more about the longer-term...