* Nobel winner Diamond says would stand for Fed renomination
* Says Fed needs time to assess impact of bond buying
* Says extending tax break for the wealthiest makes no sense
By Niklas Pollard
STOCKHOLM, Dec 8 (Reuters) - Federal Reserve nominee and Nobel economics prizewinner Peter Diamond said on Wednesday he would like the U.S. government to selectively roll out more fiscal stimulus while the Fed assessed the impact of recent policy steps.
"We need to throw things that we find useful at this problem, the ones that seem worthwhile, and I would like to see more done," said Diamond, in Stockholm to accept his Nobel prize later this week.
"More on the fiscal side. My favourite one is what was done before -- the Federal government aiding the states -- because the ability of the states to borrow is not ... there."
But extending tax breaks for top earners made no sense, he said, reiterating previous criticism.
Opposition from several Republican lawmakers means the already drawn-out process of Diamond's nomination to the seven-member Federal Reserve board could be pushed into next year, Senate aides said this week. [ID:nN06241521]
Lawmakers opposed to appointing Diamond, who shared the Nobel economics prize with Dale Mortensen and Christopher Pissarides for his work on labour markets, have said he lacks experience.
If Diamond, an economics professor at the Massachusetts Institute of Technology, is not approved by the end of this year his nomination to the Federal Reserve board will lapse, but he said he was ready to stand for renomination next year if needed.
"It is a job I would like," he told Reuters on the sidelines of his Nobel lecture in the Swedish capital.
"I believe I can be very helpful with the background, skills and techniques I can bring, because we are facing many new questions -- both things we have learned during the crisis which should lead to changes in regulation, and all the changes that the Dodd-Frank bill (on financial reform) gave to the Fed to design new regulations."
Diamond also said the Federal Reserve, which last month unveiled an additional $600 billion effort to spur demand by buying government bonds, would need to take stock of the impact of that measure before deciding on anything extra.
"We've just seen a significant change by the Fed and I think the Fed needs to take time to see how it is working and how the economy is doing before making some change in any direction."
He also reiterated his criticism of plans to include the highest income earners in an extension of tax breaks outlined by President Barack Obama earlier this week. [ID:nN07288652]
"I think including the highest earners in this makes no sense whatsoever for anyone concerned about the long-term debt, because when you look at the ratio of the amount of stimulus you get relative to the additional amount of debt it is a very poor trade-off," he said.
"There is very little bang for that buck."