Federal Reserve Conferences Incubate Policy Ideas on Economic Vulnerability

Key Quotes

"I would say the the worst thing that can happen is that you just say something wrong that sounds dishonest almost like you're trying to hide something like there's clearly a data flaw and then you don't highlight it or you don't you say in public no no no this is not a problem and everybody knows no no it's a problem kind of that that's i think the profession is built on trust and if you if you lose that trust it's it's quite bad"

Omar Barriero, a senior economist at the Federal Reserve Bank of Boston, highlights the critical importance of trust within the economics profession. He explains that presenting research with integrity, even when facing data flaws, is paramount. Losing that trust, Barriero argues, is detrimental to an economist's credibility and the broader field.

"We are living through capital H history here we have the tariffs from the trump administration the reversal of globalization new geopolitical risks AI all of it right and we're also still trying to figure out stuff like what happened in relatively recent years why did inflation actually spike during the pandemic we're also in this new era of industrial policy and we're trying to figure out what that means for the economy"

Egon Zakrajsek, Director of the Research Department at the Boston Fed, emphasizes the monumental shifts occurring in the global economy. He points out that current events, such as trade policies, geopolitical tensions, and technological advancements like AI, are reshaping economic landscapes. Zakrajsek notes that these changes necessitate a re-evaluation of existing economic models and a deeper understanding of their implications for growth and inflation.

"The benchmark implication of this view is that us has limited exposure to global risks we would like to revisit the issue in terms of asking directly how sensitive the us economy to global risks once we account for full global trade production and finance networks and really think about trades off and counterfactuals and basically revisit this issue that the fact that maybe your trade shares are low"

Shebnem Kulemli Oskan, a professor of economics, challenges the conventional view that the U.S. economy is largely insulated from global risks. She explains that by considering comprehensive global networks encompassing trade, production, and finance, her research suggests a greater sensitivity to international shocks than traditional models indicate. Oskan's work aims to re-evaluate this exposure by looking beyond simple trade shares.

"The key idea is that the state of the world in which firms operate right can can change underlying and so as economists we say the state of the economy changes even starting from potentially minor events along the supply chains so we make the example of this apparently small episode like in the suez canal two years ago sort of a ship shipping oil and other inputs got stuck for a few days we remember it well literally right but that was that episode sort of got resolved in a few days but i didn't have the time to show the data but then this the effect on transportation disruptions okay along supply chains lasted for months"

Tommaso Monacelli, a professor of economics, illustrates how seemingly minor supply chain disruptions can have prolonged and significant impacts on the economy. He uses the Suez Canal incident as an example, explaining that while the immediate blockage was short-lived, the resulting transportation disruptions along supply chains persisted for months. Monacelli's research suggests that the volatility and cascading effects within these networks are crucial factors influencing economic outcomes.

"The role really what a discussant does is is sort of a essentially let me translate what the author does for the broader audience right a good discussant's role is really to sort of reframe the paper pull out key takeaways and then provide some constructive you know comments but um sometimes things get a little awkward definitely awkward but you know everyone is still very polite still very polite yes"

Ludwig Straub, a professor of economics, describes the role of a discussant at an academic conference. Straub explains that a discussant's primary function is to interpret and critique a presented paper for a wider audience, reframing key takeaways and offering constructive feedback. He acknowledges that while this process can sometimes lead to awkward moments, politeness is generally maintained among peers.

"Unfortunately academia publishing values very narrow research and very tightly defined specialized research and that's why economists are in silos right there are there are labor economists they are macroeconomists they are io economists international economists finance economists and generally these groups don't talk to each other much and they just do one thing but when you want to do policy relevant research you talk to policymakers and then the minute you start talking to policymakers and spend time in policy institutions you realize these problems don't come like that"

An economist, whose name is not explicitly stated in this quote but is discussing the academic publishing landscape, points out a tension between academic specialization and policy relevance. This economist argues that the academic publishing system often rewards narrow, siloed research, which can hinder the ability to address complex, interconnected policy problems. They explain that when economists engage with policymakers, they discover that real-world issues rarely fit neatly into disciplinary boundaries.