The Royal Swedish Academy of Sciences has a fantastic sense of humor.
At a time when Federal Reserve Chair Kevin Warsh has turned central bank “forward guidance” into a banned phrase, the academy awarded the Nobel Prize in economics to Michael Woodford, one of the intellectual fathers of the practice, and Robert Hall, whose research on household expectations provided a foundation for Woodford’s later research. Hopefully, the award will lead Warsh to reconsider his crusade against guidance and transparency.
Ever since he was tapped to lead the Fed earlier this year, Warsh has been adamant about the idea that the central bank should “stop talking so much.” He has repeatedly declined to provide an explanation of what the interest rate-setting Federal Open Market Committee might do in response to changing economic conditions, or what is known as the Fed’s so-called reaction function.
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.