Understanding Inflation: Lessons From My Central Banking Career
The main lesson is that inflation is still a mystery
Harvey
Rosenblum is immediate past president of NABE. He is senior vice president
and director of research of the Federal Reserve Bank of Dallas. In this
capacity, he serves as economic policy adviser to the Bank's president
and as an associate economist for the Federal Open Market Committee, which
formulates the nation's monetary policy. A widely recognized expert on
both the national and Texas economies, he is the author of many articles.
He is also a visiting professor at Southern Methodist University and has
taught at other universities. He received a BA in economics from the University
of Connecticut and an MA and Ph.D. in economics from the University of
California, Santa Barbara.
Economic theory—much less modeling based on historical data—has a difficult time keeping up with structural change in the contemporary economy. Anecdotal evidence and a feel for the economy based on experience are likely to be as important as theory-based modeling in making real-time policy decisions on the control of inflation and the stability of the economy. Many of the phenomena to be understood are microeconomic in nature. While much has been learned about effective stabilization policy over the past forty years, economists still have a long way to go before inflation can be understood and managed.