A person is sometimes lucky to be in the right place at the right time. However, there is nothing accidental about the meteoric rise of quietly driven 46-year-old Harvard University’s Gita Gopinath, a star in international macroeconomics.

The IMF appointed Gopinath as chief economist Monday in a move that will challenge the fund to reshape its thinking around exchange rates.

Gopinath, one of the leading scholars in exchange rates, sovereign debt and capital flows, will be the first woman to lead the IMF’s economic research department and only the second Indian after former Reserve Bank of India governor Raghuram Rajan to hold the prestigious post.

“Gita is one of the world’s outstanding economists, with impeccable academic credentials, a proven track record of intellectual leadership, and extensive international experience,” IMF managing director Christine Lagarde said. “All this makes her exceptionally well-placed to lead our Research Department at this important juncture.”
 

Leading thinker on the global financial system

Trade, productivity, debt, capital flows and the functioning of exchange-rate systems are among the “top puzzles” and “challenges” facing the global economy as a whole, well-known economist Mohamed El-Erian, wrote in Bloomberg.

“These topics have also featured prominently in Gopinath’s research and publications, which have tended to challenge conventional wisdom and push the collective thinking forward in a beneficial way,” added El-Erian, who has authored “The Only Game in Town” and “When Markets Collide.”

The IMF said Gopinath has written 40 research papers on exchange rates, trade and investment, international financial crises, monetary policy, debt, and emerging-market crises.
 

Drawn by accident to Economics

Barely 38 when she earned tenure, Gopinath is currently the John Zwaanstra professor of international studies and economics at Harvard. She was drawn almost by accident to the discipline.

“I cannot say that I always wanted to be an economist. As with most students in India who have to decide at the age of 18 what area to specialize in I came to economics almost by chance. My subjects were in Science until class 12 and then my parents figured that I should join the Indian Administrative Services for which economics was a good subject to take. So that is really how I came to it,” Gopinath earlier told Rajyasri Rao of Braingainmag.com.

“I took my first class in economics at the Lady Sri Ram College in Delhi and it so happened that I enjoyed it immensely. Eventually I decided I was more of an academic and less of an administrator and so I stuck with it and went on to graduate school. I developed an early interest in the field of international economics and have stayed with it,” she added.

After graduating from Lady Sri Ram College, Gopinath did her Masters from both the Delhi School of Economics and University of Washington. She received her PhD in economics from Princeton University in 2001, where her thesis advisers included economic luminaries Ben Bernanke before he became Federal Reserve chairman and Kenneth Rogoff, who was the IMF’s chief economist.

Gopinath then joined the University of Chicago as an assistant professor before moving to Harvard in 2005. Five years later, she became a tenured professor in Harvard’s Economics department.

In a 2016 interview with the Minneapolis Fed, Bernanke described Gopinath as “one of the strongest and most promising students I ever worked with.”
 

Research with a strong practical bent

Gopinath has focused her research on the continued dominance of the US dollar in the global financial system. According to the WSJ, Gopinath’s research has helped explain how the rising dollar creates so much vulnerability in countries such as Argentina, which has experienced a drastic currency crisis this year and sought a bailout from the IMF.

“There are several interesting puzzles in international economics, one of which relates to how changes in exchange rates affect relative prices across countries. I tried to understand this puzzle better by studying new data on prices of detailed goods that cross borders. One rather surprising fact that my co-authors and I uncovered relates to how the response of prices to exchange rates, even when prices do change, depends on the currency of denomination of the price of the good,” Gopinath told Braingainmag.com.

“That is a German firm that sells to the US and denominates its prices in Euros, responds very differently to movements in the euro/dollar exchange rate compared to a German firm that sells to the US but prices its product or service in dollars,” she added.

The Wall Street Journalsaid a 2011 paper written by Gopinath on how countries in the European Union could achieve results similar to a currency devaluation — despite not controlling their own currencies — was followed by the French government as it sought to cope with this decade’s financial crisis.
 

Advantage of quality education

Goipinth earlier shared sage advice for aspiring students from South Asia who are mulling over studying economics abroad.

“The numbers of institutions in India that provide a good quality education in Economics are unfortunately far too few relative to the numbers of qualified applicants. The U.S. has a real advantage in this area because there are numerous institutions that can give you a good training in this field,” said Gopinath.

“Also, the breadth of courses offered, including in fields that complement economics, such as applied math, surpass anything you can get even from the very best programs in India. So I would advise students that they do not need to be disappointed if they do not get into the Ivy League schools. There are many good departments in the top 50 U.S. universities that offer strong undergraduate programs in economics,” she added.

As an economist who has studied and lived in India and the US, Gopinath has her feet in two worlds, and a strong grasp on world economies. 

“She will be more in tune with mainstream thinking in her conclusions that trade is not a main driver of economic inequality, that emerging markets are wise to tilt away from dollar denominated debt and that global co-ordination of financial regulation is essential,” noted the Financial Times.

Gopinath is a co-editor of the top-rated American Economic Review and co-editor of the Handbook of International Economics with Kenneth Rogoff.

With her appointment the IMF joins the OECD and World Bank in having a woman in the top economic role in the institution.