Thursday, August 21, 2014

Central bankers mull jobless, stargaze at Jackson Hole

    Continued high unemployment in some of the advanced economies that were hard hit by the global financial crises raises the fundamental question of whether labor markets have permanently changed, according to the Federal Reserve Bank of Kansas City, host of this week's gathering of central bankers and leading economists in Jackson Hole, Wyoming.
    Central bankers and economists will ponder why labor markets in advanced economies remain far from their pre-crises condition despite years of aggressive monetary stimulus at the Jackson Hole Economic Policy Symposium from Aug. 21-23, held in the Grand Teton National Park.
    The issue of labor markets and wages, and thus inflationary pressure, is at the heart of the current debate within the U.S. Federal Reserve and the Bank of England(BOE) over when to raise interest rates, with minutes from the most recent meetings showing growing concern over wage growth.
    The official theme for this year's symposium in the Northern Rockies is "Re-Evaluating Labor Market Dynamics," and features four presentations by economists along with speeches by Federal Reserve Chair Janet Yellen and European Central Bank (ECB) President Mario Draghi.
    Among the other central bankers attending the conference - one of the prominent events on all central bankers' calendar since 1978 - are Haruhiko Kuroda, Bank of Japan (BOJ) governor, Ben Broadbent, Bank of England (BOE) deputy governor for monetary policy, and Alexandre Tombini, Central Bank of Brazil governor.

    "The 2014 Jackson Hole symposium will address these labor market issues, as central bankers - whether objectives focus on inflation alone or include employment - consider labour market conditions in monetary policy decisions," the Kansas City Fed wrote in the symposium's program.
    The Kansas City Fed hosted its first economic policy symposium in 1978 in Kansas City with the focus on agricultural issues but then moved it to scenic Jackson Hole in 1982, reportedly to help attract avid fisherman Paul Volker, and shifted the emphasis to monetary policy.
    Since then the conference has witnessed key speeches, not only from Fed chairmen such as Alan Greenspan, but also in 2003 when William While and Claudio Borio of the Bank for International Settlements (BIS) warned of the need for central banks to lean against financial imbalances even if inflation is low, and in 2005 when Raghuram Rajan, now governor of the Reserve Bank of India (RBI), warned of the risk from elevated housing prices worldwide.
    At the 2012 conference, Ben Bernanke signaled plans for quantitative easing while economist Michael Woodford's laid out the groundwork for central banks' use of forward guidance.
    But unlike earlier years, this year's conference attendants will mostly be academics and central bankers as chief economists from some of America's biggest banks have not been invited.

    The gathering kicks off Thursday evening with a reception and dinner at the Jackson Lake Lodge before getting into full swing on Friday morning when Yellen delivers the opening remarks.
    Yellen, who is expected by economists to reiterate her view that there is still considerable slack in the labor market, is followed by the first of four research papers to be presented at the symposium.
   Steven J. Davis, professor at the University of Chicago, and John Haltiwanger, professor at the University of Maryland, will address the issue of "Churn and the Functioning of Labor Markets."
   Then David Autor, professor at Massachusetts Institute of Technology (MIT), will present a paper under the topic of "Job Polarization," followed by a panel session on "Demographics."
    Friday morning's heavy schedule concludes with a luncheon address by ECB President Draghi after which participants can digest the morning's ideas and gather on a more informal basis before taking a bus to have dinner at the Diamond Cross Ranch, a family-owned and operated ranch that often hosts corporate events and is known for its natural beauty.
    Saturday kicks off with a presentation by Till Marco von Wachter, associate professor at the University of California, Los Angeles, who will explore the theme of "Scars from the Crises" followed by a presentation about "Wage Dynamics" by Giuseppe Bertola, professor at France's EDHEC Business School, known for its finance research.
    The morning then concludes with an panel on the topic of "Labor Markets and Monetary Policy", including BOE's Broadbent, BOJ's Kuroda and Brazil's Tombini.
    As on Friday, Saturday afternoon does not feature any presentations and the symposium concludes  that evening with a "closing reception, dinner and star gazing."

1 comment:

  1. The annual Jackson Hole conference was never a glamorous affair, unlike SALT for hedge funds (and Aspen for business leaders). Larry Summers didn't attend last year's gathering in Wyoming, despite being invited. I'm encouraged by the serious tone this year, as the Fed's task, to unwind QE and more, will not be easy. This is a wise decision:
    "unlike earlier years, this year's conference attendants will mostly be academics and central bankers, as chief economists from some of America's biggest banks have not been invited."

    I wish the investment bankers on the NY district board, Jamie Dimon et. al, could be permanently uninvited.