Clarida Nomination Completes the Fed ' s Triumvirate

Last week theWhite House announced that Richard Clarida will benominated to become Vice Chair of the Federal Reserve Board.More than a month ago, Clarida became the front-runner for the role. He is widely seen asa centrist anda pragmatist holding mostlyconventional views on monetary policy. Mostly.As Vice Chair, Clarida will be the third pillar of the Fed ’s new leadership, joining Chair Jerome Powell andrecently announced incoming NY Fed President John Williams. Having been an economics professor atColumbia University since 1988 and a Global Strategic Advisor atPacific Investment Management Company (PIMCO) since 2006, Clarida provides a complement to both Powell ’s largely business background and Williams’ career inside the Fed.With a couple of mutual research interests, Clarida and Williams will likely work well together. They ’ve both explored the natural rate of interest (r*) — Williams is the coauthor of thewidely cited r* estimates and Clarida has examined natural rates from an  internationalperspective. Another area of mutual interest is price level targeting. As I have notedpreviously, Williams is an advocate of the Fed adopting such a target while Clarida has also explored its merits for monetary policy.At first blush this may be concerning, given the shortcomings of price level targeting. However, the evolution of Clarida ’s post-crisis thinking on monetary policy, including towards price level targeting, shows that he may be persuaded bythe superior me...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs