Evan Soltas
May 18, 2012

The Fed Is Filled

A quick post, because I found some testimony worth looking at, and then I'll come back and write something more later this evening.

The Senate confirmed yesterday Jerome Powell and Jeremy Stein, President Obama's two nominees for the Federal Reserve's Board of Governors. Both have a deep background in the financial regulation side of the Fed's responsibilities -- which is another way of saying that their opinions on monetary policy are unclear. That's not to say that I'm not glad that the Board has finally been filled since 2006 -- there are really good reasons, per David Beckworth, why we need a full team on the monetary policy bench.

All the news reports, however, failed to report a line Powell's testimony before the Senate's Committee on Banking -- yes, I know where to find these things -- and it's not terribly much to go on, but it does tell us a little bit where we knew nothing:

In monetary policy, the task will be providing support for the still weak economy but exiting the current highly accommodative policies in time to avoid higher inflation.
What do we know about Jeremy Stein?

The most recent piece of information would a lecture he gave at the Bank of Italy last year, "Central Banking and Financial Stability." I cannot find it online however, and it may have much more to do with the banking regulatory role of the Fed.

I have put together a linked list of every paper Stein has written which focuses largely on monetary policy. Hopefully, there is something in there which gives us a little more insight into the new balance of the Committee, but I haven't had a chance to read them yet.

Cheap Talk and the Fed: A Theory of Imprecise Policy Announcements,” American Economic Review, 79, March 1989, pp. 32-42.

Monetary Policy and Credit Conditions: Evidence from the Composition of External Finance,” (with Anil Kashyap and David Wilcox), American Economic Review, 83, March 1993, pp. 78- 98.

Monetary Policy and Bank Lending,” (with Anil Kashyap), in Monetary Policy, edited by N. Gregory Mankiw. Chicago: University of Chicago Press, 1994, pp. 221-256.

What Do A Million Observations on Banks Say About the Transmission of Monetary Policy?,” (with Anil Kashyap), American Economic Review, 90, June 2000, pp. 407-428.

Monetary Policy as Financial-Stability Regulation,” Quarterly Journal of Economics, forthcoming.

The Optimal Conduct of Monetary Policy with Interest on Reserves,” (with Anil Kashyap), American Economic Journal: Macroeconomics, forthcoming.