For years commentators have endeavored to classify monetary policy makers into doves and hawks.  Doves are said to be more concerned with unemployment. Hawks are supposedly more concerned with inflation. And because many commentators associate easy money (however one defines that) with keeping unemployment low and tighter money with keeping inflation low, they say that A is more dovish than B if A advocates an easy money policy.

In my view this terminology is very misleading, and usually gets the relationship between policy and outcome backwards. For one thing, dovish policy by this definition often leads to higher unemployment rather than lower unemployment despite the best of intentions. We saw this happen in the 1970s when easy money policies aimed at reducing unemployment and letting inflation rise backfired and eventually led to unemployment over 10%. Similarly, the efforts to hold interest rates very low in 2003-05 helped lead to excesses in housing and risk-taking that were in part responsible for the financial crisis, which again led to an unemployment rate over 10%.  Although the jury is not out, I would argue that so-called dovish policy today (QE in particular) has added uncertainty and has not contributed to a stronger recovery.

A better way to classify and assess monetary policy makers would be based on  their position on the rules versus discretion debate, and which way they lean in practice.  There is a lot of theoretical research and empirical experience that rules-based monetary policy works better than discretion in keeping both unemployment and inflation low.  And there is a clear difference between policy makers on this dimension.

What about current and prospective policy makers? The give and take of Congressional hearings can be a good source of information—including the upcoming Senate confirmation hearings. But there are other clues.

In my book First Principles I showed how some of Ben Bernanke’s writings before joining the Fed indicated a strong aversion to rules-based strategies for the instruments of monetary policy, and I have argued that Janet Yellen is more-rules based then Larry Summers would have been as Fed chair, though she justifies the current deviation from rules by saying these are not normal times. Jeremy Stein is looking for a rules-based approach to unwinding quantitative easing, which seems sensible even if very difficult, and John Williams has generally been inclined to favor rules-based policy.  Charles Plosser has been arguing in favor of sensible rules based policies for the instruments, and has been giving practical proposals to implement such policies.