Sunday, 29 December 2013
Now that Janet Yellen is to be Chair of the US Federal Reserve Board, attention has turned to the candidate to succeed her as Vice Chair. Stanley Fischer would be the perfect choice, given his unique combination of skills, qualities, and experience.
Stanley Fischer, who may join Janet L. Yellen atop the Fed, is now a respected elder among monetary economists, but he began his career as an insurgent.As with all successful revolutionaries, success has obscured the revolution. Consider the 1977 paper for which he is most famous. It helped to transform the practice of monetary policy, creating the world in which Ben S. Bernanke has operated, but its opening lines sound like conventional wisdom, which now it is.
On basic ideology, the two are in sync. They’re “New Keynesians” who support aggressive monetary stimulus when needed, including by unorthodox means such as quantitative easing. (Fischer has described QE as “dangerous” but “necessary.") They most likely agree on the need for caution in withdrawing stimulus in the U.S. while unemployment is still high and inflation low.