Now this is a good question: What do economists do? The Federal Reserve System is a good place to ask since the Fed is likely the largest single employer of economists in the nation.
Let's start at the top, with the Board of Governors of the Federal Reserve System. At the beginning of February 2006, four of the five Fed governors (there were two open positions at the time) had PhDs in economics and had worked either as economists or as professors of economics, or both. Of course, one of those individuals is the new Fed Chairman, Ben Bernanke, a former professor of economics at Princeton University.
Among the twelve Federal Reserve Bank District presidents, at press time all had advanced degrees in economics or business, and seven had PhDs in economics. Most have worked as economists and many have academic experience as well.
The Board employs over 200 economists and almost all have doctorate degrees in economics. Let's look at some excerpts from the Board's career opportunity website, which describes the position:
Economists at the Board of Governors, located in Washington, D.C., conduct economic research and policy analysis on domestic and international issues.
The Work Environment
The Board has a strong, stable, and highly regarded professional staff. The staff's reputation has been built on a solid record of state-of-the-art research disseminated in Board publications and outside journals and through careful analysis and forecasting in support of policymaking.
The Focus of Activities
Basic economic research is an important activity of the divisions. Board economists produce numerous working papers and also are among the leading contributors of papers delivered at professional meetings or published in major journals. An activity less publicly visible but crucial is the economic forecasting and policy analysis that the research divisions produce for internal use by the Board of Governors and the Federal Open Market Committee (FOMC).
Research subjects range from macro to micro issues and also include economic modeling and the economics of regulation. The Divisions of Research and Statistics and Monetary Affairs maintain a number of major statistical programs, producing data on the money stock, commercial banking, the flow of funds accounts, and industrial production and capacity utilization and from several microeconomic surveys. International Finance is responsible for basic research, policy analysis, and reporting in the areas of foreign economic and financial developments, U.S. external trade and capital flows, and developments in international financial markets.
Staff members aid the members of the Board in preparing congressional testimony and other presentations. In addition, the staff represents the Board in interagency activities and at international meetings; it also provides technical assistance and works in other ways with foreign central banks.
Each of the twelve Federal Reserve Banks also has a staff of economists to advise and support the Bank president's monetary policy decisionmaking and contribute to their understanding of the economy. Like the Board, today nearly all these economists have PhDs.
The Fed is an interesting and rewarding place to work as an economist. Economists analyze and research a variety of interesting economic issues, ranging from the growth of the economy and employment to inflation. In order to understand the performance of the economy and monetary policy, economists review a wide array of economic indicators, develop models of economic behavior for the U.S. economy, or study monetary policy issues. What are some of a Fed economists' typical types of assignments?
- Briefings for senior management. Economists continually prepare briefings for senior management and the board of directors on national, financial, international, and regional economic conditions. They use a wide variety of economic and financial data, survey results, and economic models understand how the economy works, or in some cases, doesn't work.
- Preparing and analyzing economic forecasts. Some economists prepare and analyze economic forecasts. The San Francisco Fed regularly posts a current national economic forecast, called FedViews, on its website.
- Conducting research. Bank economists conduct basic research on a variety of economic topics. Economists might focus on areas like productivity and innovation—their research might appear on the website for the Center for Study of Innovation and Productivity, or international economic issues—their research may be found on the Pacific Basin Center website.
Some of the San Francisco Fed's economic research products are available online. Results of many of the research projects Fed economists study are published in academic journals, in the working paper series, or the Economic Letter.
- Informing the public. Economists also support the Fed's key objective of informing the public about monetary policy by providing official testimony, speeches, and information. In addition to public presentations, economists provide a wealth of information about the Fed, the economy, and monetary policy that is available to the public on Federal Reserve websites. Fed economists also contribute to economic education materials, like "Ask Dr. Econ" and others posted on the San Francisco Fed's Educational Resources website.
Informing the Public Through a Variety of Presentations
In addition to briefing management and directors on the economy, Bank economists often speak at conferences or to business, government, or college audiences. Economists often are asked to speak about topics that they are researching or about current issues affecting the economy.
- Speeches by Janet Yellen, President and CEO of the Federal Reserve Bank of San Francisco, as well as a prominent economist, are posted on the San Francisco Fed's website. Speeches by members of the Board of Governors can be found on the Board of Governors' website. These speeches are a great way to find out what monetary policymakers are thinking about about monetary policy and the economy.
- At the San Francisco Fed, the most frequently requested topic for presentations by Bank economists is a current economic outlook for the national economy. The typical economic outlook presentation might be a 30-60 minute slide show and discussion of the economy that includes a review of current economic indicators and conditions, a comparison of recent economic forecasts, comments on potential risks to the forecast, and time for questions and answers.
- Interested in requesting a speaker? You may request a Fed speaker online at many Federal Reserve Bank websites. If you are located in one of the nine western states that make up the Twelfth Federal Reserve District (Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah, and Washington), make a request online.