President Barack Obama recently nominated Janet Yellen, vice chair of the Federal Reserve’s Board of Governors, to succeed Ben Bernanke as chair of the Federal Reserve when his term ends in January. 

Yellen, who served as chair of the Council of Economic Advisors under President Bill Clinton, started her career at the Federal Reserve as an economist in the early 1970s. If her nomination is confirmed by the Senate, she will become the first woman to head the central bank in its 100-year history.

How could Yellen affect economic policy and the Fed? We asked two DePaul University business professors to share their views. Joan Junkus, a professor of finance, has taught at DePaul since 1987. Her expertise centers on international finance and the history of the financial markets. Lamont Black joined the business school’s finance faculty as an assistant professor this fall. He previously served as an economist for the Board of Governors of the Federal Reserve. His research focuses on banking, corporate finance, international finance and macroeconomics.

Q: What do you think the choice of Janet Yellen signals about the future of the Federal Reserve and U.S. economic policy?

Joan Junkus (JJ): Since part of the objection to (Larry) Summers’ appointment was his perceived closeness to Wall Street, the choice of Yellen seems to be an affirmation of the White House’s recent actions on getting tough on Wall Street. The SEC (Securities and Exchange Commission) is much more active in prosecuting insider trading and other cases, and her appointment seems to add to that signal. 

However, Yellen has at times emphasized employment issues over inflation fears, and I think the Fed will be more dovish on monetary policy under her rule. Certainly, she’s been very careful and deliberate in her speeches and commentary, so I think she will try to simplify the Fed’s communications about future actions in order to avoid surprises. 

Lamont Black (LB): Janet Yellen is highly respected among the Federal Reserve economists in D.C., as is Chairman Bernanke. Most importantly, I believe that she will bring consistency in monetary policy during this time of transition. There is some debate about whether Ms. Yellen is more of a “dove” or a “hawk” than Mr. Bernanke. I think the similarities between them are much greater than the differences.

 Q: If confirmed, what do you think Yellen’s main priorities will be? What should they be?

LB:  Ms. Yellen’s main priority in the first part of 2014 will be the economic recovery. With the fiscal problems in Washington, monetary policy will continue to play an important role in supporting economic activity. However, at some point, she will need to begin to “taper” the Fed's quantitative easing program. I think this will be Ms. Yellen’s most defining moment. She will be focused on winding down the Federal Reserve balance sheet without causing the recovery to stall.

JJ: Her major problem will be determining the time when the Fed takes away the punchbowl from the party, always a thankless task. I think she’s going to err on the side of later rather than sooner, so there’s a higher probability that inflation could become a problem. 

I think one of her major priorities should be to shift the economic focus back to fiscal policy. For most of the last five years, by necessity, the Fed and monetary policy have been the big influence on the economy. While there’s not much personally she could do to get the legislative branch to do its economic duty, I think she should start pressing for a much bigger role for fiscal policy going forward. Leaving the Fed in sole charge of the economic outlook was never supposed to happen. Taxes and spending are really important, and she should try to focus the conversation back to that big missing piece.

Q: If confirmed, Yellen will be the first woman to head the Fed. Do you think her appointment will inspire more young women to go into banking and finance and/or aspire to be a future Fed chief?

JJ: Seeing a woman in that role is inspiring. Like (former Secretary of State) Hillary Clinton, she will be a role model who shows that a woman can handle the big issues and formulate policy at the highest levels. It’s always good to see a woman being the smartest guy in the room. Also, the contrast between her style and Summers’ says that you can be a leader without necessarily being macho.

That said, I think the discussion leading up to her nomination was truly revealing. Commentators said she lacked the “gravitas” to lead the Fed. A Wall Street Journal op-ed piece about her invoked gender politics and spoke of Nancy Pelosi “bellowing” her support for Yellen. So Yellen’s appointment can also serve as a useful dash of cold realism about what it takes to be a female leader.

LB: Definitely. Ms. Yellen sets a powerful example for other women interested in the field of finance. The field of finance is not always an inviting place for young women, so I hope this will encourage more women to “lean in” as they consider a future career in finance.