Tiger of the Week Tiger of the Week: Narayana Kocherlakota '83

In 2011, the Federal Reserve will make several important decisions on how to move forward in the midst of a slow economic recovery, and according to The New York Times, Princeton graduate Narayana Kocherlakota ’83 will be one of the key players in that process.

 

Kocherlakota, the president of the Federal Reserve Bank of Minneapolis, recently became one of the 12 voting members of the Federal Open Market Committee. Fed watchers have been following his words to glean opinions on policy issues, and he has taken the sort of explanatory approach one might expect from a longtime professor. For instance, in a Nov. 18 speech he took a detailed look at quantitative easing, a tool the Fed can use to lower long-term interest rates. Kocherlakota concluded that quantitative easing “is a move in the right direction” but added that “there are good reasons to suspect that the ultimate effects … are likely to be relatively modest.”

 

Kocherlakota earned his A.B. in mathematics at age 19 and received a Ph.D. in economics from the University of Chicago four years later. His most recent academic research has included important theoretical work on optimal taxation, and when he was appointed to his Fed post in 2009, Nobel laureate Robert Lucas told The Wall Street Journal that Kocherlakota is “probably the most abstract thinker ever to head a Federal Reserve bank,” adding that his approach could be useful at a time when many are questioning the conventional wisdom about financial markets.

 

Though Kocherlakota has spent most of his career in academia, he also has deep ties to the Minneapolis Fed, beginning in 1996, when he started a two-year stint as one of the bank’s research economists. From 1999 to 2009, he served as a consultant to the bank while teaching at Stanford University and the University of Minnesota, and in September 2009, he began his term as president of the Minneapolis Fed.