The interdependence of research and policymaking
I
am especially thankful to Professor Hellwig for inviting me to address
this conference. All of you Nobel laureates share the extraordinary
ability to explain parts of our everyday reality that have not been
understood before, or were previously seen from a different, and less
informative, perspective. You are the builders of a science that is also
a guide to policymaking. Your discoveries have contributed to the way
we think, the way we do policy, the way we affect the welfare of
millions of individuals.
This year marks the 200th anniversary of David Ricardo’s Theory of Comparative Advantage[1]
– in the words of Paul Samuelson, one of the few counter-intuitive
fundamental ideas in economics, which moved the world away from
mercantilism. And when we look at other giants in the history of
economic thought, Adam Smith, who laid down the foundations of
capitalism; Keynes, who drove us into policy activism and away from laissez-faire;
until the founders of econometric model building in post-war time, we
cannot but conclude that there is little in economics that does not have
policy implications and that the interaction between research and its
policy application is continuously evolving in an ever expanding
universe.
Let me review the most recent development of those
interactions and in so doing, I will focus on monetary policy and
financial regulation.(segue)
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