Published in the Wall Street Journal on January 17, 2007, By Greg Ip
Professor at the Brandeis International Business School
Central Bankers, Economists to Meet in New Forum on Monetary Policy
In an initiative designed to help the Fed and Wall Street learn from each other, this March central bank officials will participate in a new conference of academic and business economists that focuses on the nitty-gritty of monetary policy.
The U.S. Monetary Policy Forum is designed to bring Wall Street economists, leading academics and Fed officials together to discuss subjects critical to Fed decision making. Fed Vice Chairman Donald Kohn, Fed Governor Randall Kroszner, Federal Reserve Bank of Richmond President Jeffrey Lacker and Minneapolis Fed President Gary Stern are participating at the first conference, on March 9 at Washington's Hyatt Regency hotel. The on-the-record event is expected to attract 150 invitation-only participants and media.
Fed officials routinely host, and attend, research conferences, such as the Kansas City Fed's annual symposium in Jackson Hole, but they typically deal with broad, academic, or nonmonetary topics. By contrast, organizers intend the U.S. Monetary Policy Forum to tackle topics relevant to current monetary-policy decisions and as such may be more likely to produce market-moving insights or comments. This year's topics are the inflation determination process and the importance of "liquidity" to monetary policy.
"The idea is policy makers get some sense of what business economists are interested in, academics get to participate and add expertise, and the business economists get to interact with the policy makers," said Stephen Cecchetti, professor of economics at Brandeis University and co-chairman of the event.
The topics will be "more accessible" and more useful to the Fed than typical academic research, said Anil Kashyap, professor of economics and finance at the University of Chicago's graduate business school and the other co-chairman, though it won't discuss what the Fed is "going to do tomorrow." Fed Chairman Ben Bernanke, he said, is "scouring the planet to find the best arguments that can be made when he confronts something different and new." Mr. Bernanke isn't expected to attend.
Peter Hooper, chief U.S. economist at Deutsche Bank, said the event is modeled after the annual "ECB watchers conference," which brings together financial, academic and European Central Bank economists to discuss contemporary policy topics. Mr. Hooper is one of six Wall Street economists on the group's 12-member advisory panel and is one of several co-writers of this year's discussion paper, "Understanding the evolving inflation process."
The conference is sponsored by the Rosenberg Institute for Global Finance at Brandeis' international business school, and the Initiative on Global Financial Markets at the University of Chicago's graduate business school. Funding is being provided by the CME Trust, originally set up by, but now independent from, the Chicago Mercantile Exchange.
Stephen G. Cecchetti is the Rosenberg Professor of Global Finance at Brandeis International Business School, and Research Associate, National Bureau of Economic Research. He is a regular contributor to the Financial Times.