What Is a Dove?

What Is a Dove?

Let me explain what a dove is in the context of economic policy. A dove is an advisor who pushes for monetary policies that typically feature low interest rates. You see, doves back these low rates and an expansionary approach because they put more weight on things like keeping unemployment low rather than strictly controlling inflation. If you hear an economist downplaying the downsides of inflation or pushing for quantitative easing, that's a classic dove or dovish stance.

Key Takeaways

Doves are seen as focusing more on boosting job growth via low interest rates than on reining in inflation. Critics point out that if you let a dovish policy run without checks, it might overheat the economy and trigger out-of-control inflation. On the flip side, a hawk is the opposite—a policy advisor who leans toward a tight monetary policy to keep inflation in check. In my view, the ideal setup for a strong economy is when policymakers can shift between hawkish and dovish positions as needed.

Understanding Dove

Doves opt for low interest rates to drive economic growth, as this boosts demand for loans and encourages consumer spending. They figure the drawbacks of low rates are minor, but if you keep rates low too long, inflation will climb. The term comes from the peaceful bird, contrasting with 'hawk,' which describes someone who thinks higher rates are key to fighting inflation.

This isn't the only animal metaphor in economics—bulls signal rising markets, while bears indicate falling prices.

Examples of Doves

In the U.S., doves often include Federal Reserve members who set interest rates, but it also covers journalists or politicians advocating for low rates. Former Fed chairs Ben Bernanke and Janet Yellen were known as doves for their dedication to keeping rates down.

But you don't have to be strictly one or the other. Take Alan Greenspan, who was Fed chair from 1987 to 2006—he started hawkish but shifted dovish while dealing with the 1990s internet bubble burst, the 9/11 attacks, and other big events. Realistically, what people in the U.S. want—whether investors or not—is a Fed chair who can toggle between hawk and dove based on the circumstances.

Doves, Consumer Spending, and Inflation

In a low-rate environment from dovish policies, consumers are more inclined to get mortgages, car loans, and credit cards. This pushes spending by motivating people and businesses to buy now while rates are cheap, instead of waiting for potential hikes.

This spending surge impacts the whole economy, creating or sustaining jobs—which is a big priority for politicians, both for tax revenue and voter satisfaction. But over time, this demand drives up prices. Part of it comes from rising employment, where workers demand higher wages in a hot economy, and those costs get passed into products.

On top of that, expanding money and credit supply devalues the dollar, making imports pricier. Add it all up, and you get inflation. If left unchecked, inflation can be as harmful as high unemployment in a stalled economy.

What Is the Hawk and Dove Theory in Economics?

The hawk and dove theory sorts economic policymakers into two groups: doves and hawks. Doves push for expansionary policies with low rates and quantitative easing. Hawks go for contractionary policies, keeping rates high and steering clear of easing.

What Do Hawks and Doves Mean in Politics?

In politics, hawks and doves describe views on foreign policy. Hawks favor aggressive stances with strong military and other tools, while doves prefer less aggression and reduced military emphasis.

What Are the 2 Types of Monetary Policy?

Monetary policy covers what a central bank sets. It's split into expansionary, which spurs growth in slow times or recessions via low rates, and contractionary, which cools things down or fights inflation with high rates.

The Bottom Line

When we talk about a 'dove' in monetary policy, it means someone pursuing expansionary measures like low interest rates to cheapen borrowing and boost consumer demand. A hawk does the opposite, keeping rates high for contraction. While it's simple to label people this way, real economic needs demand flexible interest rates—high during inflation or overheating, low in slumps or recessions.