Minneapolis Fed's longtime research chief Rolnick to retire

Art Rolnick, whose tenure at the Federal Reserve Bank of Minneapolis and ready public comments have made him nearly synonymous with the institution, is retiring in July after 40 years, the last 25 of which he spent building a world-renowned research division in the areas of macroeconomics and monetary and fiscal policy.

"You don't replace someone like Art; rather, you build on the foundation he has established over his years of dedicated service," Narayana Kocherlakota, president of the Minneapolis Fed, said Tuesday in a prepared statement.

Rolnick, reached on vacation Tuesday, said he's planning to focus on his advocacy for early childhood education. He's awaiting approval to continue in his position as co-director of an entity that he founded at the University of Minnesota, the Humphrey Institute's Human Capital Research Collaborative.

Rolnick, 65, of Plymouth, is an outspoken critic of competitive state spending on economic development projects like sports stadiums or tax breaks to lure manufacturers. But he became a passionate advocate for early childhood education several years ago when he and a colleague did a cost-benefit analysis, concluding that dollars spent educating young children pays large dividends over time.

The Minneapolis Fed has chosen as its new research director Kei-Mu Yi, a macroeconomics researcher with expertise in international trade, economic growth and development. Rolnick will retire July 31, and Yi starts Aug. 16.

Yi is vice president and head of monetary and macroeconomic research at the Federal Reserve Bank of Philadelphia, where he has worked since 2004. He previously spent seven years working in the international research unit at the Federal Reserve Bank of New York.

Degrees from MIT, Chicago

"We are very lucky to have an economist of Kei-Mu's stature and experience to lead our research efforts," Kocherlakota said. "His academic credentials, coupled with his prior leadership at the Federal Reserve Bank of Philadelphia, make him an excellent candidate to direct research efforts at our bank."

Yi could not be reached Tuesday for comment.

He and Kocherlakota were colleagues at the University of Chicago and have an excellent relationship, Rolnick said. He said Yi is a "distinguished and talented academic" who did a good job managing research in Philadelphia. He's also written some research papers with some members at the Minneapolis Fed and should fit in well here, Rolnick added. "I think he plans to continue sort of the strong academic approach that we've taken over the years to public policy."

Areas of expertise

Yi is considered an expert in international trade and development. He's written on the growth of South Korea as a function of trade policy, an economic comparison of two Indian states, the growth of manufacturing trade despite declines in manufacturing output, and how the use of imported parts to create goods for export has affected world trade, among myriad other topics.

"His first job is, do no harm," said V.V. Chari, an economics professor at the University of Minnesota and adviser to the Minneapolis Fed. "He's a solid guy, a really good guy. But of course, he has very, very big shoes to fill. I'm sure he understands the challenge that confronts him because Art Rolnick did such a phenomenal job over the years in building this into a phenomenal research department."

Under Rolnick, Chari said, the Minneapolis Fed gained a reputation that would rank it among the top 10 academic institutions in the nation for the quality of its research. He did this by letting ideas bubble up from the bottom and letting his staff influence hiring and other important decisions, which attracted top talent.

The Minneapolis Fed is one of 12 regional Federal Reserve banks. It oversees the Fed's Ninth District, covering Montana, North and South Dakota, Minnesota, northwestern Wisconsin and Michigan's Upper Peninsula.

Dan Browning • 612-673-4493