UC Santa Cruz economists praise Yellen's nomination as Fed chair

Nominee has close ties to UCSC economics department

Janet Yellen
Janet Yellen, nominated to chair the Federal Reserve, has worked with UCSC economists and participated in conferences here.

UC Santa Cruz economists who have worked with Janet Yellen, President Obama's nominee to head the Federal Reserve, praised the nomination, saying she is an outstanding economist who believes in analytical, balanced, and transparent policy making.

"Janet is a great choice to head the Fed," said Carl Walsh, distinguished professor of economics and an expert on central banking and monetary policy. "She has been instrumental in developing the Fed's recent strategies to be more transparent and to communicate the Fed's policy objectives by, for example, being more explicit about its inflation goals."

Economics Professor Michael Hutchison called Yellen a "brilliant economist" and a "great teacher, great mentor, very insightful but unpretentious."

Hutchison said Yellen has a long relationship with UCSC's economics department. As president of the Federal Reserve Bank of San Francisco from 2004 to 2010 she was very supportive of UCSC's Santa Cruz Institute for International Economics, he said, and the SF Fed co-sponsored several of its economic conferences. In 2006, she delivered the conference keynote address, "Monetary Policy in a Global Environment."

Yellen, the current Federal Reserve vice chair, is professor emerita of UC Berkeley's Haas School of Business. Hutchison filled in for her there when she was on leave, teaching her macroeconomics course.

Hutchison and Walsh worked as senior economists at the San Francisco Fed in the mid 1980s before joining the UCSC economics department. Both have since worked with the Fed as visiting scholars and praised Yellen for building up the SF Fed's research department. "With an emphasis on informed decision making," Hutchison said. She also encouraged lively debate.

Walsh agreed, saying he saw "the high priority she placed on economic research, expanding the research department, and bringing really top economists to San Francisco."

Walsh said Yellen's work in the 1980s, much of it with her husband, Nobel Prize winner George Akerlof (Walsh's former professor), "emphasized the importance of understanding how the structure of labor markets differ from simple Econ 1 views of supply and demand–an understanding that is critical if one is to fully understand unemployment and its costs."

Hutchison said Yellen has the best forecasting record of any of the Federal Reserve Board governors or regional Federal Reserve Bank presidents. "She's had a great record of predicting the economy, GDP, and inflation."

"The Fed has done a wonderful, masterful job, with her as the vice chair," Hutchison said. "We all respect her as an economist. I respect her tremendously as a balanced policy maker."