President Obama will nominate University of Michigan economist Kathryn Dominguez to the Federal Reserve's Board of Governors, the White House announced Monday.
The seven-member Board of Governors has two seats unoccupied. Obama's other nominee, former Bank of Hawaii head Allan Landon, has seen his confirmation process stalled in the Senate.
In a statement released by the White House, Obama said that "Dr. Dominguez has the proven experience, judgment and deep knowledge of the financial system, monetary policy and international capital markets to serve at the Federal Reserve during this important time for our economy. She brings decades of leadership and expertise from various roles, particularly from her years as a leading economist and academic. I am grateful she has chosen to take on this important role, and I look forward to working with her."
Sen. Sherrod Brown of Ohio, the ranking Democrat on the Banking Committee, said Dominguez's nomination "deserves a full, fair, and prompt consideration" in the panel, which has yet to hold hearings on Landon's nomination under Chairman Richard Shelby, R-Ala.
Dominguez, a Yale Ph.D, has previously taught at a number of schools and worked briefly at the Board of Governors and Congressional Budget Office in the 1980s. She has served on academic panels for the Federal Reserve Banks of Chicago and Cleveland. She also has consulted for the International Monetary Fund, World Bank and Bank of International Settlements.
Dominguez has focused in her academic work on macroeconomics, especially the workings of foreign exchange rates.
She also has examined possible reasons for the weakness of the recovery from the 2008 recession, a topic of heated academic debate in recent years.
Her writings on the topic may provide some insight into her views on the problems facing the U.S. economy and monetary policy.
In a 2013 paper, Dominguez, with her colleague Matthew Shapiro, attributed the disappointing economic recovery to "successive financial/fiscal shocks emanating from Europe together with self-inflicted wounds from the political stalemate over the U.S, fiscal situation." The paper did not place great emphasis on the role of the Fed.
Earlier in her career, Dominguez criticized a suggestion by future Nobel Prize winner and New York Times columnist Paul Krugman that a central bank can stimulate the economy even when it has lowered its interest rate target to zero if it can "credibly promise to be irresponsible" later by stoking higher inflation. In response to a 1998 paper by Krugman suggesting that the Bank of Japan commit to irresponsibly high inflation to end the country's long stagnation, Dominguez wrote, "I hope that the Bank of Japan does not decide to follow his prescription."
Dominguez also has criticized the ability of top economists to make predictions about the future. In a 1988 paper with Ray Fair of Yale and Matthew Shapiro of Michigan, Dominguez showed that the leading economic forecasters failed to predict the severity of the Great Depression, and that modern economists would not have fared much better using newer economic models.
At Michigan, Dominguez teaches a course titled "Jane Austen and Economics." The course addresses topics such as Austen's depiction of wealth and poverty and the ways that financial markets, inheritance laws and the economics of marriage shaped her characters' behavior.
If both Dominguez and Landon were confirmed, there would still be one unoccupied position at the Fed, the vice chairman for supervision. The position was created by the 2010 Dodd-Frank financial reform law, but Obama has not nominated a candidate.