Mark Carney may be the first foreigner to become governor of the Bank of England in its 318-year history, but he is not the first to be approached.
Back in the 1960s, Harold Wilson’s Labour government wanted to replace Lord Cromer with the governor of the Reserve Australian central bank. This from David Kynaston’s The City of London: The History:
It looks like the Nobel-prize winning MIT economist is going to get blocked by the Republicans again in his nomination to the Fed’s Board of Governors. Either the Democratic majority is going to have to force a vote on this, and see if there are 60 votes to overcome a filibuster, or Mr Diamond’s nomination is going to fall by the wayside. Here is Senator Richard Shelby at the nomination hearing today:
“Today we are considering the nominations of three economists. Two to be members of the Council of Economic Advisors and one to be a member of the Board of Governors.
I’m not sure quite why Bernd Hayo and Matthias Neuenkirch of Philipps-University in Marburg, Germany, care about the behaviour of regional Fed presidents, but their latest working paper will interest Fed-watchers.
They took 612 speeches by members of the FOMC up to September 2009 and then coded them as ‘tightening’ or ‘easing’. Then they tested against economic variables to see what was motivating the speech.
Our results are, first, that Fed Governors and presidents follow a Taylor rule when expressing their opinions: a rise in expected inflation (unemployment) makes a hawkish speech more (less) likely. Second, the content of speeches by Fed presidents is affected by both regional and national macroeconomic variables. Third, speeches by nonvoting presidents are more focused on regional economic development than are those by voting presidents. Finally, voting presidents and Governors are less backward-looking in their wording than are nonvoting presidents.
The long Independence Day weekend is going to be particularly busy for Janet Yellen, Peter Diamond, and Sarah Bloom Raskin, who will likely spend less time eating burgers by the swimming pool and more time preparing for a round of questioning from US Senators.
With the economic recovery looking ever so shaky, it will come as a relief that the Senate banking committee has finally scheduled a confirmation hearing for the three nominees, and July 15 is the magic date. Assuming everything goes smoothly, the three candidates to the Federal Reserve board of governors should be taking up their posts by August, in time, especially, for Ms Yellen to replace retiring Don Kohn as vice-chair. Mr Kohn is slated to leave the central bank on September 1.