Wednesday, November 06, 2013 8:05am

Fed Policy

Question A: Enactment of the Senate bill to subject the Federal Reserve's monetary policy and discount window decisions to an audit by the Comptroller General of the U.S. would improve the Fed's legitimacy without hurting its decision making.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question B: The Fed should not reduce its purchases of mortgage-backed securities and treasurys until there is clearer evidence of strong and sustained employment growth.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question A Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Uncertain 7
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Strongly Disagree 8
The bill will reduce the policy independence of the Fed.
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Strongly Disagree 7
Bio/Vote History
         
Autor David Autor MIT No Opinion
Bio/Vote History
         
Baicker Katherine Baicker Harvard Uncertain 1
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Disagree 1
Bio/Vote History
         
Chetty Raj Chetty Harvard Did Not Answer
Bio/Vote History
         
Chevalier Judith Chevalier Yale Disagree 1
Bio/Vote History
         
Currie Janet Currie Princeton Disagree 7
It is important for the Fed to be able to operate with a minimum of political interference.
Bio/Vote History
         
Cutler David Cutler Harvard Disagree 3
Bio/Vote History
         
Deaton Angus Deaton Princeton Strongly Disagree 7
Bio/Vote History
         
Duffie Darrell Duffie Stanford Uncertain 9
This depends on whether the audit is used to reduce the discretion of the Fed when acting within its mandate. I would need some specifics.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Disagree 6
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Uncertain 5
Bio/Vote History
         
Fair Ray Fair Yale Disagree 7
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale No Opinion
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Strongly Disagree 10
Um, have you seen how it has worked in countries with political oversight of monetary policy decisions?
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Strongly Disagree 7
Bio/Vote History
         
Hall Robert Hall Stanford Strongly Disagree 8
The existing system of an independent Fed acting with finality has worked well. There's nothing to be gained from such an audit.
Bio/Vote History
         
Holmström Bengt Holmström MIT Strongly Disagree 6
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Did Not Answer
Bio/Vote History
         
Judd Kenneth Judd Stanford Disagree 7
This looks like an attempt at facilitating more political interference with Fed policy.
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Strongly Disagree 9
The point of this bill is to dial back central independence. Abundant evidence suggests worse monetary policy will follow if it is enacted.
Bio/Vote History
         
Klenow Pete Klenow Stanford Disagree 6
This could work in principle, but generally more Central Bank independence has led to better decisions.
-see background information here
Bio/Vote History
         
Levin Jonathan Levin Stanford Uncertain 3
Don't know enough about the bill to have a particularly strong view.
Bio/Vote History
         
Maskin Eric Maskin Harvard Disagree 7
Bio/Vote History
         
Nordhaus William Nordhaus Yale Uncertain 8
Hard to see any effect on its legitimacy or effectiveness.
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Strongly Disagree 2
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Strongly Disagree 3
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Disagree 8
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Strongly Disagree 7
Bio/Vote History
         
Shin Hyun Song Shin Princeton Did Not Answer
Bio/Vote History
         
Stokey Nancy Stokey Chicago Strongly Disagree 9
Central bank independence is important.
Bio/Vote History
         
Thaler Richard Thaler Chicago Disagree 6
Bio/Vote History
         
Udry Christopher Udry Yale Strongly Disagree 2
It seems like a dangerous reduction in fed autonomy.
Bio/Vote History
         

Question B Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Disagree 4
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Uncertain 3
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Uncertain 3
Bio/Vote History
         
Autor David Autor MIT Agree 5
Bio/Vote History
         
Baicker Katherine Baicker Harvard No Opinion
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Agree 3
Bio/Vote History
         
Chetty Raj Chetty Harvard Did Not Answer
Bio/Vote History
         
Chevalier Judith Chevalier Yale Agree 3
Bio/Vote History
         
Currie Janet Currie Princeton Agree 6
Quantitative easing has had to substitute for fiscal stimulus in this recovery, so it should not be ended while it is still needed.
Bio/Vote History
         
Cutler David Cutler Harvard Agree 8
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 7
Bio/Vote History
         
Duffie Darrell Duffie Stanford Uncertain 9
Judging when the marginal cost of "exit" risks exceeds the marginal stimulative benefits is difficult with only the data available to me.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Agree 6
The economy isn't strong yet.
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Agree 7
Bio/Vote History
         
Fair Ray Fair Yale Disagree 5
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Agree 5
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Strongly Agree 10
5 years of growth at 2%, unemployment around or above 7.5% and core inflation well below the target says DO NOT TIGHTEN.
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Agree 5
Risk w Fed's strategy but we are far below potential output Effect on int rates of tapering culd be large, see May-June int rate increase
Bio/Vote History
         
Hall Robert Hall Stanford Uncertain 7
The Fed has responsibility for controlling inflation. Though quite unlikely, the Fed might need to contract if inflation surged.
Bio/Vote History
         
Holmström Bengt Holmström MIT Uncertain 3
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Did Not Answer
Bio/Vote History
         
Judd Kenneth Judd Stanford Uncertain 1
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Disagree 3
Benefits of more QE now seems small. QE won't cause inflation, but the forward guidance cum QE is creating some financial stability risk.
-see background information here
Bio/Vote History
         
Klenow Pete Klenow Stanford Agree 6
But I am worried about it may be coming at the cost of misallocation.
-see background information here
Bio/Vote History
         
Levin Jonathan Levin Stanford Agree 4
Caveat: how big an effect these purchases are actually having on employment is not that clear to me.
Bio/Vote History
         
Maskin Eric Maskin Harvard Agree 7
Bio/Vote History
         
Nordhaus William Nordhaus Yale Strongly Agree 9
I interpret this as saying that should continue until are on trajectory that would lead to high employment in 2-3 years.
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Agree 8
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Agree 4
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Disagree 6
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Uncertain 5
Bio/Vote History
         
Shin Hyun Song Shin Princeton Did Not Answer
Bio/Vote History
         
Stokey Nancy Stokey Chicago Agree 8
The question is somewhat vague: clearer than what? Consistency in policy is important, so continuing is probably useful.
Bio/Vote History
         
Thaler Richard Thaler Chicago Agree 7
Bio/Vote History
         
Udry Christopher Udry Yale Agree 4
Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States. The panel includes Nobel Laureates, John Bates Clark Medalists, fellows of the Econometric society, past Presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession. This selection process has the advantage of not only providing a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters.

Finally, it is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist is an expert on a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's expertise that he or she feels unqualified to vote. In this case, our panelists vote "no opinion".

The Economic Experts Panel questions are emailed individually to the members of the panel, and each responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering.

Members of the public are free to suggest questions (see link below), and the panelists suggest many themselves. Members of the IGM faculty are responsible for deciding the final version of each week’s question. We usually send a draft of the question to the panel in advance, and invite them to point out problems with the wording if they see any. In response, we typically receive a handful of suggested clarifications from individual experts. This process helps us to spot inconsistencies, and to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and are being analyzed for an article to appear in a leading peer-reviewed journal.

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