Sunday, September 15, 2013

Sunday Question for Liberals

So -- do you have a candidate for Fed Chair? Do you care?
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Posted by Jonathan Bernstein at 5:57 PM
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12 comments:

  1. BryanSeptember 15, 2013 at 6:31 PM

    I've been pretty convinced by Evan Soltas and Scott Sumner that the superior performance of the Australian and Israeli economies over the last five years has been due to NGDP level targeting.

    I also think Matt Yglesias makes a good case that we shouldn't be shy in poaching central bankers with great records.

    Given all that, I'd be disappointed but basically fine with Janet Yellen as she'd probably continue the current Bernanke approach. I'd be more excited by Christy Romer, who's explicitly endorsed NGDP targeting.

    But I'd most prefer American-Israeli economist Stan Fischer, former central banker of Israel, who basically pursued a de facto NGDP-level target in Israel, though I heard he made some critical remarks regarding the concept that I'd like to hear more about.

    Another interesting possibility is Greg Mankiw, though probably won't happen.

    Basically, I'm willing to hear arguments for or against any candidate, but the more dovish the candidate's record and statements reveal them to be, the better.

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    1. JoshSeptember 15, 2013 at 6:47 PM

      I wouldn't choose Mankiw on the basis that a) he has no actual experience in central banking and b) he has shown a strong partisan dedication to the Republican Party to the point that it would be surprising if he were loyal to a Democratic president. I suspect he would continue Bernanke policies and his academic record suggests he would support quantitative easing, but I see no reason to take any risks on an inexperienced Republican when there are perfectly good Democratic or non-partisan options, some of whom have more experience.

      I agree 100% on Romer and Yellen, and would be fine with a poached veteran like Fischer as well. Good call on those three.

      Delete
    2. BryanSeptember 15, 2013 at 7:02 PM

      Josh, I agree it would be preferable not to pick Mankiw given other good options available.

      I was thinking he might be the NGDP candidate most palatable to GOP Senators, given his strong partisan attachment/ties to Republicans, but you're correct that this shouldn't be dispositive, especially given other concerns.

      Progressives as a whole need to be more engaged with monetary issues, and I hope the discussion (and realization how central banking is, well, central to a good economy and the ability to pass a progressive agenda!) doesn't end bc Summers was scared off.

      Delete
  2. BryanSeptember 15, 2013 at 7:08 PM

    Apologies if I'm hogging this thread, but monetary policy is so important, and I just want to register my strong dissent to an appointment of Tim Geithner, who some are saying the President (or his team) is turning to next.

    He did a fine job as Treasury Secretary, but he seems more interested in financial regulation/stability than monetary issues. There are much better candidates out there.

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    1. Jacob H.September 16, 2013 at 7:20 AM

      Wow! That really would be impressive if Obama turned to the person in his inner circle who liberals hate possibly more than Summers. It would be almost pure ego play, to punish those who torched Summers's nomination.

      Seems very plausible.

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  3. longwalkdownlyndaleSeptember 15, 2013 at 7:11 PM

    No not really. To be honest I really can't see much difference between Yellen and Summers other than in their personalities and career paths. As I see it a lot of liberals have taken to ascribing things to both of them to turn Summers into a big fat sexist slob who probably voted for Bush in 2004 and Yellen into our Lord and Savior returned to Earth. I have no idea why this has happened.

    As far as I can tell, monetary policy itself and what the Fed should be doing is being pretty much ignored.

    Yellen will probably be okay, although I wouldn't be surprised if she continues Bernanke's policy of timid and underpowered reaction to the unemployment crisis, with large scale retreats into inflation hand wringing whenever hard money hawks on the board of governors raise objections at meetings.

    The bigger question for me is why liberals continue to ignore monetary policy in particular and the Federal Reserve in general. We basically have orientated the discussion about why we (now) hate Robert Rubin, the feelings of various Harvard Faculty members, and the need to have women in important public positions. That's all well and good but we basically are ignoring monetary policy, which has major effects on all sorts of our policy outcomes that we prefer. It makes no sense to me.

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  4. Stephen BankSeptember 15, 2013 at 7:43 PM

    I'd go with Christina Romer.

    I don't know how much daylight there is between Romer and Yellen on policy, and I'm sure Yellen would make a great Fed chair, but Christina Romer has convinced me that a "regime shift" is important to get the economy back to it's potential.

    Fischer would also be acceptable, but it would be nice to have a Fed chair with a stronger connection to the Democratic party to counteract the pro-republican bias at the Fed. And let's be real here, if you pass up the obvious choice, who is a woman, for Larry Summers, your next pick should probably be a woman, mutatis mutandis.

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  5. JeffSeptember 15, 2013 at 11:00 PM

    Chait has a blog post up about the pushback from congressional liberals that forced out Summers. If his analysis is right, I have trouble seeing how the White House avoids picking Yellen now -- Geithner is (a) another man and (b) at least as implicated as Summers in the policies of 2009 (too little stimulus, too little pressure on the big banks) to which those liberals object.

    Of course, my own choice would be Paul Krugman, but only on condition that he also keeps blogging. Would be kind of interesting, wouldn't it? I mean, a blogging Fed chair..... what could possibly go wrong?

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  6. Captain FutureSeptember 15, 2013 at 11:42 PM

    If Yellin is not appointed, wouldn't the media etc. response be that there must be something wrong with her as an appointee, rather than someone else is deemed more qualified?

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  7. CouvesSeptember 16, 2013 at 1:49 AM

    I like John Taylor. He's a methodological Keynesian, although he's probably more closely associated with Republicans. He's also credited with inventing the "Taylor Rule" (according to which the Fed sets interest rates) -- Greenspan is generally blamed for starting the housing bubble by straying from the Taylor Rule.

    Taylor's main problem is that progressive Democrats might worry that he wouldn't be aggressive enough with economic stimulus (Oddly enough, Greenspan's mistake has become liberal orthodoxy).

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  8. MichaelSeptember 16, 2013 at 6:33 AM

    I'm just curious whether these Senators have given the president a list or a name. I.e., is it really all anti-Summers sentiment (not that that's not real), or is it that they simply want Yellen? If it's the latter, my bet would be that they can expect intransigence on the point from Obama. I can't see a president ever accepting the complete seizure of his prerogative on a choice like this from his party.

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  9. jamie_2002September 16, 2013 at 11:52 AM

    Mankiv and Taylor?

    Two Republican party hacks who have cast aside economic analysis in favour of party politics?

    Funny brand of liberals you have responding.

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