Economist Spotlight: Interview with Alan B. Krueger, Part Six

POSTED: February 25, 2014 | BY: Daniel Thompson | TAGS: ,

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This is the sixth in an eight-part series of CEE’s Economist Spotlight with Dr. Alan B. Krueger.

Dr. Krueger, the Bendheim Professor of Economics and Public Affairs at the Wilson School at Princeton University and former chairman of President Obama’s Council of Economic Advisers, is the author of the newly published textbook, Explorations in Economics. In this spotlight series, Alan will address topical issues including unemployment benefits, increased job growth, minimum wage legislation, investment in human capital, and more.

The interviews were conducted by 2013 Alfred P. Sloan Teaching Champions Awardees, Kathleen Brennan and Saji James.

Kathleen Brennan:

Q. Many students acquire significant levels of student loan debt and either fail to graduate, or wind up in jobs that don’t justify the debt load. Does your research point to any factors that can reverse this trend?

Alan Krueger:

A.  I think some students (and, probably more importantly, their parents) often care more about the prestige of a college than what actually is taught at the college. Students can get a good education at a range of post-secondary schools, as long as they are motivated and determined. Students need to do a better job shopping around to make sure they get value for their tuition dollars.

Saji James:

Q. What practical effect has the Dodd-Frank law had in regard to regulation of the financial services industry?

Alan Krueger:

A. Dodd-Frank has had a number of effects. Most importantly, it is raising the capital standards for systemically important financial institutions. Capital serves as a buffer. If banks get into trouble, their losses come from their capital. In addition, Dodd-Frank created the Financial Stability Oversight Council (FSOC), chaired by the Treasury Secretary, which includes the nation’s top financial regulators, and is on the lookout for systemically important institutions and new sources of instability in our financial system. Dodd-Frank has also improved the transparency of derivatives, created the Consumer Financial Protection Bureau, and given the government tools to resolve systemically important institutions. The real test of Dodd-Frank will come when an interconnected financial firm gets into trouble, but higher capital standards should help to delay the next financial crisis. My economics textbook, Explorations in Economics, has a discussion of the causes of the financial crisis and policy responses to the crisis, including Dodd-Frank.

The next Economist Spotlight: Interview with Alan B. Krueger will publish February 27, 2014.

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