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The Mystery Surrounding the Resignation of the World Bank’s Top Economist

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Via Economic Policy Journal

Pinelopi “Penny” Koujianou Goldberg is a Greek-American economist who has resigned from her position as chief economist at the World Bank.

She received a Diplom in economics from the University of Freiburg in 1986 and a PhD from Stanford University in 1992. In March, she will return to her position at Yale University where she held the Elihu Professor of Economics chair before taking the World Bank job.

There is mystery surrounding her resignation.

The Economist reports on the backstory:

When autocratic, oil-rich nations enjoy a windfall from higher crude prices, where does the money go? One place to look is Swiss bank accounts. Sure enough, an increase in oil prices is followed by a spike in deposits held by these countries in financial havens, according to a 2017 paper by Jorgen Juel Andersen of bi Norwegian Business School, Niels Johannesen of the University of Copenhagen and their co-authors.

When Mr Johannesen presented this result at the World Bank in 2015, the audience included Bob Rijkers, a member of the bank’s research group. The two of them joined forces with Mr Andersen to investigate if something similar happened after another kind of windfall: infusions of aid from foreign donors. Their conclusion was dispiriting. World Bank payouts to 22 aid-dependent countries during 1990-2010 were followed by a jump in their deposits in foreign financial havens. The leaks averaged about 5% of the bank’s aid to these countries.

Mr Rijkers is part of a unit that reports to the bank’s chief economist, Pinelopi (Penny) Goldberg. The team publishes working papers on the understanding that their views do not represent the bank’s. But Mr Rijkers’s collaborative effort, which was leaked to The Economist, is not yet among them. It passed an exacting internal review by other researchers in November. But, according to informed sources, publication was blocked by higher officials. They may have been worried about how it would look if the bank’s own researchers said that a chunk of its aid ended up in Swiss bank accounts and the like…

This month [Goldberg] said she would be returning to Yale in March, after only 15 months in the job. Her reasons were unclear. A reorganisation of the bank may have been a factor, including the imminent arrival of Mari Pangestu, who will assume oversight of Ms Goldberg’s unit, in an effort to align research more closely with the bank’s country operations. Ms Goldberg may have come to feel that the position carried too much of a managerial burden, but too little power to rule her fief.

But it is also possible that the bank’s decision to block one of her team’s papers grated on her.

RW

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