PREFERENCES FOR FED CHAIRMEN: FERRETING FOR FOLKLORE

In introductory macroeconomics students first learn of the role of the Federal Reserve in the inflationary scheme of things. This usually involves a discussion of monetary policy and, in general, its recent failings. At lecture's end, the most pessimistic student (probably the most attentive) queries whether there has ever been, in the eyes of the profession, a good chairman given his significant role in monetary discipline. This lecture is given near the end of the term by which time students have tired of the answer 'it depends' or 'yes and no' or 'normative questions have many answers,' and also by which time the instructor has tired of answering 'it depends' or 'yes and no' or 'normative questions have many answers.' Thus, a likely reply might be, "Since the fifties, and judging by each chairman's inflation record, one might rank Martin first, Burns second, and Miller third. The jury is still out on Volcker." (The latter remark is made to keep the student from adopting a doomsday attitude prior to the final exam.) The student basks in the precision, and acts as if his utility has been maximized by appearing tangential.