According to the Star-Tribune, the Minneapolis Fed says, Avast, ye mateys, to two of its star economists;
A shake-up in the top ranks of the Federal Reserve Bank of Minneapolis is prompting sharp questions about whether the bank is straying from the collegial tradition that built its reputation for world-class economic research.
Two high-profile economists who differed philosophically with President Narayana Kocherlakota have been shown the door in recent weeks, while the research director was moved to a different position.
The changes have raised eyebrows in the small, interconnected world of academic economics, with some suggesting they could hamper the local Fed’s ability to retain top-flight talent.The betting seems to be that Kocherlakota's change of approach, regarding the efficacy of Quantitative Easing to fight the recession, explains the change. Nobel Prize winner Ed Prescott isn't happy;
“Something very good is breaking down rapidly. Will something new rise out of the ashes? I think that’s what Narayana hopes, but I’m not optimistic.”
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