While still a teenager, Zoe Xie found herself 7,000 miles from home in a town a 20-minute drive from the nearest supermarket. Yet she would spend four years in this place. And her time there led Xie (pronounced "Shia") to a fascination with economics—"the study of human behavior," as she sees it—and eventually to the Federal Reserve Bank of Atlanta.
A research economist at the Atlanta Fed since August 2016, Xie grew up near Beijing. She earned a scholarship to a boarding school in Singapore before going to Williams College, an elite, 225-year-old liberal arts school in tiny Williamstown, Massachusetts. After five years in Singapore, Xie wanted to expand her horizons. The Republic of Singapore consists of a single city whose population is three-quarters Chinese.
"I really wanted a different environment," Xie says. "I wanted to go somewhere bigger and interact with different kinds of people. I think the United States is really great in that respect."
Photo by David Fine
She applied to colleges in Europe, Singapore, and the United States. A self-described "wandering spirit," Xie was initially jolted by the isolation of rural western Massachusetts. But she soon visited the homes of classmates from Chicago and Washington, D.C., and experienced the richness of urban America.
Meanwhile, the academics at Williams captivated her. In particular, she became intrigued with an advanced economics class that involved analyzing research papers. While those works were grounded in data and mathematics, the professor guided Xie and classmates to ponder the economic theory underlying the empirical results.
That class piqued her interest in economic theory—a rigorous explanation of commercial activities. And, let's face it, producing and consuming goods and services occupy a lot of our lives.
Observing life and trying to understand it
In her profession, Xie seeks to explain what she sees happening around her. She came to relish the study of economics because she views it as a satisfying blend of math—the analytical aspect—and intuitive stories of human activity. Further, her chosen specialties of labor economics and public finance, she believes, align more closely with the lives of individuals than with the workings of corporations and financial markets.
"I see a lot of actions on the household side," Xie says. "I think about what my parents would do, what my friends would do. That's what really appeals to me—just observing life and trying to understand it."
In particular, Xie observes the intersection of labor markets and government finance. For instance, she has researched the effects of the extension of unemployment insurance during the Great Recession. That paper found evidence that lengthening the duration of unemployment insurance likely dampened the motivation of some jobless people to seek work. However, Xie's research also concluded that the policy during a severe downturn made life better, or, in economists' terms, was "welfare enhancing."
Right now, Xie is examining problems rooted in the conflicting objectives that can arise when state or provincial governments rely on funding from federal governments. In some countries, for example, lower-level governments that depend on financing from the national government may find it beneficial to spend more than needed to secure greater resources from the federal level. Xie is untangling the puzzles that could help to make such government-to-government transfer programs more efficient for all parties.
She is also exploring student loan policy in the United States. Xie is studying whether there may be ways to calibrate lending rates to improve the overall financial soundness of the programs without unfairly penalizing students studying in fields that tend to be less lucrative.
Rigorous hiring process
While earning her doctoral degree at the University of Minnesota, Xie worked as an economic analyst at the Federal Reserve Bank of Minneapolis. Minneapolis Fed senior research economist Ben Malin says Xie combined sound mathematical and theoretical skills with a collegial personality. "I could trust her to do things right," Malin says. "I felt comfortable giving her a task, painting the broad picture of what I needed, and then letting her figure out how to implement that."
Her initiative no doubt helped attract the attention of the Atlanta Fed. Landing a "junior" economist position at a Federal Reserve Bank is no small feat. The Atlanta Fed's typical recruitment process begins with 300 candidates. The Bank's research officials then winnow that pool to 30. From that group, the Bank brings three candidates to headquarters for a full day of presentations on their research.
There's a method at work. Gauging whether a freshly minted PhD holder will make a good researcher is not clear-cut, says Toni Braun, a senior economist at the Atlanta Fed who participates in hiring junior economists. Acing coursework does not necessarily translate to success at path-breaking research. "It takes time," Braun says.
Policy enriches research
The central bank's mode of combining pure research with policymaking appealed to Xie: study and put the fruits of research to work in the real world. Many of her fellow doctoral students preferred working in academia. For a researcher, a university setting promises freedom to pursue knowledge wherever it leads. "Directed research" conducted at the behest of an employer is less appealing to many economists, including Xie. But at the Fed, she says the policymaking enriches the research.
"When I sit in the briefing meetings (to prepare the Atlanta Fed president for Federal Open Market Committee sessions), I hear people talk about policy, or what they hear from CEOs, or what they see from the data," she says. "That sometimes makes me come up with ideas—maybe I could do this in my research, or do that in my research. That's really fascinating."
It's intense brainwork, to be sure. Away from the job, Xiu rests her intellect, she says, by reading and watching movies she's already seen. Before she became a professional researcher, she sought challenging cinema and literature.
It's another adjustment for a young research economist. It's nothing she can't handle. Immersion in different cultures, Xie says, makes her not only a sharp observer of human behavior, but also adaptable.
Charles Davidson
Staff writer for Economy Matters