WASHINGTON - As the Federal Reserve's new leader, Janet Yellen won't have to go far to bounce ideas off a fellow economist. The kitchen table will do just fine.
Yellen is the first Fed leader in the central bank's 100 years to be married to an equally renowned economist - a Nobel laureate, no less. In 35 years of marriage, Yellen and George Akerlof have partnered on groundbreaking research on everything from the collapse of East Germany to the way generous pay for a baby sitter shows how wages motivate workers.
Colleagues say that as economic thinkers, the two complement each other. And they say their partnership reflects a philosophy of consensus and collaboration that's likely to surface in Yellen's leadership, which began with last week's meeting of the Fed's policy committee, the first since Yellen succeeded Ben Bernanke as chair Feb. 3.
The committee includes critics of the Fed's policymaking.
As Akerlof's collaborator, as a professor and as the Fed's vice chair, Yellen has been known for forging consensus. When she worked with Akerlof, the two drew upon each other's differing strengths, according to colleagues and former students.
"Janet is very balanced and grounded. She thinks clearly and has a lot of common sense," said Andrew Rose, an economist who collaborated with them at the University of California at Berkeley. "George is much more artistic and has these leaps of brilliance."
Rose described Yellen as a mother who was devoted to helping her son with his pinewood derby car. She would sit at favorite restaurants while drafting economic papers. In debating ideas with her husband, seemingly any assumption of how the economy functioned was ripe for debate.
"As far as I could tell, they did almost everything together," said Michael Ash, a student of Akerlof's and now an economics professor in Massachusetts.The two might chew on problems separately, but the "degree of communication, respect and a willingness to be playful in thinking" distinguished them.
Akerlof can no longer afford to be as outspoken as he was. He declined to comment for this article. The 73-year-old economist recently stepped down from an unpaid advisory post at the University of Zurich backed by the Swiss bank UBS "to avoid the appearance of a conflict," he wrote in an email.
Akerlof has been critical of the institution his wife leads and of other central banks. He's argued that there's a painful price to pay when a central bank focuses too much on avoiding higher inflation: sluggish hiring and meager pay.
His suggestion that the Fed should put more emphasis on job growth and accept the risk of higher inflation is among the most divisive issues Fed officials are debating.
Unemployment remains at a still-high 6.7 percent nearly a half-decade into the economic recovery. The Fed's investment portfolio has roughly quadrupled to more than $4 trillion since the recession began in late 2007. The Fed has tried to spur growth by buying Treasury and mortgage bonds to keep long-term loan rates low.
Super-low borrowing rates are intended to drive spending, growth and hiring. But rates kept too low for too long risk causing sharp price spikes.
The Fed has lowered the pace of its monthly bond buying from $85 billion to $65 billion, and said last week it will trim that to $55 billion. Yet the Fed still maintains short-term rates will stay near zero.
However, the Fed no longer mentions a specific unemployment rate that might lead it eventually to raise rates. Instead, it will monitor a range of information on the economy.
Yellen told members of Congress that extremely low inflation "gives us ample scope to continue to try to promote a return to full employment."
Her husband has been blunter about the possible trade-offs between inflation and job growth. "Most of us think of central bankers as cautious, conservative and safe," Akerlof said in his 2001 Nobel Prize lecture. "But I consider many to be dangerous drivers: To avoid the oncoming traffic of inflation, they drive on the far edge ... keeping inflation too low and unemployment too high."
The couple met at a Fed cafeteria in 1977. He had already achieved some fame for his 1970 paper that demonstrated through used cars the economic problems caused when a seller has more information than a would-be buyer. It was an insight, in part, that led to his sharing a Nobel.
While Yellen and Akerlof were teaching at Berkeley in the 1980s, their search for a baby sitter inspired a research paper on wages. The couple paid a premium for sitters, figuring it would attract superior talent.
Their research found that employees tend to slack off once their pay falls below a "fair wage." This trend, in turn, contributes to unemployment.
Last month, Yellen repeated her fears that the recovery had been too weak to help many of the recession's victims. "The fact that we have very long spells of unemployment," she told a House committee, "suggests that the job market is not strong enough to be able to provide people with jobs who want to work."
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