Fed Nominee Knows How to Put Theory to Work ; Fischer's Academic Work Has Helped Guide Current Activist Monetary Policy

By Appelbaum, Binyamin | International New York Times, March 13, 2014 | Go to article overview

Fed Nominee Knows How to Put Theory to Work ; Fischer's Academic Work Has Helped Guide Current Activist Monetary Policy


Appelbaum, Binyamin, International New York Times


Stanley Fischer, the nominee for vice chairman of the Federal Reserve, has been an influential academic as well as head of the Bank of Israel.

Stanley Fischer has worked for much of his professional life to improve economic policy in the developing world. Now he is on the verge of a new role in a country with plenty of economic problems of its own: the United States.

Mr. Fischer, nominated by President Obama to serve as vice chairman of the Federal Reserve, is likely to move quickly through a confirmation process that begins with a hearing before the Senate Banking Committee on Thursday morning.

Assuming Mr. Fischer successfully negotiates that gantlet, he would join Janet L. Yellen, the Fed's new chairwoman, in the difficult work of figuring out how much more the Fed can do to help the economy recover. Ms. Yellen proposed his selection to the White House.

Mr. Fischer has supported the efforts by the Fed and other central banks to revive economic growth, but he has also described the benefits as limited. "You could do a lot with monetary policy, but you couldn't get the economy growing fast again," he said on Bloomberg Television in September. "You needed fiscal policy."

Genial, courtly, self-effacing, Mr. Fischer is skilled at making sharp points without making enemies.

Lawrence H. Summers, a former Treasury secretary, suggested at a conference in November held by the International Monetary Fund in Mr. Fischer's honor that there were fewer financial crises in the decades after World War II because people acted prudently.

"Larry," Mr. Fischer responded, "I wonder whether the 35 years after World War II had something to do with the fact that financial liberalization hadn't yet happened."

Mr. Fischer, now 70, is a widely respected figure in the world of economic policy. His academic work in the 1970s helped to provide the intellectual justification for the activist monetary policy being pursued today. His students included the recently retired Fed chairman, Ben S. Bernanke, and Mario Draghi, head of the European Central Bank.

He subsequently began a career in policy making, including a stint as second-in-command at the International Monetary Fund during the 1990s and, most recently, an eight-year run as governor of the Bank of Israel, a job he left in June.

Along the way, Mr. Fischer, who was born into a family of shopkeepers in a small town in present-day Zambia, in a home without running water, amassed a fortune as the author of a best-selling economics textbook and a senior executive at Citigroup.

In December, Mr. Fischer disclosed assets worth $14.6 million to $56.3 million, including a residence in New York worth at least $5 million. He said that he would divest some stock and investment holdings if he were confirmed.

Mr. Fischer has said that his upbringing in Mazabuka, then part of the British colony of Northern Rhodesia, imbued him with a passion for economic development.

"One of the things that got me interested in economics, peculiarly, was that Dag Hammarskjold was an economist," Mr. Fischer recalled in a 2004 interview with his friend Olivier Blanchard, now the chief economist at the I.M.F. "When I was in high school, Dag Hammarskjold was this great man. Then he was killed in the then-Belgian Congo, right next door. I knew he had done good in the world and my parents had brought me up to believe I should do good in the world. I realized that economics would help you do good."

Mr. Fischer came to the United States in the late 1960s to pursue a doctorate at the Massachusetts Institute of Technology, then spent nearly two decades there as a professor of economics. …

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