The Fed: Lessons learned from the past three years
Past Event
The past three years have been challenging for the Federal Reserve: a pandemic, a recession, large doses of fiscal stimulus, a surge of inflation that proved more persistent than many anticipated, a very tight labor market, the economic ripples of the Russian invasion of Ukraine, a banking crisis. All that was accompanied by a new framework for monetary policy that redefined its inflation goal (now defined as “inflation that averages 2% over time”) and maximum employment (now defined as a broad-based and inclusive goal) with a policy focus on shortfalls from that goal. By most accounts, the Fed was slow to raise interest rates to thwart inflation, which then led the central bank to lift rates unusually rapidly beginning in 2022.
On Tuesday, May 23, the Hutchins Center on Fiscal & Monetary Policy at Brookings discussed lessons that the Fed should draw from the past three years, and what issues it should consider when it revisits the framework, as it has promised to do every five years.
Brookings’ Ben Bernanke and Olivier Blanchard of the Peterson Institute for International Economics presented a paper on what drove the inflation that was much greater and persistent than Fed forecasters anticipated. Don Kohn of Brookings and Gauti Eggertsson of Brown University presented a paper on how the Fed’s approach to using its monetary policy tools over the past few years may have contributed to the inflation overshoot. A panel then discussed issues that the Fed should consider in its next framework review. Viewers submitted questions by emailing events@brookings.edu, on Twitter using the hashtag #FedFramework, and at sli.do using the code #FedFramework.
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Agenda
Welcome
David Wessel
Director - The Hutchins Center on Fiscal and Monetary Policy
Senior Fellow - Economic Studies
Paper presentation
Olivier Blanchard
C. Fred Bergsten Senior Fellow - Peterson Institute for International Economics
Session Materials
Discussant response
Jason Furman
Former Brookings Expert
Aetna Professor of the Practice of Economic Policy - Harvard University
Nonresident Senior Fellow - Peterson Institute for International Economics
Session Materials
Discussant response
Richard Clarida
C. Lowell Harriss Professor of Economics and Professor of International and Public Affairs - Columbia University
Vice Chair (former) - Board of Governors of the Federal Reserve
Session Materials
Conversation and Q&A
Ben S. Bernanke
Distinguished Senior Fellow - Economic Studies - The Brookings Institution
Olivier Blanchard
C. Fred Bergsten Senior Fellow - Peterson Institute for International Economics
Richard Clarida
C. Lowell Harriss Professor of Economics and Professor of International and Public Affairs - Columbia University
Vice Chair (former) - Board of Governors of the Federal Reserve
Jason Furman
Former Brookings Expert
Aetna Professor of the Practice of Economic Policy - Harvard University
Nonresident Senior Fellow - Peterson Institute for International Economics
Louise Sheiner
The Robert S. Kerr Senior Fellow - Economic Studies
Policy Director - The Hutchins Center on Fiscal and Monetary Policy
Paper presentation
Gauti B. Eggertsson
Professor of Economics - Brown University
Session Materials
Discussant response
Ellen Meade
Research Professor of Economics - Duke University
Senior Adviser (former) - Federal Reserve Board
Session Materials
Conversation and Q&A
Gauti B. Eggertsson
Professor of Economics - Brown University
Ellen Meade
Research Professor of Economics - Duke University
Senior Adviser (former) - Federal Reserve Board
David Wessel
Director - The Hutchins Center on Fiscal and Monetary Policy
Senior Fellow - Economic Studies
Panel
Ben S. Bernanke
Distinguished Senior Fellow - Economic Studies - The Brookings Institution
Olivier Blanchard
C. Fred Bergsten Senior Fellow - Peterson Institute for International Economics
Richard Clarida
C. Lowell Harriss Professor of Economics and Professor of International and Public Affairs - Columbia University
Vice Chair (former) - Board of Governors of the Federal Reserve
Kristin J. Forbes
Jerome and Dorothy Lemelson Professor of Management, Professor of Global Economics and Management - MIT-Sloan School of Management
Ellen Meade
Research Professor of Economics - Duke University
Senior Adviser (former) - Federal Reserve Board
David Wessel
Director - The Hutchins Center on Fiscal and Monetary Policy
Senior Fellow - Economic Studies
Session Materials
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