St. Louis Fed's Review: Monetary Policy Under Uncertainty

ST. LOUIS — Economists and policymakers from around the world gathered in St. Louis for the 32nd annual policy conference of the Federal Reserve Bank of St. Louis to explore the conduct of monetary policy under uncertainty. The conference was held in honor of William Poole, the St. Louis Fed's outgoing president, who has had a long-standing interest in the subject.

The papers and discussions from the conference are published in the July/August issue of Review, the St. Louis Fed's bimonthly publication of economic and business research. The publication also features a reprint of "Rules-of-Thumb for Guiding Monetary Policy," a paper written by Poole and published by the Board of Governors of the Federal Reserve System in 1971, when he was a senior economist in the special studies section of the Board's Division of Research and Statistics.

The publication is also available online.

Attendees paid tribute to Poole, who was at the helm of the St. Louis Fed for 10 years until his retirement in March of 2008. Among others who commended his work, John Taylor, professor of economics at Stanford University, told conference attendees that Poole's emphasis on the good communication and good policy "has contributed, and will continue to contribute, to improvements in the conduct of monetary policy."

Reflecting Taylor's sentiment, Fed Chairman Ben S. Bernanke said, "The contributions of Bill Poole have helped refine our understanding of how to conduct monetary policy in an uncertain environment ... Most fundamentally, our discussions of the pervasive uncertainty that we face as policymakers is a powerful reminder of the need for humility about our ability to forecast and manage the future course of the economy."

The titles and authors of the conference papers are:

• "Optimal Monetary Policy Under Uncertainty," by Lars E.O. Svensson and Noah Williams. Svensson is deputy governor of the Sveriges Riksbank and professor of economics at Princeton University. Williams is assistant professor of economics at Princeton University.
• "Economic Projections and Rules of Thumb for Monetary Policy," by Athanasios Orphanides and Volker Wieland. Orphanides is governor of the Central Bank of Cyprus. Wieland is a professor of Goethe University Frankfurt and director of the Center for Financial Studies.
• "Home Prices and the Stance of Monetary Policy," by Marek Jaroci?ski and Frank R. Smets. Jaroci?ski is an economist at the European Central Bank (ECB). Smets is deputy director general of research at the ECB.
• "Assessing Monetary Policy Effects Using Daily Federal Funds Futures Contracts," by James D. Hamilton, professor of economics at the University of California, San Diego.
• "Announcements and the Role of Policy Guidance," by Carl E. Walsh, professor of economics at the University of California, Santa Cruz, and a visiting scholar at the Federal Reserve Bank of San Francisco.
• Panel Discussion: "The Importance of Being Predictable," by John B. Taylor, professor of economics at Stanford University; Ben S. Bernanke, chairman of the Board of Governors of the Federal Reserve System; and William Poole, president of the Federal Reserve Bank of St. Louis.

Commentaries are provided by:

• Timothy W. Cogley, professor of economics at the University of California, Davis.
• Andrew T. Levin, deputy associate director in the Division of Monetary Affairs, Board of Governors of the Federal Reserve System.
• Charles I. Plosser, president of the Federal Reserve Bank of Philadelphia.
• Patrick Minford, professor of applied economics at Cardiff University.
• Robert G. King, professor of economics at Boston University.
• Stephen G. Cecchetti, professor of global finance at Brandeis International Business School.
• Alec Chrystal, professor of money and banking, and associated dean and head of the faculty of finance at Sir John Cass Business School, City University, London, England.

With branches in Little Rock, Louisville and Memphis, the Federal Reserve Bank of St. Louis serves the Eighth Federal Reserve District, which includes all of Arkansas, eastern Missouri, southern Indiana, southern Illinois, western Kentucky, western Tennessee and northern Mississippi. The St. Louis Fed is one of 12 regional Reserve banks that, along with the Board of Governors in Washington, D.C., comprise the Federal Reserve System. As the nation's central bank, the Federal Reserve System formulates U.S. monetary policy, regulates state-chartered member banks and bank holding companies, and provides payment services to financial institutions and the U.S. government.

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