Qualifications for the Fed10th April 2019
I have a new post up at The Bridge, which discusses the qualifications we should look for in a nominee for the Board of Governors:
There are at least five possible criteria for judging a candidate for the Fed:
1. Does the candidate agree with one’s own views on monetary policy?
2. Does the candidate have educational or work experience and credentials indicating an adequate background in monetary economics?
3. Does the candidate exhibit knowledge of monetary economics in their public comments and writings on the subject?
4. In retrospect, do previous policy recommendations by the candidate seem to have been correct?
5. Would the candidate avoid partisan bias when making decisions?
There is some reason to worry that Mr. Moore and Mr. Cain fall short in these areas, although in my view the first two criteria should carry relatively little weight. . . .
I’m in no position to judge motives, but the case for appointing Moore and Cain to the Federal Reserve Board runs into obstacles however one views their attitude toward Fed independence. If their change of heart was motivated by political considerations, that would be inconsistent with the Fed’s traditional independence from the rest of the government. When politics influences Fed decisions, it can destabilize the economy.
If we assume that their evolution from hawkish to dovish doesn’t reflect political considerations, that raises another question: do the candidates have good judgment on policy? I am not aware of any coherent economic model, liberal or conservative, which would justify calling for tighter money in the early 2010s and easier money today.
Read the whole thing.
Update: Tyler Cowen had this interesting observation:
My personal preference is for a nominal GDP rule, but the irony is this: At the end of the day, the advocates of the gold standard, and their possible presence on the Federal Reserve Board, are themselves the best argument for … the gold standard.
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