Recent developments in the world economy have presented substantial challenges to monetary policy. Central banks have responded with great activism and have resorted to unconventional policies such as quantitative easing and an increasing use of forward guidance. Moreover, central banks are now expected to take on more responsibility for financial stability. In some countries this includes proposals for new macroprudential policy tools. With these increasing demands placed on central banks, it seems appropriate to revisit an old debate in economics about the scope and ambition of monetary policy – and to relate this debate to macroprudential policy proposals.

This Norges Bank conference brings together prominent economists with different perspectives on this debate for an open-minded, constructive dialogue. Specifically, it revisits the questions that Milton Friedman set out to answer in his famous 1967 address to the American Economic Association. What can monetary policy contribute to achieving the several goals of economic policy? What are its limitations? And how should it be conducted to contribute the most?

Organisers:

• Ida Wolden Bache
• Gisle J Natvik
• Dagfinn Rime
• Martin Seneca

Programme

Thursday 26 September

11:30 – 12:45 Registration and entry, lunch

13:00 - 13:15 Welcome address, Øystein Olsen (Governor, Norges Bank)

13:15 - 14:30 Keynote lecture, The role of monetary policy, revisited, John Cochrane (University of Chicago Booth School of Business) Presentation

14:30 - 15:00 Break

15:00 - 17:00 Session I: Monetary policy

Chair: Steinar Holden (Norges Bank Professor of Economics, University of Oslo)

Some lessons from six years of practical inflation targeting

• Presenter: Lars Svensson (Stockholm University) Presentation / Paper
• Discussant: Roger E.A. Farmer (University of California, Los Angeles/Bank of England)

International competitiveness and monetary policy: Strategic policy and coordination with a production relocation externality

• Presenter: Giancarlo Corsetti (University of Cambridge) Paper / Presentation
• Discussant: Hélène Rey (London Business School) Presentation

17:00 - 17:30 Break

17:30 - 18:30 Session II: Macroprudential policy

Chair: Ragna Alstadheim (Director, Norges Bank General Secretariat)

A theory of macroprudential policies in the presence of nominal rigidities

• Presenter: Emmanuel Farhi (Harvard University) Paper
• Discussant: Martin Flodén (Deputy Governor, Sveriges Riksbank) Presentation

19:00 - 23:00 Conference dinner (by invitation only)

Friday 27 September

8:15 - 08:45 Re-registration and entry

09:00 - 11:00 Session III: Monetary policy and financial markets

Chair: Farooq Akram (Director, Norges Bank Research)

The effects of monetary policy on asset price bubbles: Some evidence

• Presenter: Jordi Galí (University Pompeu Fabra) Presentation
• Discussant: Andrea Ferrero (University of Oxford) Presentation

The I theory of money

• Presenter: Markus Brunnermeier (Princeton University) Paper / Presentation
• Discussant: Philipp Hartmann (Deputy Director General, European Central Bank) Presentation

11:00 - 11:30 Break

11:30 - 12:30 Keynote lecture: U.S. Monetary Policy: Assessing Strategy and Effectiveness, Charles Evans (President and Chief Executive Officer, Federal Reserve Bank of Chicago) Presentation

12:30 - 13:45 Lunch

13:45 - 15:45 Session IV: Macroprudential policy and financial markets 

Chair: Ida Wolden Bache (Deputy Executive Director, Norges Bank Financial Stability)

Macroprudential policy and the financial cycle: Some stylised facts and policy suggestions

• Presenter: Claudio Borio (Deputy Head and Director, Bank for International Settlements) Presentation
• Discussant: Lasse Pedersen (Copenhagen Business School/New York University Stern School of Business) Presentation

Interactions between capital and liquidity regulation

• Presenter: Anil Kashyap (University of Chicago Booth School of Business) Presentation
• Discussant: Frank Smets (Director General, European Central Bank)

15:45- 16:15 Break

16:15 - 17:30 Concluding discussion: Monetary and macroprudential policies going forward

Moderator: Gretchen Morgenson (New York Times)

Panel:

• Claudio Borio (Deputy Head and Director, Bank for International Settlements)
• John Cochrane (University of Chicago Booth School of Business)
• Charles Evans (President and Chief Executive Officer, Federal Reserve Bank of Chicago)