Held-Up Fed Nominee Peter Diamond Wins Economics Nobel

MIT economist Peter Diamond, President Barack Obama’s final nominee for the Federal Reserve Board of Governors, was among three winners of the economics Nobel.

Bloomberg News

Peter Diamond, center, was nominated for a Fed seat alongside Janet Yellen and Sarah Bloom Raskin.

Diamond won the prize — officially called theSveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel — along with Dale T. Mortensen ofNorthwestern University and andChristopher A. Pissarides the London School of Economics, for their work on search frictions in markets, especially labor markets.

“Why are so many people unemployed at the same time that there are a large number of job openings? How can economic policy affect unemployment? This year’s Laureates have developed a theory which can be used to answer these questions. This theory is also applicable to markets other than the labor market,” according to  the Nobel committee.

Diamond’s expertise in the labor market, which is of particular concern in the current economic environment, was noted when he was nominated for the Fed. However, his nomination was sent back to the White House. Several Republicans object to his candidacy on the grounds that he has limited macroeconomic policy experience. The White House renominated Diamond, but his nomination requires another vote of the Senate Banking Committee before it can go to the floor.

Senate Banking Committee Chairman Christopher Dodd (D., Conn.) has said he would hold a hearing on Mr. Diamond’s nomination when the Senate reconvenes after the November mid-term elections.