This post pulls together and recaps last night’s tweets.
I was really struck by reading this document from the St Louis Fed, reflecting back solemnly on the culture of research first launched by Homer Jones in the 1960s. It articulates what I think myself, only much better. The essence is to give people time to do ‘undirected research’. Trusting those at the frontier to define the right questions, answer them, and thereby keep themselves at it, perhaps even pushing the frontier back.
It’s the culture that the current St Louis Fed President James Bullard was nurtured in himself, and one that eventually launched him onto the FOMC.
I’d add a silent rider to that document. Which is that the ‘direction’ comes at the point of hiring. Choosing people gripped with the same compulsive fascination with monetary macroeconomics (for example) you have yourself, guessing that their undirected nose-following will lead them just where the central bank should be going.
You might wonder whether the Bank of England is embarked on its own enlightened relaunch of research under the banner of Andrew Haldane’s ‘cultural revolution’. It may. But there are a few reasons why this would constitute an amazing departure from the past.
First, recapping on my previous post, despite the intention for the new research to be free of the need to toe the existing policy line, and for authors to be free [perhaps even compelled!] to ‘challenge the orthodoxy’, I noted that Andy himself was one of the most vigorous and risk averse content policemen in the Bank. So this is a case of poacher turned gamekeeper.
Second, the new ‘research hub’. This could not have existed prior to the departure of Mervyn King, Charlie Bean, Spencer Dale and others, because there was almost visceral objection to the idea of ring-fencing researchers inside their own managerial unit. To be fair, there were discouraging examples that could be cited. But even referring obliquely to the possibility in a conversation about management strategy was enough to mark one out as a contributor to be ignored. So much the better then, that the hub now exists with Carney’s new regime. But, note that Andy himself was as energetic in his objections to this idea as the others. So the new ‘research hub’ is overseen by its prime opponent. Should be interesting!
Third, the observant will note that the BoE are in the middle of a research hiring frenzy looking for PhDs. Well, there’s an irony in that too. As I remarked on Twitter, the very senior management view of PhD’s, subscribed to and espoused by Andy, might be summed up as follows: 1) the only PhDs we [BoE] can attract do research we don’t really want anyway, bar the occasional fluke and 2) the purpose of early years research is to find a way to co-opt the very small minority of PhDs we do want into policy work. To turn them, in other words, from an activity that is useless, to something we can use. I wonder, has there been another 180 degree turn on this view too? (That would be something to celebrate).
Fourth, in stark contrast to the St Louis Fed model, Andy himself saw the pursuit of research to journal publication as pointless, and something the Bank should not sponsor, as those who attended his internal talks on ‘research in the Bank’ in the past will testify. [I didn’t, but I had to spend several hours of my own time reassuring unnerved researchers that the Haldane view would not ruin their career plans]. I wonder, is this part of the new philosophy of the research hub too, or communicated as they are hiring new PhDs? Or has there been another 180 degree turn? If the latter, great.
Fifth, Andy had a veritable distaste for RBC/DSGE, financial frictions or no. This is not at all inconsistent with the way the new research activity is being launched. Which is going to be about ‘challenging orthodoxy’. And I imagine that many would celebrate this. However, rights and wrongs of this debate aside, I wonder how many of the recent or soon to be hires who have made this skill set their raison d’être know that what they are do is or at least was viewed as a blind alley?
Who knows if these aspects of the old Bank of England will cast a shadow over its exciting-sounding future. I hope not.