According to an article published today at the Wall Street Journal,"Mr. Stanley Fischer's record shows he has supported an activist central bank in the past to help the economy, even though he has expressed some skepticism about the Fed's vigorous efforts to spur growth and bring down unemployment in recent months".
''In 1977, Mr. Fischer wrote a seminal research paper laying out the case for an activist monetary policy to counter short-run economic downturns. The paper was a counterpunch at University of Chicago economists who saw government intervention as ineffective and became a key part of his world view as a policy maker''.
''Mr. Fischer taught at Chicago in the early 1970s, but with the 1977 paper he became a leader in the "New Keynesian" academic movement, which accepted some Chicago arguments but still saw a role for government intervention.
In the 1990s, as the deputy director of the International Monetary Fund, Mr. Fischer helped build what came to be known as the "Washington Consensus" on economic policy, which called for flexible exchange rates, free capital flows between countries and balanced budgets.
Critics on the right said the IMF was too quick to intervene in countries jarred by market instability during this period. Critics on the left said the IMF demanded overly harsh policies, such as interest-rate increases and spending cuts in economies in Latin America, Asia and Russia when it did intervene to stabilize them.
In one instance Mr. Fischer persuaded reluctant finance ministry officials to buy corporate bonds to ease volatile swings in Israeli corporate debt markets spurred by real estate companies with activities in distressed housing markets abroad.
"We believed that more intervention would be bad for the economy and send a bad signal to the markets," said Yoram Ariav, a former director general of the Israeli finance ministry. "He wasn't a decision maker, but we adopted his view. It was his knowledge and experience, because he was very calm."
Mr. Fischer wasn't universally beloved in Israel.
His most consistent detractor, Yaron Zelekha, a former accountant general in the Israeli Finance Ministry, said Mr. Fischer didn't raise interest rates soon enough, thus contributing to a real-estate bubble in Israel".
Shlomo Maoz, chief economist at the Excellence investment house, said Mr. Fischer's efforts to restrain the housing market by tightening controls on mortgage lending had a minimal impact.
Speaking at a conference in Israel earlier this week, Mr. Fischer said Israeli authorities should be more focused on the export market, which would have been hurt by interest rate hikes, than housing.
"It is not possible to manage the economy, and interest rates, and the exchange rate, solely to address the needs of the housing market," he said, according to the "Globes" Israeli business publication, which sponsored the conference''.
