Barack Obama recently announced his nomination of Janet Yellen as the next chairman of the Federal Reserve. Though the Fed chair has always wielded extensive power, Yellen will enter the post at a particularly pivotal time in the Fed’s history: quantitative easing continues unabated, and interest rates have rested near zero for years. She will face tough policy decisions, and because of the increasing interconnectedness of the global economy, her choices will resonate far beyond the United States.
Given Yellen’s open support of Benjamin Bernanke during his tenure as Fed chair, it is likely that her policies will be similar to his. Though of course Bernanke’s primary focus was on ensuring the health of the American economy, he frequently referenced the health of the global economy, asserting that his policies simultaneously worked to ‘support’ global and domestic stability. Yellen, similarly, will not hesitate to make dramatic decisions that will impact the global economy if she believes they will stabilize the United States.
That said, Yellen, because of her academic background and her gender, is also uniquely positioned to influence international economics – as well as other fields – more broadly. In contrast to previous Fed chairs, Yellen has a deep academic interest in foreign economies. She is known for her expertise in labor markets, but one of her most influential papers focused not on domestic markets, but on the economic history of German unification. Within this influential study, she demonstrated how workers in the eastern half of the country were priced out of jobs under the terms of the reunification. This research undoubtedly augments her understanding of Germany’s current economic situation and likely also influences her view of the current struggles of peripheral Eurozone countries, who face similar basic challenges, including a loss in competitiveness and high unemployment. Thus, Yellen’s specialization may help her to more deeply understand the intricacies of foreign economics, which may in turn affect her domestic economic policies.
Yellen’s academic specialization may be of particular help to her in her relationship with another prominent female world leader, Angela Merkel, though the positions of two women also draw attention to another aspect of Yellen’s biography. If appointed Fed chair, Yellen will become a member of a newly empowered class of female political leaders, joining the ranks of such women as Karnit Flug of Israel, Elvira Nabiullina of Russia, and Christine Lagarde of the IMF, all of whom hold positions of power in a historically male-dominated field. While these three women differ greatly on matters of policy, the very fact of their holding the positions they do could inspire more countries to consider women for top economic jobs and more young girls to pursue economics as a career. Currently, at the top 100 universities, women account for just 28 percent of economics majors, with recent studies conducted at these schools attributing these statistics in part to the lack of strong female role models.
Ultimately, an understanding of the significance of Yellen’s appointment should take into account her knowledge of European economic history and her gender, both of which suggest that she is poised to have an event greater impact than just her prospective title would suggest.
Allison Lazarus (’14) is a History major in Jonathan Edwards College.