From The Editor
by Robert T. Crow
NABE’s Annual Meeting was held September 10-12 in Boston and, as always, was marked by its president’s valedictory and by awards. This issue is heavily influenced by that event. William Poole, the president and CEO of the Federal Reserve Bank of St. Louis, was presented with NABE’s Adam Smith Award for his leadership in the economics profession and for applying economic ideas and knowledge in work and policy. This issue leads off with his Adam Smith lecture, “The Monetary Policy Model,” in which he describes the content and implications of rational expectations in monetary policy. He emphasizes the importance of credibility of central bank policy in making policy in a rational expectations world, which in turn requires clear communication of goals and policies.
Continuing the focus on monetary policy, the next article is Stuart G. Hoffman’s presidential address. “Reflections of a Life-Long Professional Fed Watcher,” chronicles the evolution of Fed policy, instruments, and operating philosophy over the past three decades. He also explores the conundrum of the inverted yield curve and offers his outlook for Fed policy and U.S. economic growth.
The next paper, by Thomas F. Siems and Adam S. Ratner, won the Edmund A. Mennis Contributed Paper Award. “Strengthening Globalization’s Invisible Hand: What Matters Most?” uses analytical results from a crosssection of 52 countries to identify the factors that are most important to sustaining strong economic growth in today’s global, knowledge-based economy.
The NABE Contributed Paper Award is the runner-up in the Mennis competition. This was won by Jacob De Rooy. His paper, “Pricing of Mutual Fund Services in Retirement Plans: Evidence from Open-End Equity Funds,” illustrates the importance of management fees in the returns from mutual funds in retirement accounts. It also presents an empirical analysis of the determinants of these fees relative to funds’ asset size.
Edward P. Lazear, the Chairman of the President’s Council of Economic Advisers, presented “Productivity and Wages” at the Annual Meeting. His address is published in this issue. His analysis shows the relationships between total compensation per worker, productivity, and profits. He also describes the necessary conditions for sustaining high productivity growth.
In their paper, “Expected Future Budget Deficits and the U.S. Yield Curve,” Lloyd B. Thomas and Danhua Wu take a new tack on exploring the relationship between greater federal deficits and the yield curve. They find that, recent experience notwithstanding, growing deficits are likely to increase the spread between short- and long-term interest rates by a significant amount.
In Economics at Work, Dave Andrea describes his work for the Original Equipment Suppliers Association. His activities cover a wide range of ways that an economist creates value for an industry under a great deal of pressure— from providing an understanding of the economics of a highly competitive industry coping with a monopsony to forecasting commodity prices and inferring their implications for equipment suppliers.
In Focus on Statistics, Robert Parker describes the programs and publications relating to petroleum supply and demand that emanate from the U.S. Energy Information Administration. These cover U.S. and international daily, weekly, monthly, and annual statistics covering prices and output of the petroleum industry from well-head production to retail product sales. They also cover short- and long-term outlooks for domestic and international petroleum markets.
Audio books have become increasingly popular with the development of increasingly mobile audio technology—CD players, Ipods, etc. This enables many to learn from books that they cannot read—because of visual impairment, driving a car, or other circumstances—or that they simply prefer to listen to. Edmund A. Mennis reviews two books from the last few years that have recently been issued on CDs. Moreover, they may have slipped under economists’ collective radar and are worth considering in any medium. The first, The Tipping Point: How Little Things Can Make a Big Difference by Malcolm Gladwell, explores the phenomenon of apparently small events making drastic changes in markets. The title of the second, The Wisdom of Crowds: Why the Many Are Smarter than the Few and How Collective Wisdom Shapes Business, Economies, Societies, and Nations by James Surowiecki, is fairly self-explanatory—on the average, group judgment may be fairly accurate.
There is no Focus on Industries and Markets in this issue, but it is expected to be back in the next.
Additions to the Editorial Board
I am pleased to welcome the return of Evelina M. Tainer to the Editorial Board. Evelina has extensive and distinguished experience in business and will be especially valuable in considering issues relating to labor, macroeconomics, and inflation. I would also like to welcome Thomas F. Siems. Tom is the only two-time winner of the Mennis Award, whose paper with Adam S. Ratner appears in this issue. He is interested in a wide range of topics, and his quantitative and theoretical skills are especially welcome.