Economics can be ‘aggressive’, says Silvana Tenreyro, Monetary Policy Committee’s lone woman voice

Her original plan was to work on public policy and eventually return to Argentina

Paul Dallimore

20 July 2018

It takes a bout of hyperinflation to teach a lesson in the harsh realities of economics. When the Bank of England’s rate-setter Silvana Tenreyro was a young girl growing up in Tucuman, a poor region of Argentina, political and economic crises were part of everyday life. At one point, inflation was running at 5000% a year.

“The distortions were so blatant,” she recalls, sitting in her office on a sweltering day in the Bank’s Threadneedle Street headquarters. “Just as a kid, you knew that if you had any bill in your hand you run to the supermarkets to stock your chocolates.

“That kind of behaviour was present in every business, any company in Argentina at the time was more concerned about hedging themselves against inflation than actually producing or investing in any productive activity. You needed more accountants than engineers and it was reflected in the lack of long-term investment.”

More painfully still, the 44-year-old economist was just three years old when her grandfather was abducted; he was one of the estimated 30,000 “desaparecidos” kidnapped, tortured and killed by the military junta which seized power in a coup d’état in 1976 and ruled until 1983. Her memories of him — a university professor and a pianist as well as a politician — are dim, but it started an “endless search with no closure really,” she adds in her accented English.

The hardships of the country’s throes — runs on the peso and debt defaults — fostered Tenreyro’s interest in economics from an early age. At Harvard, after her undergraduate degree at Tucuman, she helped to set up a public policy think-tank with fellow Argentine expat students which is still going.

“I was very aware of the inequities and hardships people had to go through in that part of the country,” she says. “The question of how you stop poverty and improve living standards was very pressing.”

Her original plan was to work on public policy and eventually return to Argentina. But studying for her PhD under Robert Barro and Ken Rogoff — two of the world’s foremost economists — she was drawn to research, specialising in areas such as currency unions. Barro also introduced her to her husband, an Italian academic, and they’ve lived in London for more than a decade since she joined the London School of Economics as an assistant professor in 2004. She has Argentine, Italian and UK citizenship.

Despite her research interests, the idea of “applying the knowledge” in public policy lingered and an opportunity cropped up by chance in 2012. After giving a talk to a group of African alumni she was invited to the Mauritian embassy, where she met the country’s finance minister and ended up with a seat on its version of the monetary policy committee.

With two young children she hesitated, but she wanted the challenge, and it was a period when Europe’s struggles spelt difficulties for Mauritius’s tourism-based economy. It was her cautious approach there that had her marked out as a “dove” when she joined the Bank of England last year.

She was paid 967,965 Mauritian rupees for her work in 2013 — around £21,000 (along with the added bonus of the weather) — whereas in Threadneedle Street she’s on the £151,179 salary earned by the MPC’s external members.

A year into her spell, the central bank has also been under fire for a lack of diversity. Tenreyro herself is the only woman on the MPC, and the newest member, Jonathan Haskel, was chosen ahead of four other women on the shortlist. An irate Treasury Select Committee chairman Nicky Morgan has warned that MPs could start blocking appointments if things do not improve.

The Bank has a target of 35% female participation in senior management positions by 2020, and Tenreyro sees a “real commitment” to improve. But she adds that Morgan is “right to complain”. “I think diversity is very important for committees, decisions, because it brings a deeper perspective that enriches the decision-making process. To keep in mind, the appointments are not made by the Bank, they are made by the Treasury, so sometimes I am surprised in the press when they seem to blame the Bank.”

As someone who recently chaired the Royal Economic Society’s women’s committee, she’s in favour of quotas as “the only way to go forward and change the equilibrium” — although not necessarily for very small committees like the MPC. As only 14% of economics professors are women we need to be more proactive, she argues, and create more role models.

“There’s a problem with identification if you are a young girl deciding what to do with your life: football is not going to come into your mind, because you don’t see women footballers on the front page of the newspaper, so you don’t relate.

“You don’t see many female economists in senior positions. [Christine] Lagarde and Janet Yellen have helped with that but we have to do more. Once you get past those two, there is not a lot.”

Part of the problem is the tenure system which gives academics jobs for life to pursue research; having children can make tenure more difficult to achieve for women academics and often presents them with a “stark choice”.

“It’s a period in which the clock is ticking and if you want to have children the choice is binding.” But women can also be put off by the macho nature of the economic debate. “There are issues with the way in which economists interact, while not being offensive might be challenging for women, at least I found it hard when I was starting in my career. The type of discussion was very aggressive, and that was a way of criticising each other that was very unnatural. You could see how male dominance played a role and might have put off many women. I for one, I thought, ‘I can’t engage in this type of interaction, it is too aggressive’.” Things have improved but “you have to develop very thick skin to be in academia”.

The darker side of this was uncovered last year by Harvard economist Alice Wu. She studied the anonymous posts on the Econjobrumors site and found the top 30 words used in discussions of women included “slut”, “hot”, “horny” and “prostitute”.

Tenreyro doesn’t think the profession is quite that bad, but “when you open the door to anonymity you have some completely unrepresentative people making comments that can be offensive”. She adds: “I never experienced direct sexism but I know other women have had different experiences.”

On the Bank’s present policy stance, Tenreyro keeps her cards much closer to her chest. She’s never voted against the majority on the MPC, which causes one City economist to sniff that as an external member “she’s supposed to be a dissenter, a differing view”. She said in June that the timing of future rate rises was an “open question”. Is it any less or more open now?

“In May and June I thought it was prudent to wait a bit to confirm that the soft patch was due to the weather, and not a sign of something more fundamental going on with demand. My vote there was a vote of caution … The PMIs [activity surveys] on output were positive and confirm in some sense the assessment that we had in our central forecast that the soft patch was snow-related.”

Her tone suggests she might be ready to join the hawks and raise rates for only the second time in 11 years in a fortnight’s time, but she dead-bats that one as well. “I will watch very closely the data we have in the coming weeks and I don’t want to say more than that.”

There’s also the impact of Brexit to consider, which she opposed before joining the MPC. Not to mention a possible trade war.

The nightmare scenario is “everyone jumping in, you will see pressure on inflation together with a negative effect on output and that, of course, will present a very challenging trade-off for monetary policy”.

We don’t have long to wait until she shows her hand.

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Economics can be ‘aggressive’, says Silvana Tenreyro, Monetary Policy Committee’s lone woman voice

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