Ben S. Bernanke is a superb choice to replace Alan Greenspan as chairman of the Federal Reserve, but he will have to demonstrate to financial markets that he is as much an anti-inflation hawk as his highly regarded predecessor, according to faculty members in Wharton’s finance department and private-sector economists.
These observers also say that Bernanke -- a former professor accustomed to discussing economics and monetary policy with students and others -- will speak more plainly in explaining Fed actions than Greenspan, whose cryptic, oracular comments became his trademark. Also, Bernanke is likely to establish and publicly disclose the Fed’s specific target, or target range, for the inflation rate -- a policy that Greenspan eschewed but one that is becoming more common among central bankers worldwide.
“I was thrilled [at Bernanke’s nomination by President Bush] because he’s a friend and I was just greatly relieved for the country; he was the best choice,” says professor Andrew B. Abel, co-author with Bernanke of a textbook titled Macroeconomics. Abel calls Bernanke, who taught at Stanford University and served as chairman of Princeton University’s economics department, “a very judicious, careful, thoughtful kind of person who is capable of moving an institution in ways that benefit stakeholders as he sees fit. But he will do that in a consultative, deliberate way.” Bernanke will need such talents to work with the Federal Open Market Committee, the group of officials that sets interest rates.
“I was definitely pleased,” says professor Jeremy J. Siegel, a longtime Fed watcher. “He seemed to be the favorite choice among economists and, I think, those in the market.” Professor [continue]
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