Assaf Razin was a great and internationally renowned Israeli economist who taught for many years at Cornell University, while ultimately holding his permanent academic position at Tel Aviv University. He made his name through his research in public finance and international economics.
Assaf’s oeuvre covers a wide range of topics. Among his most frequently cited contributions is his empirical estimation of effective tax rates on factor income and consumption for a large number of countries.
His work on migration as a source of welfare gains through pay-as-you-go pension systems attracted considerable attention.
Particularly noteworthy are his papers interpreting current-account balances as an expression of the intertemporal consumption planning of a country’s households. Just as a private household may build up its bank account as a reserve for future consumption, an entire economy can accumulate assets abroad in order to draw on them later when times become more difficult, for example as its population ages. While this follows from the definitions of national accounting, Assaf Razin, with his theoretical models of intertemporal optimization, provided important insights into the microeconomic determinants of current-account balances. His insights have become firmly established in economics.
Together with Lars Svensson, for example, he wrote an influential paper on how the current account responds to a currency depreciation or, similarly, a deterioration in the terms of trade. Whereas an earlier contribution by Laursen and Metzler had emphasized the short-run anomaly resulting from the contractual rigidity of quantities supplied and the increase in import prices, Razin and Svensson showed that the expected persistence of the depreciation also plays an important role. A depreciation believed to be permanent may thus produce the normal response, namely an improvement in the current account. In their framework, this is because households realize that they have become permanently poorer and therefore consume less, save more, and invest abroad. However, a depreciation believed to be temporary may produce a result resembling the Laursen-Metzler effect, because households smooth their consumption over time, using a deterioration in the current account as a cushion.
Assaf Razin’s empirical work on the risks that current-account deficits pose to the financial stability of an economy has received widespread attention. It is becoming increasingly relevant in view of the enormous US current-account deficits, which have contributed to a huge negative net international investment position amounting to 71 percent of GDP, or 27 trillion dollars. The hectic efforts of the US government to improve the current account through tariffs and financial contributions from its European allies, as well as its attempt to gain military predominance in Venezuela and other oil-producing regions, can be interpreted as efforts to avert such risks.
Over the past three decades, Assaf Razin was one of the most frequent visitors to Center for Economic Studies (CES) at LMU Munich and, following its establishment in 1999, also a regular participant in the conferences of the CESifo Network. He served as a member of the Scientific Advisory Council (SAC) of the ifo Institute and provided invaluable advice on its scientific orientation in preparation for the evaluation by a group of internationally renowned scholars scheduled for 2007. When David Bradford died in 2005, Assaf succeeded him for several years as chairman of the Council, before later being succeeded by Bob Haveman. He drafted a very positive statement by the SAC for the evaluation committee and thereby helped pave the way for the ifo Institute to be reclassified as a research institute at the Ludwig Maximilian University of Munich.
In 2013, he and Bob Haveman were awarded honorary membership of the ifo Institute in recognition of their outstanding contributions to the scientific development of the institute.
Assaf was a man whom we all admired for his intellectual depth, his rigor, and his scholarly achievements, but whom we also loved for his warm personality and his humor. The members of the CESifo Group mourn the loss of a great scholar and a close personal friend.
Hans-Werner Sinn, 5 October 2026