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Charles Goodhart
Charles Goodhart (b. 1936: London, UK) was appointed to the newly established Norman Sosnow Chair of Banking and Finance at the London School of Economics (LSE) in September 1985, which he held until his retirement in 2002. He has remained at LSE at the Financial Markets Group, initially as Deputy Director, 1987-2005, and now a member, 2005-. He was elected a Fellow of the British Academy in 1990, and awarded the CBE in the New Years Honours List for 1997, for services to monetary economics. During 1986, he helped to found, with Professor Mervyn King, the Financial Markets Group at LSE, which began operation at the start of 1987. For the previous 17 years he served as a monetary economist at the Bank of England, becoming a Chief Adviser in 1980. Following his advice on overcoming the financial crisis in Hong Kong in 1983, and the establishment of the link between the HK and the US $, he subsequently served on the HK Exchange Fund Advisory Committee for several years until 1997. Later in 1997 he was appointed for three years, until May 2000, one of the four independent outside members of the newly-formed Bank of England Monetary Policy Committee. Between 2002 and 2004 he returned to the Bank of England as a (part-time) adviser to the Governor on Financial Stability. He is graduate of Cambridge (B.A. 1960) and Harvard (Ph.D. 1963). After returning from Harvard to teach at Cambridge, where he was a Fellow of Trinity College, (1963-65), he became an adviser in the Department of Economic Affairs (DEA) for a brief period (1965-66), before returning to academic life as a Lecturer in Economics at the LSE (1966-68), from whence he joined the Bank of England.
Goodhart's initial research was in monetary history, writing two books, the first - a distillation of his thesis - on The New York Money Market, 1900-1913 and a second companion piece on UK banking in the same period, The Business of Banking, 1891-1914, (an LSE monograph). His interests, teaching and research, soon shifted to a study of contemporary monetary issues. During his period at LSE, and subsequently at the Bank, he published a number of journal papers on monetary issues, both analytical and empirical. In 1973 he wrote a textbook on contemporary monetary economics, Money, Information and Uncertainty, which has been revised; the new edition published by Macmillans (1989); in 1984 he put together a collection of his papers and published these under the title, Monetary Theory and Practice. Subsequently, he has completed a monograph on The Evolution of Central Banks (1985), published by LSE: this has also been revised, and reissued in a new format by MIT Press (1988). Since then he has been one of the co-authors of The Future of Central Banking (Cambridge University Press, 1994), comprising papers presented at the tercentenary of the Bank of England. Subsequently he published a collection of his papers on Central Banking and monetary policy, entitled The Central Bank and the Financial System (Macmillan, 1995). Besides his research work for the FMG, two of his main articles have been his Inaugural Lecture, `The Foreign Exchange Market: A Random Walk with a Dragging Anchor', Economica, November 1988, and a survey paper on `The Conduct of Monetary Policy', Economic Journal, June 1989. Since then one of his research interests has related to the foreign exchange market where he has been analyzing a massive data set of continuous quotes of spot exchange rates taken from Reuters screens. These papers have been collected together in his monograph on The Foreign Exchange Market: Empirical Studies with High Frequency Data, joint with R. Payne, (Macmillan, 2000).
A second topic of research and analysis has been financial regulation. Besides numerous articles, notably his Per Jacobsson Lecture (2004), on `Some New Directions for Financial Stability’, he has written, co-authored and edited several books in this field, including: Financial Regulation: Why, how and where now? (Routledge, 1998); Which Lender of Last Resort for Europe? (Central Banking Publications, 2000); Regulating Financial Services and Markets in the 21st Century (Hart Publishing, 2001); Financial Crises, Contagion, and the Lender of Last Resort (Oxford University Press, 2002), and a study, with Dai Lu, on the Hong Kong crisis of 1998, Intervention to Save Hong Kong (OUP 2003).
He is, perhaps, more widely known for two less serious pieces. First, he was one of the first to have undertaken a serious empirical study of the relationship between macro-economic developments and political popularity, in his article `Political Economy', Political Studies, vol. 18, 1970. Second, he is the author of Goodhart's Law (see Monetary Theory and Practice, page 96), "that any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes".
In his free time he is a sheep farmer, an exercise which uses up any spare cash he may have earned elsewhere.
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