Speech

Inflation and Unemployment

Abstract: I recently had the opportunity to guest-teach a couple of business school economics classes. It was great to be back in the classroom. Don’t get me wrong – I like my current job. But it was nice not to have to vote on anything. I opened my discussions with a pair of questions, asking students to put themselves in the place of a monetary policymaker choosing a target for the federal funds rate. First I gave them a set of hypothetical facts about the state of the economy – a slowdown in housing in the wake of multi-year housing boom; rising mortgage default rates; preliminary indicators of a possible slowing in business investment. And then I asked them: “What are you going to do?” The students dutifully responded that this situation could call for a reduction in the funds rate. They’d obviously been doing their homework.

Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Speech

Publication Date: 2007-03-29