Given at the 36th Annual Economic Policy Conference, St. Louis. October 20, 2011.Monetary policy - United States ; Economic conditions - United States ; Federal Reserve Bank of St. Louis

James Bullard

English

Research Papers in Economics

 
 
 
Opening remarks by President James Bullard 
36th Annual Federal Reserve Bank of St. Louis Fall Conference 
Federal Reserve Bank of St. Louis 
Oct. 20-21, 2011 
 
 
It is my pleasure to welcome you to the St. Louis Fed’s fall conference.  This is the 36th year for 
this conference.  I want to thank B. Ravikumar and Juan Sanchez for putting this very 
provocative program together.  I am looking forward to the stimulating discussion these papers 
are sure to inspire over the next day and a half. 
At the St. Louis Fed, we have long tried to provide perspectives on whether the policies 
adopted in the past still serve us well today and whether recent developments at the frontier of 
research can be fruitfully applied to improve policy.  This agenda has become especially 
important in the last few years, as the Fed and central banks around the world have struggled 
to devise appropriate policy responses to the current macroeconomic situation. 
In polite economist society, there has long been a distinction between what is known as 
“frontier” research and what is sometimes called “policy” research.  In my view, this has been 
and continues to be a false dichotomy.  There is no such distinction: “Policy” and “frontier” 
research are two sides of the same coin.  We need to understand both how fundamental 
mechanisms in the economy operate as well as how current data can be interpreted in terms of 
fundamental theory. 
In short, advanced economic theory has to be made more relevant for actual policy, and actual 
policy has to understand and embrace the difficult ideas advanced in the theoretical world.  The 
Federal Reserve Bank of St. Louis has long been a leader in supporting basic research at the 
intersection of economic theory and economic policy.   
We are fortunate this year to have an outstanding group of speakers whose research expands 
our understanding of key contemporary issues in macroeconomics.  This year’s conference 
covers a wide range of topics: From economic fluctuations to sovereign debt; from international 
trade to innovation and long-run growth. 
On the more current and shorter-term macroeconomic issues, we have papers examining  
•  optimal monetary and fiscal policy at the zero lower bound,  
 
 
 
 
 
•  the role of self-fulfilling prophecies in business cycles and in the sovereign debt crisis in 
Europe, 
•  the role of demand shocks in business cycle fluctuations, 
•  why global trade dropped so much during the Great Recession, and 
•  the implications of the tax treatment of debt on financial leverage. 
We also have a group of papers studying longer-term macroeconomic issues, including  
•  the role of informational frictions in finance and development,  
•  understanding innovation policy, 
•  the relationship among health investment, consumption, and wealth, and 
•  how the allocation of talent affects long-term growth.  
I know that these papers and the ideas they contain will contribute importantly to the 
macroeconomic discussion in the coming years as the papers are eventually published and the 
results become more widely known in the profession.  The St. Louis Fed is proud to provide this 
forum for discussion and analysis of the leading issues of the day. 
Let me again welcome all of you to the St. Louis Fed’s fall conference.  Thanks very much for 
coming, and now let’s get to work! 
 
James Bullard, President and CEO  
Federal Reserve Bank of St. Louis 
 
 
 
   

Opening remarks

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