So it looks like President Obama is going to start filling the vacancies left on the Federal Reserve Board. There are three vacancies including the vice chairmanship. Reuters lists several possible candidates. Their list is fine for speculative purposes, but I would like to put my two cents in as well.
There are two people that I think should (and could) be chosen to sit on the Board of Governors. Also, I would choose one of the two to serve as vice chairman. They are:
- Edward Nelson — Ed Nelson is currently the Assistant Vice President of the St. Louis Federal Reserve and is, in my opinion, one of the best and most active monetary economists in the field. Nelson’s research displays not only rich, modern insights, but also an appreciation of previous work in monetary economics that seems to have fallen out of the consciousness of most of monetary theory. He recognizes that monetary aggregates are useful for policy. In addition, he has written on nominal income targeting (something I like) and has done extensive research on the Great Inflation.
- Michael Woodford — This pick will likely surprise those who know me well because I absolutely deplore the cashless approach to monetary policy analysis that Woodford pioneered. However, Woodford is the premier monetary theorist of the day, an independent thinker, and, most importantly, he has a forward-looking viewpoint of monetary policy (something that would please Scott Sumner).