Janet Yellen, First Jewish Woman Fed Chair, Brings Compassion to Tough Job

Signals Need To Boost Economy Even If Inflation Rises

Banker-in-Chief: Janet Yellen is introduced by President Barack Obama as his pick to be the next Federal Reserve chief.
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Banker-in-Chief: Janet Yellen is introduced by President Barack Obama as his pick to be the next Federal Reserve chief.

By Reuters

Published October 09, 2013.
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Yellen has written extensively about monetary policy, but she has also struck farther afield. One paper, written with her Nobel Prize-winning economist husband George Akerlof, analyzed single motherhood, arguing that a rise in out-of-wedlock births was due to a decline in “shotgun” weddings. That paper proposed forcing unwed fathers to pay child support.

Yellen met Akerlof when they were both at the Fed in Washington; their wedding was hasty, although only because Akerlof was moving to London and the couple wanted to stay together. Their only child - Robert Akerlof - teaches economics at the University of Warwick.

Yellen, whose love of gourmet food does not stop her frequenting the Fed’s staff cafeteria, joked in 1995 that dinner at her house meant “a diet that is richer in discussions of economics and policy issues than many people would find appetizing.”

DOVE FOR THE TIMES

While Yellen has a reputation as one of the Fed officials most willing to risk higher inflation to bring the jobless rate down, her track record offers a more nuanced picture of her approach to monetary policy.

In 1996, she and then-Fed Governor Laurence Meyer paid a visit to the central bank’s chairman, Alan Greenspan, to warn that leaving rates too low for too long could fan inflation.

Although the argument fell on deaf ears, “it tells you that she’s prepared to be hawkish when she needs to be,” Meyer said.

In 1995, she convinced the Fed board that targeting a low level of inflation would be better than aiming for no inflation at all and in 2012, she was instrumental in pushing the Fed to adopt a 2 percent inflation target.

“That was a very big step for the Fed, and it was managed mostly by Janet,” said former Fed Vice Chairman Alan Blinder. “She was fighting for years and years, going back to her first stint on the Fed, to adopt a 2 percent inflation target.”

Dallas Federal Reserve President Richard Fisher, who also backed an inflation target but is at the opposite end of the policy spectrum to Yellen, said in September that Yellen would make a great chair, even though her policy was “wrong” - showing she has backing even among Fed hawks.


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