Lindsey was born on July 18, 1954 in Peekskill, New York. He graduated from Lakeland Senior High School in Shrub Oak, New York in 1972. He received his A.B. magna cum laude and Phi Beta Kappa from Bowdoin College and his A.M. and Ph.D. in economics from Harvard University.

He is the author of The Growth Experiment: How the New Tax Policy is Transforming the U.S. Economy (Basic Books, New York, 1990) and Economic Puppetmasters: Lessons from the Halls of Power (AEI Press, Washington, D.C., 1999), and What A President Should Know ...but most learn too late: An Insiders View On How To Succeed In The Oval Office (Rowman & Littlefield Publishers, Inc., Maryland, 2008), and has contributed numerous articles to professional publications. His honors and awards include the Distinguished Public Service Award of the Boston Bar Association, 1994; an honorary degree from Bowdoin College, 1993; selection as a Citicorp/Wriston Fellow for Economic Research, 1988; and the Outstanding Doctoral Dissertation Award from the National Tax Association, 1985.

During the Reagan Administration, he served three years on the staff of the Council of Economic Advisers as Senior Staff Economist for Tax Policy. He then served as Special Assistant to the President for Policy Development during the first Bush administration

Lindsey served as a Member of the Board of Governors of the Federal Reserve System for five years from November 1991 to February 1997. Additionally, Lindsey was Chairman of the Board of the Neighborhood Reinvestment Corporation, a national public/private community redevelopment organization, from 1993 until his departure from the Federal Reserve.

From 1997 to January 2001, Lindsey was a Resident Scholar and holder of the Arthur F. Burns Chair in Economics at the American Enterprise Institute in Washington, D.C. He was also Managing Director of Economic Strategies, an economic advisory service based in New York City. During 1999 and throughout 2000 he served as then-Governor George W. Bush's chief economic advisor for his presidential campaign. He is a former associate professor of Economics at Harvard University.

Lindsey is presently Chief Executive Officer of the Lindsey Group, which he runs with a former colleague from the National Economic Council and writes for The Wall Street Journal, Weekly Standard and other publications. He is a visiting scholar at the American Enterprise Institute.

On September 15, 2002, in an interview with the Wall Street Journal, Lindsey estimated the high limit on the cost of the Bush administration's plan in 2002 of invasion and regime change in Iraq to be 1-2% of GNP, or about $100—$200 billion. Mitch Daniels, Director of the Office of Management and Budget, subsequently discounted this estimate as "very, very high" and stated that the costs would be between $50—$60 billion. This lower figure was endorsed by Defense Secretary Donald Rumsfeld who called Lindsey's estimate "baloney".

As of 2007 the cost of the invasion and occupation of Iraq exceeded $400 billion, and the Congressional Budget Office in August 2007 estimated that appropriations would eventually reach $1 trillion or more. On September 20, 2007, the Congressional Budget Office estimated the future annual costs of continuing occupation in Iraq to be between $25 and $30 billion.

Nobel Prize winning economist Joseph Stiglitz and Harvard Professor Linda Bilmes predicted in 2006 that the war would cost between $1—2 trillion. .They later raised that estimate to $3 trillion in their book "The Three Trillion Dollar War".

In October 2007, the Congressional Budget Office estimated that by 2017, the total costs of the wars in Iraq and Afghanistan could reach $2.4 trillion. In response, Democratic Representative Allen Boyd criticized the administration for firing Lindsey, saying "They found him a job outside the administration."

Lindsey is famous for spotting the emergence of the late 1990s U.S. stock market bubble back in 1996 while a Governor of the Federal Reserve. According to the meeting transcripts for September of that year, Lindsey challenged the expectation that corporate earnings would grow 11½ percent a year continually. He said, "Readers of this transcript five years from now can check this fearless prediction: profits will fall short of this expectation." According to the Bureau of Economic Analysis, corporate profits as a share of national income eroded from 1997 until 2001. Stock prices eventually collapsed, starting their decline in March 2000.

In contrast to Chairman Greenspan, Lindsey argued that the Federal Reserve had an obligation to prevent the stock market bubble from growing out of control. He argued that "the long term costs of a bubble to the economy and society are potentially great...As in the United States in the late 1920s and Japan in the late 1980s, the case for a central bank ultimately to burst that bubble becomes overwhelming. I think it is far better that we do so while the bubble still resembles surface froth and before the bubble carries the economy to stratospheric heights." During the 2000 Presidential campaign, Governor Bush was criticized for picking an economic advisor who had sold all of his stock in 1998.

According to the Washington Post, Lindsey was on an advisory board to Enron along with Paul Krugman before joining the White House. Lindsey and his colleagues warned Enron that the economic environment was riskier than they perceived.