Open Bernanke thread
President Bush has nominated Ben Bernanke to replace Alan Greenspan as Federal Reserve Chairman. Comment away!! Tyler Cowen is all over the nomination. See this post grading Bernanke’s capabilities to do the job — and this one on Bernanke’s contributions to the economics discipline. On current policy debates, Bernanke is best known for his “global ...
President Bush has nominated Ben Bernanke to replace Alan Greenspan as Federal Reserve Chairman. Comment away!! Tyler Cowen is all over the nomination. See this post grading Bernanke's capabilities to do the job -- and this one on Bernanke's contributions to the economics discipline. On current policy debates, Bernanke is best known for his "global savings glut" hypothesis -- about which I blogged here. For me, the key will be whether -- like Greenspan -- Bernanke will be willing to question his assumptions about the way the economy works in the face of data that contradicts his a priori assumptions. If Tyler's assessment is correct, I'm pretty optimistic. It's nice to see Bush reverting to the John Roberts mold of picking universally well-regarded nominees -- as opposed to other, less savory molds. Andrew Samwick thinks "Bernanke is an excellent choice." Brad DeLong thinks it's "a very good choice." Max Sawicky thinks it's "the preferable outcome." On the other hand, Stephen Roach says that Bernanke was his "second favorite choice." One could interpret that as damning with faint praise, but given Roach's general economic outlook, I'd interpret it as grudging acceptance. UPDATE: Foreign Policy has a boatload of Bernanke-relevant articles up on their main website. In late 2003, Bernanke wrote the following:
President Bush has nominated Ben Bernanke to replace Alan Greenspan as Federal Reserve Chairman. Comment away!! Tyler Cowen is all over the nomination. See this post grading Bernanke’s capabilities to do the job — and this one on Bernanke’s contributions to the economics discipline. On current policy debates, Bernanke is best known for his “global savings glut” hypothesis — about which I blogged here. For me, the key will be whether — like Greenspan — Bernanke will be willing to question his assumptions about the way the economy works in the face of data that contradicts his a priori assumptions. If Tyler’s assessment is correct, I’m pretty optimistic. It’s nice to see Bush reverting to the John Roberts mold of picking universally well-regarded nominees — as opposed to other, less savory molds. Andrew Samwick thinks “Bernanke is an excellent choice.” Brad DeLong thinks it’s “a very good choice.” Max Sawicky thinks it’s “the preferable outcome.” On the other hand, Stephen Roach says that Bernanke was his “second favorite choice.” One could interpret that as damning with faint praise, but given Roach’s general economic outlook, I’d interpret it as grudging acceptance. UPDATE: Foreign Policy has a boatload of Bernanke-relevant articles up on their main website. In late 2003, Bernanke wrote the following:
Low and stable inflation in many countries is an important accomplishment that will continue to bring significant benefits. But de facto price stability has had another effect, which is now forcing central bankers, as well as the public, to fundamentally rethink inflation. After a long period in which the desired direction for inflation was always downward, the industrialized world’s central banks must today try to avoid major changes in the inflation rate in either direction. In central bank speak, we now face ?symmetric? inflation risks…. In short, inflation can be too high, but it can also be too low. So what level of inflation is just right?what, if you will, is the ?Goldilocks? level? The best-case scenario is when inflation is neither so high as to impede economic efficiency and growth nor so low that the nominal short-term interest rate routinely flirts with zero. What that ideal inflation rate is depends on the individual economy and on the views and preferences of policymakers. Although the ?just right? inflation rate for the U.S. economy remains an open question, much recent research suggests that it is around 2 percent.
One interesting question at confirmation hearings will be where Bernanke thinks inflation is right now. Given current conditions, deflation is not the source of concern it was a few years ago. At the same time — as Daniel Gross pointed out yesterday in the New York Times — it’s not completely clear whether inflation should be a source of concern either.
Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast. Twitter: @dandrezner
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