UPDATE 2-Wharton professor Amir Yaron chosen as Bank of Israel governor

Finance professor Amir Yaron has been chosen as the new Bank of Israel governor, Prime Minister Benjamin Netanyahu said on Tuesday.

Yaron, a professor at the Wharton School of the University of Pennsylvania, will replace Karnit Flug, whose term ends next month.

Flug, who opted not to seek a second five-year term, has had a number of disagreements with Finance Minister Moshe Kahlon over the past three years, mainly over fiscal policy and Kahlon's preference for lowering taxes.

Netanyahu said the new central bank chief must be independent.

"We want to ensure that the head of the Bank of Israel will be a person with great ability, independence and top professional capabilities," Netanyahu told a news conference. Yaron was not present at the news conference.

Yaron's research interests include asset pricing, micro-finance and applied time series economics, according to the university website.

He received a doctorate from the University of Chicago in 1994.

In a 2015 research paper, he wrote that the net effects of investor uncertainty are greater than previously thought and that they are not always bad.

Yaron will still need the approval of an appointments committee. It was not immediately clear when that is due to happen. 

(With inputs from agencies.)