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  • Federal Open Market Committee Minutes Show Measured Positive Outlook

    The Federal Reserve has released the minutes from the Federal Open Market Committee 's March meetings, and they read as measured, but also somewhat optimistic that slow, steady improvement will continue. Here is a key excerpt: In their discussion of monetary policy in the period ahead, members agreed that there was sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions since the inception of the current asset purchase program, members decided that it would be appropriate to make a further measured reduction in the pace of its asset purchases at this meeting. Members again judged that, if the economy continued to develop as anticipated, the Committee would likely reduce the pace of asset purchases in further measured steps at future meetings. Members also underscored that the pace of asset purchases was not on a preset course and would remain contingent on the Committee's outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of purchases. Accordingly, the Committee agreed that, beginning in April, it would add to its holdings of agency mortgage-backed securities at a pace of $25 billion per month rather than $30 billion per month, and would add to its holdings of longer-term Treasury securities at a pace of $30 billion per month rather than $35 billion per month. While making a further measured reduction in its pace of purchases, the Committee emphasized that its holdings of longer-term securities were sizable and would still be increasing, which would promote a stronger economic recovery by maintaining downward pressure on longer-term interest rates, supporting mortgage markets, and helping to make broader financial conditions more accommodative. The Committee also reiterated that it would continue its asset purchases, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. One member, while concurring with this policy action, suggested that in future statements the Committee might provide further information about the trajectory of the Federal Reserve's balance sheet, including information about when the Committee might discontinue its policy of reinvesting principal payments on all agency debt and agency mortgage-backed securities in agency mortgage-backed securities. With respect to forward guidance about the federal funds rate, all members judged that, as the unemployment rate was likely to fall below 6-1/2 percent before long, it was appropriate to replace the existing quantitative thresholds at this meeting. Almost all members judged that the new language should be qualitative in nature and should indicate that, in determining how long to maintain the current 0 to 1/4 percent target range for the federal funds rate, the Committee would assess progress, both realized and expected, toward its objectives of maximum employment and 2 percent inflation. However, a couple of members preferred to include language in the statement indicating that the Committee would keep rates low if projected inflation remained persistently below the Committee's 2 percent longer-run objective. One of these members argued that the Committee should continue to provide quantitative thresholds for both the unemployment rate and inflation. Members also considered statement language that would provide information about the anticipated behavior of the federal funds rate once it is raised above its effective lower bound. The Committee decided that it was appropriate to add language indicating that the Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run. In discussing this addition, a couple of members suggested that language along these lines might better be introduced at a later meeting. However, another member indicated that adding the new language at this stage could be beneficial for the effectiveness of policy because financial conditions depend on both the length of time that the federal funds rate is at the effective lower bound and on the expected path that the federal funds rate will follow once policy firming begins. It was also noted that the postmeeting statements, rather than the SEP, provide the public with information on the Committee's monetary policy decisions and that it was therefore appropriate for the postmeeting statement to convey the Committee's position on the likely future behavior of the federal funds rate. You can read the minutes here . Wall Street Journal reporter Victoria McGrane was looking forward to seeing the minutes after Fed officials seemed to reveal concern...
  • Yellen Stays the Course in First Congressional Hearing as Chair of the Fed

    Congress welcomed Janet Yellen to her new post as Chair of the Federal Reserve yesterday by asking her to spend six hours with them in an extended hearing on the state of the U.S. economy. Yellen did not give any signs that she will turn sharply from any Fed positions held by her predecessor, Ben Bernanke. The Fed will continue to aim to ease out of some of its quantitative easing as long as the labor market shows improvement. Here are a few key excerpts from her testimony. On the state of the economy : My colleagues on the FOMC and I anticipate that economic activity and employment will expand at a moderate pace this year and next, the unemployment rate will continue to decline toward its longer-run sustainable level, and inflation will move back toward 2 percent over coming years. We have been watching closely the recent volatility in global financial markets. Our sense is that at this stage these developments do not pose a substantial risk to the U.S. economic outlook. We will, of course, continue to monitor the situation. On monetary policy : Our current program of asset purchases began in September 2012 amid signs that the recovery was weakening and progress in the labor market had slowed. The Committee said that it would continue the program until there was a substantial improvement in the outlook for the labor market in a context of price stability. In mid-2013, the Committee indicated that if progress toward its objectives continued as expected, a moderation in the monthly pace of purchases would likely become appropriate later in the year. In December, the Committee judged that the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions warranted a modest reduction in the pace of purchases, from $45 billion to $40 billion per month of longer-term Treasury securities and from $40 billion to $35 billion per month of agency mortgage-backed securities. At its January meeting, the Committee decided to make additional reductions of the same magnitude. If incoming information broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings. That said, purchases are not on a preset course, and the Committee's decisions about their pace will remain contingent on its outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases. on strengthening the financial system : Regulatory and supervisory actions, including those that are leading to substantial increases in capital and liquidity in the banking sector, are making our financial system more resilient. Still, important tasks lie ahead. In the near term, we expect to finalize the rules implementing enhanced prudential standards mandated by section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. We also are working to finalize the proposed rule strengthening the leverage ratio standards for U.S.-based, systemically important global banks. We expect to issue proposals for a risk-based capital surcharge for those banks as well as for a long-term debt requirement to help ensure that these organizations can be resolved. In addition, we are working to advance proposals on margins for noncleared derivatives, consistent with a new global framework, and are evaluating possible measures to address financial stability risks associated with short-term wholesale funding. We will continue to monitor for emerging risks, including watching carefully to see if the regulatory reforms work as intended. Read the full speech here .
  • Bernanke Helps Open New Brookings Center for Fiscal and Monetary Policy Studies

    On Thursday the Brookings Institution opened the new Hutchins Center on Fiscal and Monetary Policy , and Ben Bernanke was one of the featured guests for the event. Bernanke spoke about the past, present, and future of monetary policy in the U.S. and the Federal Reserve in particular. With the Fed now in the early days of its centenary year, Bernanke is about to step down after being in charge for 8 challenging years. In this excerpt from his talk, Bernanke takes a moment from discussing the long view to address monetary policy during the global economic crisis, saying "we did the right thing": Here is the full talk: You can watch other sessions from the Hutchins Center launch here .
  • Marketplace Explainer: Reverse Repo

    If the economy continues its steady improvement--and especially if growth picks up the pace--the Federal Reserve will be trying to manage something a little tricky: increasing interest rates without inflation climbing. That means trying to influence important players in the financial sector who are not banks. One of the tools they will likely use is called reverse repo. Marketplace 's Stacey Vanek Smith gives a good explainer on how reverse repo works (and no, Harry Dean Stanton and Emilio Estevez are not involved).
  • Bernanke on Transparency and the Fed

    Outgoing Federal Reserve Chair Ben Bernanke spoke to members of the American Economic Association on Friday (or at least those members who were able to get to Philadelphia with all the travel disruptions). Instead of leading his address with monetary policy or economic projections, Bernanke chose to highlight what he sees as a major achievement of the Fed during his tenure: improved communication and transparency: What types of transparency are needed to preserve public confidence? At the most basic level, a central bank must be clear and open about its actions and operations, particularly when they involve the deployment of public funds. The Federal Reserve routinely makes public extensive information on all aspects of its activities, and since the crisis it has greatly increased the quantity and detail of its regular reports to the Congress and the public.3 Importantly, contrary to what is sometimes asserted, all of the Fed's financial transactions and operations are subject to regular, intensive audits--by the Government Accountability Office, an independent Inspector General, and a private accounting firm, as well as by our own internal auditors.4 It is a testament to the dedication of the Federal Reserve's management team that these thorough audits have consistently produced assessments of the Fed's accounting and financial controls that most public companies would envy. Transparency and accountability are about more than just opening up the books, however; they also require thoughtful explanations of what we are doing and why. In this regard, our first responsibility is to the Congress, which established the Federal Reserve almost exactly a century ago and determined its structure, objectives, and powers. Federal Reserve Board members, including the Chairman, of course, as well as senior staff, testify frequently before congressional committees on a wide range of topics. When I became Chairman, I anticipated the obligation to appear regularly before the Congress. I had not entirely anticipated, though, that I would spend so much time meeting with legislators outside of hearings--individually and in groups. But I quickly came to realize the importance of these relationships with legislators in keeping open the channels of communication. As part of the Fed's interaction with the Congress, we have also routinely provided staff briefings on request and conducted programs at the Board for the benefit of congressional staff interested in Federal Reserve issues. I likewise maintained regular contact with both the Bush and Obama Administrations, principally through meetings with the Secretary of the Treasury and other economic officials. The crisis and its aftermath, however, raised the need for communication and explanation by the Federal Reserve to a new level. We took extraordinary measures to meet extraordinary economic challenges, and we had to explain those measures to earn the public's support and confidence. Talking only to the Congress and to market participants would not have been enough. The effort to inform the public engaged the whole institution, including both Board members and the staff. As Chairman, I did my part, by appearing on television programs, holding town halls, taking student questions at universities, and visiting a military base to talk to soldiers and their families. The Federal Reserve Banks also played key roles in providing public information in their Districts, through programs, publications, speeches, and other media. The crisis has passed, but I think the Fed's need to educate and explain will only grow. When Paul Volcker first sat in the Chairman's office in 1979, there were no financial news channels on cable TV, no Bloomberg screens, no blogs, no Twitter. Today, news, ideas, and rumors circulate almost instantaneously. The Fed must continue to find ways to navigate this changing environment while providing clear, objective, and reliable information to the public. You can watch the full speech below:
  • The Fed's First Hundred Years

    If you are safe and warm huddling with a bunch of economists at the American Economic Association annual meeting in Philadelphia today, you may get a chance to listen to Ben Bernanke talk about the history of the Federal Reserve . If you are huddled someplace else (or maybe even are someplace warm enough that you don't need to huddle), then you can watch other employees of the Fed talk about the history of their (and our) 100-year-old institution:
  • The Fed: 100 Years Old and Flexing Its Muscles

    As the Federal Reserve wraps up its first century (the Federal Reserve Act was passed in December 1913), Greg Ip sees echos of the Washington-based battles over the role and power of the U.S. central bank from the Wilson years. Ip discusses the early days of the Fed and the power of the Fed today with his Economist colleague, Zanny Minton-Beddoes .
  • S&P's Bovino on the Reasons Behind Fed's Tapering

    By now you are likely well aware that the Federal Open Market Committee is preparing to scale back its asset purchasing program/quantitative easing. Here is a key line from the FOMC statement yesterday: In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the Committee decided to modestly reduce the pace of its asset purchases. Ben Bernanke and his colleagues at the Federal Reserve clearly see a brighter near future for the U.S. economy. To get a sense an outside perspective to what Fed leaders are likely responding, the Wall Street Journal turned to Beth Ann Bovino , chief economist for Standard and Poor's Rating Services.
  • Lawrence Summers: 'Preempting structural stagnation is profoundly important

    Writing at The Washington Post , Lawrence Summers says policymakers must preempt "structural stagnation." He seems to be concerned that there is a temptation to believe in the idea that developed economies don't need the help of monetary policy measures in order to return to "full employment and strong growth." He calls this idea "secular stagnation." Summers: My concern rests on several considerations. First, even though financial repair had largely taken place four years ago, recovery has kept up only with population growth and normal productivity growth in the United States and has been worse elsewhere in the industrial world. Second, manifestly unsustainable bubbles and loosening of credit standards during the middle of the past decade along with very easy money were sufficient to drive only moderate economic growth. Third, short-term interest rates are severely constrained by the zero lower bound: real rates may not be able to fall far enough to spur enough investment to lead to full employment. Fourth, in such situations falling or lower-than-expected wages and prices are likely to worsen performance by encouraging consumers and investors to delay spending, and to redistribute income and wealth from high-spending debtors to low-spending creditors. Read Stagflation is not our fate — unless we let it be here .
  • Foreign Banks and the Federal Funds Market

    In a post at Liberty Street Economics , Gara Alfonso , Alex Entz , and Eric LeSeur look at who is borrowing in the U.S. federal funds market, and it turns out that foreign banks are very active. In fact, foreign banks are borrowing more, in total, than domestic banks. From the post: Differences in institutional structures, as well as in regulation and requirements, may help explain why foreign banks have been more active borrowers than domestic banks in recent years. As we discuss in our previous post, trading dynamics in the fed funds market have changed following the expansion of the Federal Reserve’s balance sheet and the payment of interest on excess reserves (IOER). The increased level of excess reserves in the banking system has reduced the structural need of many institutions to borrow fed funds for cash management or funding purposes. The decline in domestic bank fed funds borrowing relative to that of foreign banks may reflect their differential access to dollar liquidity, as domestic banks typically have more access to retail deposits as well as to other sources of stable funding, such as advances from Federal Home Loan Banks. Under the new dynamics of the fed funds market, borrowing transactions can reflect arbitrage activity between fed funds rates and IOER. Borrowing institutions have an incentive to borrow fed funds at a rate below the IOER rate and then hold their borrowed funds in their reserve account to receive IOER and thus earn a positive spread on the transaction. Differences in capital requirements may make such transactions comparatively more attractive for foreign banks. A change in the calculation of the Federal Deposit Insurance Corporation (FDIC) deposit insurance fee in 2011 likely reinforced the relative attractiveness of fed funds borrowing for foreign banks (which are generally not FDIC insured) versus domestic banks. In 2011, the FDIC expanded its deposit insurance assessment base from deposits to average consolidated total assets minus average tangible equity. For domestic banks, this meant an increase in the effective cost of borrowing fed funds to arbitrage IOER since these transactions now increase their FDIC fees. In sum, to look for answers to our initial question of who’s currently borrowing in the fed funds market, we can’t just look at domestic institutions; we also have to focus our attention on foreign institutions—in particular, on European, Asian, and Canadian banks. These institutions are key players in a market that’s crucial for implementation of U.S. monetary policy. Many reasons explain their predominant role in this market, including institutional frictions and differences in regulation and requirements. More research is needed on this topic to better understand the implications of the fed funds market’s composition. Read Who’s Borrowing in the Fed Funds Market? here .
  • SF Fed Economic Letter: 'Consumer Inflation Views in Three Countries'

    Inflation expectations among consumers are a bit off of actual inflation trends, not just in the U.S. but also in other top economies. That can make the life of central bankers a little more tricky. In an Economic Letter for the San Francisco Fed , Bharat Trehan and Maura Lynch dig into the inflation expectations in Britain, Japan, and the U.S., and the gap between expectations and "relatively long-lasting shifts in the inflation rate." ...Above-target consumer expectations are ironic since the Fed and the Bank of Japan have been worrying, to different degrees, about deflation. The data also show that consumer inflation expectations are extremely sensitive to oil prices. Somewhat alarmingly, those expectations seem to be related to the level of oil prices, not the rate of change as economic theory would suggest. These two characteristics of consumer inflation expectations may be related and could arise from the way consumers form expectations. Rational inattention theory, which emphasizes the costs of processing information, suggests that households may not spend a lot of time and effort rethinking their estimate of the prevailing inflation rate (see Sims 2010). These information processing costs tend to make consumers update their inflation expectations infrequently, especially during periods when inflation is relatively stable. Moreover, instead of using sophisticated models to predict inflation, consumers are more likely to rely on a few simple rules of thumb. Because oil prices are highly volatile, one such rule of thumb could be linked to the price of oil. The apparent importance of the level of oil prices may be related to this casual way of forming expectations. Consumers may well have been feeling the pinch of rising oil prices over the past few years. In an era of stagnant incomes, they could be equating high oil prices with high inflation, an association that presumably will weaken over time. By contrast, the evidence indicates that consumers have not reacted much to central bank inflation target announcements in recent years. This insensitivity is at least partly the result of the prevailing low and stable inflation rates and could go away if the behavior of inflation changed significantly. And even if it were long-lived, the insensitivity of consumer inflation expectations to inflation targets or other central bank announcements does not mean that monetary policy cannot influence consumer behavior. There is no doubt that financial market participants react to monetary policy announcements, and those reactions often have important economic effects. As financial markets respond, the resulting changes in asset prices affect consumer behavior. For instance, if a central bank announces that it expects to ease monetary policy in the future, the currency exchange rate would probably drop. That in turn would tend to lead to higher inflation over time, which would affect consumer behavior. Read the full post here .
  • Hawks and Doves on the Marketplace Whiteboard

    Paddy HIrsch was puzzled as to why we have taken to using the hawks vs doves theme for fiscal matters. After all, unlike in foreign policy matters, the hawks in fiscal matters are the ones reluctant to take action. He sorts it all out at the Marketplace Whiteboard :
  • SF Fed Economic Letter: 'Gaug[ing] the Current Momentum of the Labor Market Recovery'

    You'll no doubt recall that the Federal Reserve Board of Governors have tied changes in monetary policy to "substantial improvement in the labor market." In an Economic Letter for the San Francisco Fed , Mary C. Daly , Bart Hobijn , and Benjamin Bradshaw examine whether there are any signs of improvement. We begin by considering a wide array of data on labor market conditions in the United States. This includes information on employment, unemployment, the rate at which people quit existing jobs, the number of people who get hired, employers’ perceptions of the ease of filling their job vacancies, and workers’ sentiment about the state of the overall labor market. Because each of these series comes from a different source, comparing them requires putting them on equal footing in terms of how they’re measured. We do this by normalizing each indicator, as well as its 6-month change, to reflect how much it deviates from its own historical average at any point in time. In particular, we perform a statistical test by measuring how many standard deviations an indicator is from its historical average. The normalized six-month change in an indicator gives us a sense of whether it has a persistently strong correlation with the unemployment rate. We call this persistence number “momentum.” Finally, to make these data easier to compare, we transform them so they all move in the same direction over the business cycle. For example, the unemployment rate tends to decline when payroll job growth increases. To make job growth move in the same direction as the unemployment rate, we change its sign. We focus on the period from January 1978 to mid-2013. Our main interest is identifying those indicators whose movements over the past six months are most highly correlated with changes in the unemployment rate in the next six months. Because we are interested in the signals these data send about improvement in the outlook for the labor market, we calculate correlations over labor market expansions only, and do not include recessions. This is important because indicators that lead the labor market during downturns are not necessarily as informative during expansions. A prime example is the number of layoffs, which helps assess the depth of a downturn but is of little use in gauging the strength of a recovery. This is because the strength of recoveries is based on the rate at which people find jobs, which can remain low for some time after layoffs have subsided (Elsby, Hobijn, and Şahin, 2013). Among the 30 indicators we analyze, six stand out as excellent predictors of future improvements in the unemployment rate. Indeed, these six predict future changes in the unemployment rate better than lagged improvements in the unemployment rate itself. These indicators are the insured unemployment rate, initial claims for unemployment insurance, capacity utilization, the jobs gap, the Institute for Supply Management (ISM) manufacturing index, and private payroll employment growth. Among these common indicators, the jobs gap is the least familiar. Taken from the Conference Board’s Consumer Confidence Survey, it measures the difference between the percentage of households that considers jobs hard to get and the percentage that considers jobs plentiful. The six indicators are listed in Table 1 in order of their predictive power for future changes in the unemployment rate, as captured by the correlation between the indicators’ momentum, and changes in the unemployment rate during the subsequent six months. These correlations are printed in boldface in the second column of the table. The unemployment rate is listed in the first row for comparison. Comparing the first row with the other rows shows that the momentum of these indicators are all more closely correlated with the future change in the unemployment rate than the momentum of the unemployment rate itself. That is, when considering the speed at which the unemployment rate will come down, changes in our six indicators are better predictors than changes in the unemployment rate. This is precisely the value of these six momentum indicators. Read Gauging the Momentum of the Labor Recovery here .
  • Tim Duy Breaks Down Minutes from 'Contentious' Federal Open Market Committee Meetings

    Back at the end of the summer, investors, economists, and those of us who watch investors and economists were waiting for the Federal Reserve 's next big step: pulling back from the quantitative easing program and tapering off asset purchases. So we waited for the September Federal Open Market Committee meeting. And nothing happened. The minutes from the meeting were released yesterday, and it appears it was quite a discussion. Noted Fed watcher Tim Duy synthesized the "contentious meeting," and breaks down the debate. Here is a key excerpt. Policy hawks likely saw everything moving in their direction at the September FOMC meeting began. To be sure, the data was marginal. But the markets were fully expecting a small taper! The FOMC was getting a free pass for a small taper. They could match the taper with a dovish statement, and market participants would eat it up with a smile. The timing would never be better. But the dove didn't roll over: In general, those who preferred to maintain for now the pace of purchases viewed incoming data as having been on the disappointing side and, despite clear improvements in labor market conditions since the purchase program's inception in September 2012, were not yet adequately confident of continued progress. Many of these participants had revised down their forecasts for economic activity or pointed to near-term risks and uncertainties. The fight must have been, as far as recent FOMC meetings are concerned, bordering on epic. Hawks responded forcefully: The participants who spoke in favor of moderating the pace of securities purchases at this meeting also cited the incoming data, but viewed those data as broadly consistent with the Committee's outlook for the labor market at the time of the June FOMC meeting when the contingent expectation that the pace of asset purchases would be reduced later in the year was first presented to the public. Moreover, they highlighted what they saw as meaningful cumulative progress in labor market conditions since the purchase program began. Those participants generally were satisfied that investors had come to understand the data-dependent nature of the Committee's thinking about asset purchases, and, because they judged that the conditions laid out in June had been met, they believed that the credibility of the Committee would best be served by announcing a downward adjustment in asset purchases at this meeting. With the markets apparently viewing a cut in purchases as the most likely outcome, it was noted that the postponement of such an announcement to later in the year or beyond could have significant implications for the effectiveness of Committee communications. In particular, concerns were expressed that a delay could potentially undermine the credibility or predictability of monetary policy by, for example, increasing uncertainty about the Committee's reaction function and about its commitment to the forward guidance for the federal funds rate, with the result of an increase in volatility in financial markets. Moreover, maintaining the pace of purchases could be perceived as a sign that the FOMC had turned more pessimistic about the economic outlook. And, probably most frightening to hawks, they saw that the door was about to close on tapering in the near term: Finally, it was noted that if the Committee did not pare back its purchases in these circumstances, it might be difficult to explain a cut in coming months, absent clearly stronger data on the economy and a swift resolution of federal fiscal uncertainties. It's not just difficult to explain a cut in the coming months. It just isn't going to happen. Stronger data? We no longer have any of the most important data. Swift resolution of fiscal uncertainties? That battle is even bloodier than that within the Fed. Moreover, the impending leadership change also argues for delaying tapering until 2014. Unless the economy lurches upward, what exactly is the reason to pull the trigger on tapering before the March FOMC meeting, after which future Chair Janet Yellen will lead a press conference? None, really. Read FOMC Minutes Overtaken by Events here .
  • Janet Yellen's Undergraduate Years Provided Clues to her Potential as an Economic Thinker

    All the top news outlets are putting (mostly) helpful biographies of Janet Yellen , who appears to be the President's nominee for Federal Reserve chair. We like the report put together by Brittany Nieves , in the Brown Daily Herald . It provides some deep background on Yellen from her days as an undergraduate econ major at Brown University, where, according to a couple of her teachers, she was a star student. Yellen started her pursuit of economics at Brown in 1963, graduating summa *** laude in 1967. “She was the star of the class,” said Jeff Koshel MA’67, who was a teaching assistant for one of Yellen’s economics classes. Yellen demonstrated prescient analysis in her writing for the course, Koshel said. “The argument (for one of her papers) is that if you had a currency area that would allow some country or geographic region to change its exchange rates, it could increase trade,” Koshel said. “At the time, I couldn’t quite get my head around it, but she wrote a very thoughtful, really theoretical paper, and 35 years later, everyone is talking about how if Greece had the ability to change its exchange rates, it could probably get out of its economic slump more easily than being tied to the Euro.” Yellen always went a step beyond the required work, Koshel said, adding that she would complete all the required questions on exams and then would proceed to discuss several other topics in the area. “It was kind of striking because it was something I never did on exams,” Koshel said. “I’d answer the question as best I could, but I never went beyond it. You really have to know a lot to put a question in context, and that’s what she did. I was always very impressed with her.” When Yellen attended Pembroke College the University’s fledgling economics department had only eight people, said Jim Hanson, an economics professor at Brown in 1964. Both professors and students of the 1963-1967 economics department said they remembered Yellen’s accomplishments in the classroom and the diligence with which she approached her work. “She was certainly the best undergraduate student I ever had,” said Hanson, who taught at Brown until 1980. Read Fed chair candidate could bring Brown to DC here . Want to go back even farther? Business Insider spoke with some of Yellen's high school classmates . (We learned of the Brown Daily Herald article from the New York Times reporter Sarah Wheaton , who has posted a good reading list on Yellen at the Economix blog .
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