|15th Vice Chair of the Federal Reserve|
June 27, 1994 –January 31, 1996
|Preceded by||David Mullins|
|Succeeded by||Alice Rivlin|
|Member of the Federal Reserve Board of Governors|
June 27,1994 –January 31,1996
|Nominated by||Bill Clinton|
|Preceded by||David Mullins|
|Succeeded by||Alice Rivlin|
New York City,New York,U.S.
|Education|| Princeton University (BA)|
London School of Economics (MS)
Massachusetts Institute of Technology (PhD)
|New Keynesian economics|
|Information at IDEAS / RePEc|
Alan Stuart Blinder ( // ,born October 14,1945) is an American economist and the Gordon S. Rentschler Memorial Professor of Economics and Public Affairs at Princeton University who served as the Vice Chair of the Federal Reserve from 1994 to 1996.
Blinder is among the most influential economists in the world according to IDEAS/RePEc.
He served on President Bill Clinton's Council of Economic Advisers from January 1993 to June 1994and as the Vice Chairman of the Board of Governors of the Federal Reserve System from June 1994 to January 1996. Blinder's academic work has focused particularly on monetary policy and central banking, and on the "offshoring" of jobs. His writing has been published in The New York Times , The Washington Post ,as well as a monthly column in The Wall Street Journal .
Regarding the financial crisis of 2007–2008,Blinder drew ten lessons for fellow economists,including:"It can happen here," "Fraud and near-fraud can rise to attain macroeconomic significance," "Excessive complexity is not just anti-competitive,it's dangerous," and "Go-for-broke incentives will induce traders to go for broke."
Blinder was born to a Jewish familyin Brooklyn,New York. He graduated from Syosset High School in Syosset,New York. Blinder attended Princeton University as an undergraduate student and graduated summa cum laude with a B.A. in economics in 1967. He completed a 130-page long senior thesis,titled "The Theory of Corporate Choice". He received an MSc in economics from the London School of Economics in 1968 and received a doctorate in economics from the Massachusetts Institute of Technology in 1971. He was advised by Robert Solow.
Blinder is the Gordon S. Rentschler Memorial Professor of Economics and Public Affairs at Princeton where he has been since 1971;from 1988 to 1990,he chaired the economics department. [ citation needed ]Also in 1990,he founded Princeton's Griswold Center for Economic Policy Studies. And he has served as vice-chair of The Observatory Group.
Since 1978,Blinder has been a Research Associate of the National Bureau of Economic Research.He is a past president of the Eastern Economic Association and Vice President of the American Economic Association and was named a Distinguished Fellow of the latter in 2011. He is a Fellow of the American Academy of Arts and Sciences (since 1991),a member of the American Philosophical Society since 1996,and a member of the board of the Council on Foreign Relations (since 2008). Blinder's textbook Economics:Principles and Policy,co-written with William Baumol,was first published in 1979 and,in 2012 was printed in its twelfth edition.
In 2009 Blinder was inducted into the American Academy of Political and Social Science,"for his distinguished scholarship on fiscal policy,monetary policy and the distribution of income,and for consistently bringing that knowledge to bear on the public arena." [ non-primary source needed ] Blinder has been critical of the public discussion of the US national debt,describing it as generally ranging from "ludicrous to horrific".He is a strong proponent of free trade.
Blinder served as the Deputy Assistant Director of the Congressional Budget Office (1975),on President Bill Clinton's Council of Economic Advisers (January 1993 - June 1994),and as the Vice Chair of the Federal Reserve from June 27,1994,to January 31,1996. As Vice Chairman,he cautioned against raising interest rates too quickly to slow inflation because of the lags in earlier rises feeding through into the economy. He also warned against ignoring the short term costs in terms of unemployment that inflation-fighting could cause.
Many have argued that Blinder's stint at the Fed was cut short because of his tendency to challenge chairman Alan Greenspan:
[Economist] Rob Johnson, who watched the Blinder ordeal, says Blinder made the mistake of behaving as if the Fed was a place where competing ideas and assumptions were debated. "Sociologically, what was happening was the Fed staff was really afraid of Blinder. At some level, as an applied empirical economist, Alan Blinder is really brilliant," says Johnson.
In closed-door meetings, Blinder did what so few do: challenged assumptions. The Fed staff would come out and their ritual is: Greenspan has kind of told them what to conclude and they produce studies in which they conclude this. And Blinder treated it more like an open academic debate when he first got there and he'd come out and say, 'Well, that's not true. If you change this assumption and change this assumption and use this kind of assumption you get a completely different result.' And it just created a stir inside – it was sort of like the whole pipeline of Greenspan-arriving-at-decisions was disrupted.
This put him in conflict with Greenspan and his staff. "A lot of senior staff ... were pissed off about Blinder – how should we say? – not playing by the customs that they were accustomed to," Johnson says.
He was an adviser to Al Gore and John Kerry during their respective presidential campaigns in 2000 and 2004.
Blinder was an early advocate of a "Cash for Clunkers" program, in which the government buys some of the oldest, most-polluting vehicles and scraps them. In July 2008, he wrote an article in The New York Times advocating such a program,which was implemented by the Obama administration during the summer of 2009. Blinder asserted it could stimulate the economy, benefit the environment, and reduce income inequality. The program was praised by President Obama for "exceeding expectations," but criticized for economic and environmental reasons.
Blinder was a co-founder and a vice-chair of the Promontory Interfinancial Network, LLC.[ citation needed ]
After his service as the vice chairman of the Federal Reserve, Blinder, along with several former regulators, founded a company that offers a number of services that provide a means for depositors (including governmental entities, nonprofits, businesses, as well as individuals such as retirees) to access millions in Federal Deposit Insurance Corporation (FDIC) coverage at a single institution instead of multiple ones.[ citation needed ] This provides banks that are members the ability to offer coverage above the FDIC per account/per bank limit by letting those banks place funds into CDs or deposit accounts issued by other network banks. This occurs in increments below the standard FDIC insurance maximum ($250,000) so that both principal and interest are eligible for FDIC insurance. The company acts as a sort of clearinghouse, matching deposits from one institution with another. Through its services it allows access to higher levels of FDIC insurance although limits apply.
Blinder draws 10 lessons for fellow economists in an article entitled "What Did We Learn from the Financial Crisis, the Great Recession, and the Pathetic Recovery?": [ non-primary source needed ]
1) It can happen here.
2) Hyman Minsky was basically right. " . . The financial world envisioned by Minsky is different in every respect from the EMH [Efficient Markets Hypothesis] paradigm. While the good times are rolling, people forget the bitter lessons of the past. (“This time is different.”) So financial excesses grow more, not less, severe as the bubble progresses—creating greater vulnerability to shocks and more damage when the crash comes. The crash itself always seems to come as a surprise; and after it, sentiment swings radically in the other direction. People shun risk, pessimism rules, and the economy struggles. . "
3) Reinhart-Rogoff recessions are worse than Keynesian recessions. " . . Reinhart-Rogoff recessions destroy parts of the financial system and leave much of the rest reeling—and needing to deleverage. All of that stunts and delays recovery. Reinhart-Rogoff recessions also leave large buildups of debt—financial sector debt, corporate debt, household debt, and public debt—in their wake. . "
4) Self-regulation is oxymoronic.
5) Fraud and near-fraud can rise to attain macroeconomic significance.
6) Excessive complexity is not just anti-competitive, it's dangerous.
7) Go-for-broke incentives will induce traders to go for broke.
8) Illiquidity closely resembles insolvency. Blinder asks, Was the situation with Bear Stearns, which was saved in March 2008, really so different from the situation with Lehman Brothers, which was allowed to go bankrupt in September 2008?
9) Moral hazard isn't a show-stopper, it's a tradeoff.
10) Economic illiteracy can really hurt.
Keynesian economics are the various macroeconomic theories and models of how aggregate demand strongly influences economic output and inflation. In the Keynesian view, aggregate demand does not necessarily equal the productive capacity of the economy. Instead, it is influenced by a host of factors – sometimes behaving erratically – affecting production, employment, and inflation.
In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending. This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock, the bursting of an economic bubble, or a large-scale anthropogenic or natural disaster. In the United States, it is defined as "a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales". In the United Kingdom, it is defined as a negative economic growth for two consecutive quarters.
In economics and political science, fiscal policy is the use of government revenue collection and expenditure to influence a country's economy. The use of government revenues and expenditures to influence macroeconomic variables developed as a result of the Great Depression, when the previous laissez-faire approach to economic management became unpopular. Fiscal policy is based on the theories of the British economist John Maynard Keynes, whose Keynesian economics theorized that government changes in the levels of taxation and government spending influences aggregate demand and the level of economic activity. Fiscal and monetary policy are the key strategies used by a country's government and central bank to advance its economic objectives. The combination of these policies enables these authorities to target inflation and to increase employment. Additionally, it is designed to try to keep GDP growth at 2%–3% and the unemployment rate near the natural unemployment rate of 4%–5%. This implies that fiscal policy is used to stabilize the economy over the course of the business cycle.
Business cycles are intervals of expansion followed by recession in economic activity. They have implications for the welfare of the broad population as well as for private institutions. Typically business cycles are measured by applying a band pass filter to a broad economic indicator such as Real Gross Domestic Production. Here important problems may arise with a commonly used filter called the "ideal filter". For instance if a series is a purely random process without any cycle, an "ideal" filter, better called a block filter, a spurious cycle is produced as output. Fortunately methods such as [Harvey and Trimbur, 2003, Review of Economics and Statistics] have been designed so that the band pass filter may be adapted to the time series at hand.
Monetary economics is the branch of economics that studies the different competing theories of money: it provides a framework for analyzing money and considers its functions, and it considers how money can gain acceptance purely because of its convenience as a public good. The discipline has historically prefigured, and remains integrally linked to, macroeconomics. This branch also examines the effects of monetary systems, including regulation of money and associated financial institutions and international aspects.
A liquidity trap is a situation, described in Keynesian economics, in which, "after the rate of interest has fallen to a certain level, liquidity preference may become virtually absolute in the sense that almost everyone prefers holding cash rather than holding a debt which yields so low a rate of interest."
John Brian Taylor is the Mary and Robert Raymond Professor of Economics at Stanford University, and the George P. Shultz Senior Fellow in Economics at Stanford University's Hoover Institution.
Kenneth Saul Rogoff is an American economist and chess Grandmaster. He is the Thomas D. Cabot Professor of Public Policy and Professor of Economics at Harvard University.
A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics. Other situations that are often called financial crises include stock market crashes and the bursting of other financial bubbles, currency crises, and sovereign defaults. Financial crises directly result in a loss of paper wealth but do not necessarily result in significant changes in the real economy.
Robert Pollin is an American economist. He is a professor of economics at the University of Massachusetts Amherst and founding co-director of its Political Economy Research Institute (PERI). He has been described as a leftist economist and is a supporter of egalitarianism.
The Deutsche Bank Prize in Financial Economics honors renowned researchers who have made influential contributions to the fields of finance and money and macroeconomics, and whose work has led to practical and policy-relevant results. It is awarded biannually, since 2005, by the Center for Financial Studies (CFS), in partnership with Goethe University Frankfurt, and is sponsored by Deutsche Bank Donation Fund. The award carries an endowment of €50,000, which is donated by the Stiftungsfonds Deutsche Bank im Stifterverband für die Deutsche Wissenschaft.
The Great Recession was a period of marked general decline (recession) observed in national economies globally that occurred between 2007 and 2009. The scale and timing of the recession varied from country to country. At the time, the International Monetary Fund (IMF) concluded that it was the most severe economic and financial meltdown since the Great Depression. One result was a serious disruption of normal international relations.
Following the global financial crisis of 2007–2008, there was a worldwide resurgence of interest in Keynesian economics among prominent economists and policy makers. This included discussions and implementation of economic policies in accordance with the recommendations made by John Maynard Keynes in response to the Great Depression of the 1930s, most especially fiscal stimulus and expansionary monetary policy.
In macroeconomics, particularly in the history of economic thought, the Treasury view is the assertion that fiscal policy has no effect on the total amount of economic activity and unemployment, even during times of economic recession. This view was most famously advanced in the 1930s by the staff of the British Chancellor of the Exchequer. The position can be characterized as:
Any increase in government spending necessarily crowds out an equal amount of private spending or investment, and thus has no net impact on economic activity.
In economics, stimulus refers to attempts to use monetary policy or fiscal policy to stimulate the economy. Stimulus can also refer to monetary policies such as lowering interest rates and quantitative easing.
Macroeconomic theory has its origins in the study of business cycles and monetary theory. In general, early theorists believed monetary factors could not affect real factors such as real output. John Maynard Keynes attacked some of these "classical" theories and produced a general theory that described the whole economy in terms of aggregates rather than individual, microeconomic parts. Attempting to explain unemployment and recessions, he noticed the tendency for people and businesses to hoard cash and avoid investment during a recession. He argued that this invalidated the assumptions of classical economists who thought that markets always clear, leaving no surplus of goods and no willing labor left idle.
Carmen M. Reinhart is a Cuban-born American economist and the Minos A. Zombanakis Professor of the International Financial System at Harvard Kennedy School. Previously, she was the Dennis Weatherstone Senior Fellow at the Peterson Institute for International Economics and Professor of Economics and Director of the Center for International Economics at the University of Maryland. She is a Research Associate at the National Bureau of Economic Research, a Research Fellow at the Centre for Economic Policy Research, Founding Contributor of VoxEU, and a member of Council on Foreign Relations. She is also a member of American Economic Association, Latin American and Caribbean Economic Association, and the Association for the Study of the Cuban Economy. She became the subject of general news coverage when mathematical errors were found in a research paper she co-authored.
Vincent Raymond Reinhart is the Chief Economist for BNY Mellon Asset Management.
The Great Recession in the United States was a severe financial crisis combined with a deep recession. While the recession officially lasted from December 2007 to June 2009, it took many years for the economy to recover to pre-crisis levels of employment and output. This slow recovery was due in part to households and financial institutions paying off debts accumulated in the years preceding the crisis along with restrained government spending following initial stimulus efforts. It followed the bursting of the housing bubble, the housing market correction and subprime mortgage crisis.
Growth in a Time of Debt, also known by its authors' names as Reinhart–Rogoff, is an economics paper by American economists Carmen Reinhart and Kenneth Rogoff published in a non peer-reviewed issue of the American Economic Review in 2010. Politicians, commentators, and activists widely cited the paper in political debates over the effectiveness of austerity in fiscal policy for debt-burdened economies. The paper argues that when "gross external debt reaches 60 percent of GDP", a country's annual growth declined by two percent, and "for levels of external debt in excess of 90 percent" GDP growth was "roughly cut in half." Appearing in the aftermath of the financial crisis of 2007–2008, the evidence for the 90%-debt threshold hypothesis provided support for pro-austerity policies.
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