Summers cont.

Zachary Goldfarb at Wonkblog has a rundown on what we can expect from Larry Summers if (when?) he is nominated/confirmed for the position of Chairman of the Federal Reserve. To take this back to what I wrote recently–I think this is more evidence in favor of the point that Summers represents anything but a regime change for the Fed. Looking through Larry’s preferred policies, I don’t see any major shift in agenda from what we currently have at the Bernanke Fed:

Larry Summers is concerned about the labor market, especially in light of persistently low inflation–we can expect him to continue keeping interest rates at 0 for an extended period of time. He might be more skeptical about QE, but that will likely be wrapping up (and, thus, less of a factor) by the time he assumes the position of Chair.

In addition, Goldfarb argues that Summers would be concerned about financial stability but that he wouldn’t use interest rates as a policy mechanism to achieve financial stability. Instead, Summers would rely on banking regulation; in particular, he seems likely to push for higher capital requirements in the banking system (which seems like as good a regulatory goal as one can hope for with the banking system these days). In sum, I don’t really see anything here separating Summers from Yellen.

If Krugman (and Romer, and every other economist out there dissatisfied with the current Fed policy) really were interested in a ‘regime-shift,’ neither Yellen nor Summers are the right person for the job. This says, to me, that the push-back against Summers from the left is less about policy preferences, and more about some combination of: the importance of ‘central banking experience,’ gender norms,’ and signaling dissatisfaction with the current administration’s economic leadership in general (by pushing back hard against a key member of their ‘club’ and their preferred nominee).


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