Federal economists’ party affiliations and alleged political homogeneity

from Independent review Article by Emre Force:

… Research and speeches by Fed economists increasingly focus on climate change, gender, race, and inequality (Toomey 2021). Regional Federal Reserve Banks and the Federal Reserve Board of Governors have held numerous seminars and conferences and published research papers on politically charged topics.

I wondered how damning that statement was. Obviously, former Sen. Tommy is furious. The Federal Reserve Bank is responsible for conducting monetary policy, but it is also partly responsible for regulating the financial system. It seems to me that climate change (increasing incidence of weather events, resulting in economic damage and challenges for insurance companies) would be nothing to worry about. Inequality is something that has an effect on the transmission of monetary policy (think wealth inequality, or access to financial services such as banking). What about gender and race? We know that pay varies by gender and race, and cannot be fully explained by other covariates such as education; We should not care less about whether markets are doing well, in order to know whether either monetary policy is working effectively across demographic groups. At the very least, it’s interesting—for example—that women usually have higher ratings of inflation than men. I do not think it is dangerous to investigate such a phenomenon.

Another point made by Dr. Kovvitt is that the Fed is biased toward Democrats, even more so than the public economist profession (I’m talking about rank-and-file economists, not those who take the lead like council governors). I certainly wonder about the comparison with the general economics profession – surely you have to rely on the limits placed on the ‘economics profession’. I’m also curious about the statistical significance (Kuvvet reports estimates of the Democrat/Republican ratios, but one might want to know the confidence intervals for the ratio in the public profession, and for the Fed in general, and see if the confidence intervals overlap). But I also expect that Fed economists lean more Democratic than Republican, and more so over time. After all, Republicans have moved away from many of the traditional beliefs of their past, such as balanced budgets, central bank independence, free trade policy and, in the Trump era, belief in data and experience. In that environment, I would expect a flight from the Republican Party, as in Zingher (2020) (although not, as I emphasized, conservative economic thought).

Anyway, here’s the data Kuvvet collects regarding affiliations to the Federal Reserve, and seven of the 12 regional Fed banks (SF, Dallas, Philadelphia, Boston, Atlanta, New York, Cleveland; missing St. Louis, Kansas City, Minneapolis, Richmond, and Chicago) .

Source: Strength (2022), Table 2.

I have to say, looking at Kuvvet 2’s table and derived graphics, it seems to me that there is some uncertainty about party affiliations. Looking at the Board of Governors in Washington, D.C., one can see the largest “unregistered” category. This is true for the sum of the board and seven of the 12 regional federal banks. If there is any political homogeneity, I’m hard pressed to see it in these stats as reported.

I’m also hard-pressed to see the increasing uniformity over time, from personal experience. 32 years ago, I interviewed on the board of directors, two Federal Reserve banks. This isn’t an incredibly large sample, but at least I have one. I was amazed at how much heterogeneity there was, at least in terms of economic arguments and worldviews (I’m never asked about politics, obviously, so I don’t know about that). It was also very racially and ethnically homogeneous. It’s hard for me to see how homogeneous it is more In the 32-year interval.

Speaking of party affiliations and worldviews, have you ever wondered who thought about overlapping contracts, which are a key concept of neo-Keynesian economics? One of them was John Taylor. Have you ever wondered who brought up menu costs as a component of New Keynesian economics? Greg Mankiw. I’m sure they’re both still Republicans.

to update:

The Department of Defense has a report, Climate Risk Analysis (2021 edition). Do I wonder about the political affiliations of defense officials that influence their views on global climate change, and its importance in protecting US national security. See more here and here.

Previous report from 2019.

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