Few have the power to change the course of the global economy with their words alone. One such man is Dr. Stanley Fischer, Vice-Chairman of the Federal Reserve, who provided an intriguing account of historical monetary policy through the 2000’s and hinted at an uncertain future.
Dr Fischer was educated at LSE, going on to complete his PhD at MIT, where he would later return as a professor and advise future economic heavyweights such as Gregory Mankiw, Ben Bernanke and Mario Draghi. After a spell in corporate banking, he served as Governor of the Bank of Israel from 2005-2013, before being appointed by Barack Obama to his current role as Vice-Chair of the Fed in January 2014.
Every model is a vast simplification of the complexity of the economy
Dr. Fischer discussed at length the implications of poor economic models, commenting that “every model is a vast simplification of the complexity of the economy”. The title of his lecture, “I’d rather have Bob Solow than an economic model”, encapsulates his view that “no one economic model can capture the various opinions brought to policy making better than a committee can”.
The Fed would be strict in meeting targets of creating full employment and getting inflation to 2 percent
When questioned on the future of the economy, Fischer said there was significant uncertainty about U.S. fiscal policy under the Trump administration, but the Fed would be strict in meeting targets of creating full employment and getting inflation to 2 percent. Comments were also made regarding the Dodd-Frank financial regulation, where Fischer said he hoped that capital requirements for banks would not be significantly reduced.