October 31, 2011

Sound policy makes good economic sense, say conference organizers

Can the work of researchers in macroeconomics help lead us out of the economic doldrums? Emory economics faculty members Sheila Tschinkel and Tao Zha say the answer is a resounding yes.

Together they have worked with the Halle Institute for Global Learning and the Federal Reserve Bank of Atlanta to organize a conference on macroeconomic policy set for Thursday, Nov. 3, at Goizueta Business School.

Economists, policymakers, students and the public will discuss the interplay between macroeconomic research and public policy in a variety of areas, from oil prices, to monetary policy and the recent financial crisis.

"We put the conference together because we want to show that good macroeconomic policy, both fiscal and monetary, is based on research," says Tschinkel, distinguished visiting scholar in economics and the Halle Institute. "Good macroeconomic analysis can help us avoid policy mistakes."

Avoiding policy mistakes can be the key to keeping the global economy afloat, but that can be especially difficult when the future appears uncertain and therefore unpredictable, says Zha.

Zha recently learned that two macroeconomists with whom he has co-authored papers, Thomas J. Sargent of New York University and Christopher Sims of Princeton University, were awarded the 2011 Nobel Prize for their work with empirical macroeconomic tools and models.

"In a world full of uncertainty, if you don't have some careful empirical assessment of a particular action and the effect of a particular policy action, it's not going to bode well for the world economy," says Zha, who also serves as director of the Center for Quantitative Economic Research at the Federal Reserve Bank of Atlanta.

The Nobel committee agreed, stating in its citation, "In their entirety, the research contributions of Sargent and Sims are not merely always and everywhere central in empirical macroeconomic research—it would be nearly impossible to imagine the field without them."

Tschinkel and Zha agree that the time is right to share insights on macroeconomic research and policy with a broader audience. Alan Blinder, who will be the keynote speaker for the conference, is familiar with the worlds of research and policy. The Princeton University professor of economics and public affairs is a former member of President Bill Clinton's Council of Economic Advisers and former vice chair of the Federal Reserve's board of governors.

"It's important for people to see how research and policy relate," says Tschinkel. "There may be some who think the economy can be managed as if it's a business, but all that we've gone through in the last several years has demonstrated that's not the case. It takes careful analysis of policy choices in order to decide what to do."

Zha says that students are "very keen to learn and understand the dynamics and the effect of public policy as it relates to the economy." He adds that this week's conference serves to strengthen the liberal arts at Emory.

"Bringing academic researchers together with policymakers and practitioners in the private sectors is an important aspect of Emory's mission as a place where the liberal arts are central," Zha says. "The liberal arts should be focused on public policy and the welfare of society, which are entwined." 

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