Contrasting Banks

Recall that the Reserve Bank of New Zealand's Monetary Policy Committee does not allow those with an ongoing research interest in macro/monetary from serving as external members of the committee. They've considered it a conflict of interest.

The Bank of Canada has appointed Prof Nicolas Vincent as an external deputy governor. 

The Financial Post's write-up highlights the value of external expertise in challenging times. 

Vincent will begin his two-year term in March, filling the void left by former deputy governor Timothy Lane, who retired in September. The Bank of Canada launched a search for an outsider to bring a different perspective to the Governing Council in August 2022, as the central bank confronts one of the most challenging economic environments it has ever faced.

Vincent “is an accomplished scholar and teacher, with deep expertise in macro and microeconomic research in areas such as inflation and price dispersion, firm dynamics, inequality, house prices and household finance,” governor Tiff Macklem said in a press release. “I have no doubt that his broad knowledge of monetary economics combined with his keen interest in public policy will be invaluable in helping the Bank navigate the policy challenges ahead.”

In this new role, Vincent is expected to bring his own perspectives to the policy making process, providing a check on groupthink as he’ll have no direct ties to the institution. He will be responsible for helping with monetary policy and financial system stability decisions, and will join other deputy governors in communicating the Bank of Canada’s consensus-based policy decisions.

Vincent will balance this role with his job as a professor of economics at the HEC Montreal, serving as deputy governor on a part-time basis. This wouldn’t be his first time in a policy focused role, as he started his career at Department of Finance in 2000 before becoming an assistant professor at the HEC.

The Bank of Canada's press release also highlights the value of deep expertise in relevant research areas.

The Board of Directors of the Bank of Canada today announced the appointment of Nicolas Vincent as the Bank’s new external, non-executive Deputy Governor for a term of two years, effective March 13, 2023. Mr. Vincent’s appointment, which is the result of an open external search process, fills the vacancy created by the departure of Timothy Lane in September 2022.

“I am delighted that Nicolas Vincent is joining the Bank’s Governing Council and I am looking forward to working with him,” said Governor Tiff Macklem. “He is an accomplished scholar and teacher, with deep expertise in macro and microeconomic research in areas such as inflation and price dispersion, firm dynamics, inequality, house prices and household finance. I have no doubt that his broad knowledge of monetary economics combined with his keen interest in public policy will be invaluable in helping the Bank navigate the policy challenges ahead.”

The Bank changed the fourth Deputy Governor position to an external, non-executive Deputy Governor role to bring diverse perspectives into its consensus-based policy-making process and to ensure the Bank’s executive team has a streamlined and effective distribution of management responsibility. In this role, Mr. Vincent will be a member the Bank’s Governing Council, which is responsible for decisions with respect to monetary policy and financial system stability. Alongside other members of Governing Council, he will also be responsible for communicating with Canadians about the Bank’s consensus-based policy decisions as well as its ongoing assessment of the outlook for the economy and inflation. In keeping with the nature of this role, Mr. Vincent will work with the Bank of Canada in a part-time capacity and will maintain his affiliation with HEC Montréal.

Mr. Vincent is a professor of economics in the Department of Applied Economics at HEC Montréal and co-chair of the Business Cycles and Financial Markets research theme at CIRANO (Centre interuniversitaire de recherche en analyse des organisations). He has been a visiting faculty member and researcher at numerous institutions, including Columbia Business School, INSEAD, the Banque de France and the Kellogg School of Management.

Born in Trois-Rivières, Quebec, Mr. Vincent received a Bachelor of Commerce degree in applied economics from HEC Montréal, a master’s degree in economics from Queen’s University and a PhD in economics from Northwestern University.

Circular hydrocarbons

Want to make hydrocarbons part of the circular economy? Terraform Industries has a whitepaper. 

Basic deal: use solar to power kit that sucks CO2 out of the atmosphere. It'll also pull some water out of the atmosphere while it's at it. Turn the water into hydrogen and oxygen. Then make CH4 (or any desired hydrocarbon) with oxygen and some surplus water as waste product. 

They're aiming at an all-up carbon sequestration cost of USD$43/T. 

Afternoon roundup

Easing back into the office after a summer break and already the tabs have multiplied.

Today's worthies:

• Alex Penk on the value of free speech
• Zoning Reform in Gotham. One option sounds a lot like NZ's National Policy Statement on Urban Development. 
• Bryce Edwards expects a big politician pay increase after the election. I'd forgotten about the MP pay freeze. I like that a nominal pay freeze for the politicians responsible for the dilution of the Reserve Bank's mandate and erosion of accountability for meeting its inflation target means substantial real pay cuts for them. 
• Bryan Caplan is working on a book on zoning reform. Will look forward to it!
• Regime uncertainty around investment in thermal generation is a problem:

  “Mitigating the winter 2023 operational coordination issue with further information is insufficient by itself, particularly considering the limited timeframe to resolve the issue,” the system operator says. The key issues are the influx of unreliable wind generation, the paucity of fast-start thermal generation, and the weakening market incentives for slow-start thermal generation. And Transpower says the EA’s proposed measures won’t address these underlying problems.

  The article notes some more complex multi-hour generation contracts as a potential solution. 

• Getting more energy generation seems like a good idea and people get unreasonably upset about landfills. And so a waste-to-energy plant gets knocked back for want of an adequate cultural impact assessment. 
• But, on the plus side, there is more generation coming through - including 168MW of geothermal
• Medicaid expansions in the US did not reduce mortality. In line with the results of the now-old RAND experiment. 
• Some details are up on the new smokefree regs. New Zealand's Planning Board has mapped out where cigarette stores will be allowed to be. Oamaru and Queenstown will each be allowed to have two stores. Balclutha can only have one. Auckland will be allowed 13. These are all clearly the scientifically-determined correct number of stores. If you disagree, you have a couple of months to make your submission.