Having spent a great deal of my professional life in academia, I'm a big fan of economic education. A lifelong commitment to economic ed has only been heightened by my current position as a monetary policy-maker. If citizens lack understanding about the benefits of the Fed's goal of price stability, as well as how we go about pursuing it, the Fed can hardly expect support for its policy actions. While the media have at times focused—albeit with tongue in cheek—on the condition of Alan Greenspan's briefcase as a clue to forthcoming Federal Open Market Committee (FOMC) decisions, I believe the public needs better information than that.
One way the St. Louis Fed is working to dispel the briefcase mentality is to sponsor Fed Challenge, a real-world economics competition for high school students. Fed Challenge teams participate in a mock FOMC meeting, presenting their analyses of current economic conditions and their recommendations for monetary policy. A question and answer session with a panel of judges composed of business, academic and Fed economists concludes each team's performance. This year, for the first time, Little Rock and Louisville area schools will compete against their counterparts in St. Louis and Memphis, bringing all four Eighth District offices into the Fed Challenge fold. As this issue of The Regional Economist goes to print, we will have completed our District-wide competition and sent the winning team on to the nationals in Washington, D.C., on May 1.
The first time I served as a judge for Fed Challenge, I was amazed at the students' level of understanding of monetary policy. From several months of intense work, they accumulate knowledge of the Fed that few students—even at the college level—can match. In my opinion, many of them would be quite comfortable discussing the economy with Chairman Greenspan himself. Not only does the competition stir students' interest in economics and related subjects as potential fields of further study, but it also helps them develop research, cooperation, presentation and critical-thinking skills, giving them experience they can use in any number of future endeavors. When they reach adulthood, these teen-agers will undoubtedly become spheres of influence in their communities.
I am convinced that this competition raises the overall level of economic literacy in our nation's high schools by motivating teachers and their students to really dig into the basics of monetary policy. So the next time you want to know what interest rates are going to do—and, more important, why—forget about the Chairman's briefcase. Ask a Fed Challenge competitor instead.