The White House is sending signals that President Barack Obama is close to nominating Janet Yellen to be the next head of the Federal Reserve.
Administration officials have begun discussing the process for nominating the next chairman with Senate officials, people familiar with the matter said. Two Democratic aides said Ms. Yellen's name has come up in at least two of those conversations, and a White House official confirmed the Fed vice chairwoman is the front-runner for the post[...]
A nominee must first clear the 22-member Senate Banking Committee, where Democrats hold a two-vote majority. Many Democrats already have expressed support for Ms. Yellen. Nonetheless, the administration can't afford to lose any Democrats if Republicans unite against the president's pick.
For the record, Yellen comes out of the "Yale school" of Keynesian macroeconomics. Her dissertation adviser was the Keynesian James Tobin. Tobin was a huge advocate of using government intervention to stabilize financial markets.
David Warsh notes:
If there’s a criticism of Yellen, other than looking like a kindly grandmother, it has to do with her identity as a product of the somewhat amorphous “Yale school” of macroeconomics. (See David Colander’s interviews in Inside the Economist’s Mind for background) A proud tradition associated with influential figures of the 1960s such as Arthur Okun, Henry Wallich and James Tobin (the Nobel laureate whose student and collaborator Yellen was), Yale macro today also includes Robert Shiller, William Nordhaus, Ray Fair and William Brainard.