The Federal Reserve’s independence shouldn’t be compromised by politicians who disagree with the central bank’s policy actions, economic advisers to President Barack Obama and Mitt Romney said in a debate tonight. Glenn Hubbard, a senior economic adviser to Romney, said he hopes “that whoever is elected president we see a cooling down of discussions” about the Fed. Jeffrey Liebman, a senior economic adviser to Obama, said research shows that countries with independent central banks have faster economic growth and less inflation than nations that don’t.
The advisers spoke at Columbia University in New York, where Hubbard is dean of the business school. Their comments were in response to a question from panelist Michael Woodford, a professor of political economics at the university.
Romney, the Republican presidential candidate, has said he wouldn’t appoint Fed Chairman Ben S. Bernanke to a third term. Hubbard said in a Reuters interview in August that Bernanke should “get every consideration” to stay on after his term expires and called him “a model technocrat.”
Hubbard said tonight that he is “personally critical of the efficacy” of the Fed’s third round of quantitative easing, announced Sept. 13, and that the central bank should “focus mainly on price stability and financial stability.” The Fed has “wound up politicizing itself a bit” as its regulatory powers have expanded, he said.
“I don’t mean that as a criticism because it was actually a necessary consequence of going through the financial crisis and taking on a lot of turf in financial regulation which definitely draws the Congress’s attention,” Hubbard said.
Liebman is a public policy professor at Harvard University’s Kennedy School of Government. He served as chief economist and later acting deputy director of the Office of Management and Budget in the Obama administration.
Congressional Republicans who seek to “intimidate the Fed” are not “helpful given the importance of independence of the Fed to the economy of the U.S.,” Liebman said.
The debate was moderated by Chrystia Freeland, global editor-at-large at Thomson Reuters Corp.