http://blogs.wsj.com/economics/2009/12/08/academics-spar-with-popul...

A group of academic economists — including several Nobel Prize winners, leaders of respected economic journals and former Fed officials — is dialing up its call for lawmakers to drop plans to subject the Federal Reserve to more scrutiny by the Government Accountability Office, an investigative arm of Congress.

In a letter to leaders on the Senate Banking Committee and House Financial Services Committee, the economists say a bill proposed by Rep. Ron Paul (R., Tex.) and Alan Grayson (D., Fla.) to let the GAO review Fed monetary policy would do “serious harm to the economy.” They warn increased congressional oversight would harm the Fed’s independence and ability to fight inflation.

Mr. Paul has built a popular movement in part on his attacks against the Fed and won large support in the House for his bill. Ben Bernanke, Fed chairman, has a growing body of academics on his side. Some 270 economists have signed the letter, including Edward Prescott, Myron Scholes, Daniel McFadden, Fynn Kydland, Roger Myerson and Robert Engel, all Nobel winners.

The academics sent a similar letter to Congress in November, but are trying to dial up their campaign now that Mr. Paul’s bill has been approved by the House Financial Services Committee.

Supporters of Mr. Paul argue that the organizers of the letter-writing campaign are too close to the Fed to be objective — some are former Fed officials or have served as advisers to the Fed. Mr. Bernanke, a former academic, is also friends with many of them.

The academics say the charge isn’t fair. “Hundreds of people signed the petition and most have little, if any connection to the Federal Reserve,” counters Anil Kashyap, a professor at the University of Chicago Booth Business School and a lead organizer of the campaign.