Janet Yellen’s hearing before a Senate committee will have plenty of talk of economic policy, and maybe some talk of birds, as well.
The current Fed chairman, Ben Bernanke, is a dove. His predecessor, Alan Greenspan, was dove-ish. But Paul Volcker? He was a hawk when he led the Fed from 1979 to 1987.
To find out the difference between hawks and doves, I went in search of a really rare bird: Donald Marron, an economist and a birdwatcher, who said the hawk and dove dichotomy has been around for decades.
“Doves are the bird of peace, and hawks have talons and are, you know, the violent ones,” Marron explains.
In monetary policy, hawks have a laser-like focus on inflation. Keeping that under control is one of the Fed’s two mandates. And doves? They’re concerned with the other mandate.
“The dove, being a little bit softer, might be more concerned about what is going on in labor markets, the rate of growth, and the unemployment rate,” says Paul Wachtel, a professor of economics at NYU’s Stern School of Business.
Doves are not happy, because unemployment is at 7.3 percent. And hawks? As Wachtel puts it, “there aren’t too many hawks out there nowadays.”
That’s because inflation right now is really low.
“The concern of a hawk today would be more that the Fed’s easy monetary policy is distorting asset markets,” says Phillip Swagel, a public policy professor at the University of Maryland.
The Fed has been buying bonds to push interest rates down, and that is something that makes hawks skittish.
David Blanchflower teaches economics at Dartmouth, and he says a good Fed policymaker – whether a hawk or a dove – keeps an open mind.
“When the economy gets back to normal, and when we start to see a rise in inflation eventually, then the focus will have to move away from the employment part of the mandate to the inflation part of the mandate.”
Janet Yellen could be considered a good example of this. Called a hawk in the nineties, now she is considered a dove.
Blanchflower says the bird analogies don’t stop here. He was called an “uber dove” when he was on the Bank of England’s monetary policy committee.
“People there actually classified a third type, which were people who sat on the fence in the middle, and were called pigeons.”
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