Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Okay, so thank you all.
Speaker 3: The next paper is going presented by Omar barbierro Us
Speaker 3: Firm's Exposure to import tariffs a comparison of the eighteen
Speaker 3: and twenty twenty five episodes.
Speaker 4: Can I ask a personal question when you present a
Speaker 4: paper like this at a research conference like this Boston
Speaker 4: fed one, So you get nervous, and then I guess
Speaker 4: adjacent to that, like what's the best outcome for you
Speaker 4: when you present the paper? And what's the sort of
Speaker 4: nightmare scenario would it be someone like finding some fundamental
Speaker 4: error in the methodology and like standing up in the
Speaker 4: middle of the conference and being like, there's a serious
Speaker 4: problem here.
Speaker 5: Yeah, I mean many many nightmare scenarios king randomly and
Speaker 5: then we went okay.
Speaker 1: All right.
Speaker 5: I would say the worst thing that can happen is
Speaker 5: that you just say something wrong that sounds dishonest, almost
Speaker 5: like you're trying to hide something like there's clearly a
Speaker 5: data flaw, and then you don't highlight it, or you
Speaker 5: don't you say in public, no, no, no, this is
Speaker 5: not a problem, and everybody knows no, no, no, it's it's
Speaker 5: a problem that's I think the profession is built on trust,
Speaker 5: and if you if you lose that trust, it's it's.
Speaker 3: It's quite bad.
Speaker 4: That's Omar Barbiero, a senior economist at the Federal Reserve
Speaker 4: Bank of Boston. He's getting ready to stand up in
Speaker 4: front of a room full of other economists, journalist, academics,
Speaker 4: and his employer and present a research paper tracking the
Speaker 4: exposure of US businesses to import tariffs.
Speaker 5: This is a paper written jointly with Slavic, Hillary and Alvaro,
Speaker 5: where there happened to be in the room our excellent
Speaker 5: research assistance Sophie and Lydia also who helped us with
Speaker 5: this paper. We're ready for the conference is still quite
Speaker 5: preliminary and therefore will really value your comments on this.
Speaker 4: How many individual pieces of data would you say were
Speaker 4: involved in this particular study.
Speaker 1: Okay, product code, they were around four hundred thousand, I
Speaker 1: would say, and then you have to multiply that by
Speaker 1: many different countries, and so you have to keep track
Speaker 1: of that metrix.
Speaker 5: The supply chain that I said was also quite fun
Speaker 5: because it's kind of a network of companies and it
Speaker 5: gets big, very very fast, and you have to track
Speaker 5: it over time. I have to say, I mean we
Speaker 5: have excellent I mean I have excellent call thors, we
Speaker 5: have accidents.
Speaker 6: It's a system.
Speaker 5: We have excellent you know, computing power, Thank god that
Speaker 5: can help us with that. And I don't know millions,
Speaker 5: I ah, yes, millions.
Speaker 3: Yeah.
Speaker 6: We are at the Boston SAIDs annual Flagship Research Conference.
Speaker 6: The sixty nine year of the event, and the theme
Speaker 6: for twenty twenty five is quote the US economy and
Speaker 6: a changing global landscape, so focusing on how things like tariffs,
Speaker 6: geopolitical tensions, industrial policy, AI, et cetera are reshaping US growth, inflation,
Speaker 6: and the overall financial system.
Speaker 4: Clearly, that is a very rich vein to mind for research,
Speaker 4: and the format is a classic central bank research conference.
Speaker 4: Economists and other researchers are invited to write a paper
Speaker 4: for the event, they're assigned an official discustant, and then
Speaker 4: they publicly present to a room full of their peers
Speaker 4: while the audience gets a chance to ask questions or
Speaker 4: sometimes critique.
Speaker 6: Yeah, you say it's a classic central bank research conference,
Speaker 6: but we've never actually been to one. I don't think right,
Speaker 6: it felt like a totally new environment.
Speaker 4: Yeah, it's true. We have gone to Jackson Hole for
Speaker 4: the past few years, which is probably the most famous
Speaker 4: FED research conference. But it's famous because the FED chair
Speaker 4: usually makes a speech and that gets all the attention.
Speaker 4: We've never actually been in the room at Jackson Hole
Speaker 4: where they discuss the research papers being presented, because the
Speaker 4: FED only allows a certain number of journalists into the room.
Speaker 6: The room, the room, the room. Also, I think it's
Speaker 6: unfair Kansas City FED gets to hold their conference in
Speaker 6: the most beautiful place on.
Speaker 4: Earth instead of Kansas it's in the middle of August.
Speaker 6: And then the Boston FED. I mean it's their choice,
Speaker 6: but the Boston FED has theirs in Boston, which is lovely.
Speaker 6: We both had a great time, but November.
Speaker 4: It was very cold. Well, the upshot is that this
Speaker 4: time we were actually in the proverbial room, so for
Speaker 4: the first time we got to really experience and learn
Speaker 4: what an economic research conference actually is.
Speaker 6: Yeah, this is actually very key because if you sort
Speaker 6: of like wonder so okay, Jerome Poulos says something about,
Speaker 6: you know, the expected relationship between tariffs and inflationary but
Speaker 6: where did these ideas come from? Where do these assertions,
Speaker 6: predictions and so forth? It comes from academic research. It
Speaker 6: comes from the research backing that up. These conferences are
Speaker 6: where the macro ideas sort of actually collide with a
Speaker 6: real world data.
Speaker 4: Yeah, another way of thinking about it. It is where
Speaker 4: the first serious drafts of tomorrow's policy debates are aired.
Speaker 4: And we're going to give you a front row seat
Speaker 4: to experience what those initial drafts and debates are actually like.
Speaker 6: Welcome to the Boston FED sixty ninth Annual Flagship Economic Conference.
Speaker 7: The research at the regional bank, at the board or
Speaker 7: at the BIS. You do policy by policy, we mean,
Speaker 7: you know, you advise your principles. In our case that
Speaker 7: Susan Collins the Presidency of the Boston Fed. Preparations for
Speaker 7: the FMC meeting or public engagements.
Speaker 4: That is Egon sa Kreichek. He's director of the Research
Speaker 4: Department at the Boston Fed, and he's the one who
Speaker 4: actually puts this event.
Speaker 6: Together and is Omar's boss.
Speaker 4: Yeah, and he's an Omer's boss, right. He also gets
Speaker 4: to choose the broad theme of the conference.
Speaker 7: We've lived in a particular global order, rules based international system, globalizations,
Speaker 7: trade integrations. We just took those things for granted for decades,
Speaker 7: and we're now grappling with monumental change, and we lack models,
Speaker 7: we lack theoretical frameworks to understand these changes. You've heard
Speaker 7: many debates about this data is no good, this is
Speaker 7: the sausage, don't need it right? And how as one
Speaker 7: go about it? So I think it's just it's just really,
Speaker 7: I mean, it's an exciting time for researchers because we
Speaker 7: have great questions, but I think it also underscores of
Speaker 7: just how little we really know and and how challenging
Speaker 7: it is then to make policy recommendations in this in
Speaker 7: the period of such change. You know, the way the conference,
Speaker 7: a conference like that comes together is, you know, we
Speaker 7: sit together, my team of researchers. We we try to
Speaker 7: pick a topic that would obviously be timely relevant to
Speaker 7: policy makers. We confer with Susan and so forth, We
Speaker 7: look you know, and so forth. So once we once
Speaker 7: we kind of zero in on what the topic is,
Speaker 7: we then have to identify the contributors to this. We
Speaker 7: have a certain idea of what we want different sessions
Speaker 7: to be. Then we get either academics or you know,
Speaker 7: contributors to write papers for this. But you know, academics,
Speaker 7: researchers write what they want to write so sometimes there's
Speaker 7: a bit of a you know, so we're saying, you know,
Speaker 7: gentlemanlike distance between the blurb and the ultimate paper that
Speaker 7: gets written. But that's all right. We've always seen this.
Speaker 7: This is very very standard, and you know, the idea
Speaker 7: is that needs to the discussing the role of a
Speaker 7: discuss and they needs to kind of bring that paper
Speaker 7: and provide some context and you know, try to try
Speaker 7: to fit it into the general theme.
Speaker 6: So this particular conference, the theme has changed, right. And
Speaker 6: one of the things we keep saying, but I think
Speaker 6: it's true, is we're living through capital age history here.
Speaker 6: We have the tariffs from the Trump administration, reversal, globalization,
Speaker 6: new geopolitical risks, AI all of.
Speaker 4: It right, And we're also still trying to figure out
Speaker 4: stuff like what happened in relatively recent years, why did
Speaker 4: inflation actually spike during the pandemic. We're also in this
Speaker 4: new era of industrial policy and we're trying to figure
Speaker 4: out what that means for the economy. If we actually
Speaker 4: want to do the stuff like make semiconductors or build
Speaker 4: small modular nuclear reactors, we have to have some idea
Speaker 4: of where we're going.
Speaker 7: And we try to really keep it. You know, I
Speaker 7: would say somewhat more accessible. I would say a bit interdisciplinary.
Speaker 7: We try to reach a bit broader audience. Is somewhat
Speaker 7: a typical conference, you know, your typical economic research conference
Speaker 7: would feature slide after slide of equations graphs.
Speaker 4: I'm laughing slightly because I saw some equations this morning
Speaker 4: and the speaker is like, oh, well, as you can
Speaker 4: see from the slide, and I'm thinking I cannot see no.
Speaker 7: Right right, So you know, so this is I would say,
Speaker 7: this is very light on this. If you're you know,
Speaker 7: this is super light on this. And so forth, we
Speaker 7: urge authors to try to write something that's more I
Speaker 7: would say policy relevant. That the touches that can be
Speaker 7: communicated and stuff that rather than very very technical pieces.
Speaker 7: You know, that is what the academic journalistand to specialize that.
Speaker 7: Hopefully it sparks. It sparks the idea, It sparks a
Speaker 7: new paper. You know, it says, ah, you know what,
Speaker 7: this is an interesting result, but I have maybe better
Speaker 7: data to do that, so let me actually or there
Speaker 7: was a there was a testable implication that somebody you
Speaker 7: know brought up. Let me see if I can fledge
Speaker 7: that out because I think I can provide sences. That's
Speaker 7: how knowledge and conferences, you know, advances. It's a very
Speaker 7: organic bit of a messy type of affair, and that
Speaker 7: you know, to be honest, many times don't things don't
Speaker 7: they don't pan out. You know, I have files and
Speaker 7: folders full of research ideas that you know never went anywhere.
Speaker 4: But do you try and if you want to get
Speaker 4: a sense of that process and the policy implications of
Speaker 4: some of this research. Take a listen to the first
Speaker 4: paper presented at the conference. It's by Shepnham Klumley Auskin.
Speaker 4: She's the Shreiber Family Professor of Economics over at Brown University.
Speaker 6: I love economists and their their long title. The John
Speaker 6: Maynard Knees Chair of the Ludwig viin me seasoned dud
Speaker 6: See at the University of you know whatever.
Speaker 4: Cane's chatt the Missus School would be an interesting mix. Anyway,
Speaker 4: here's Shepnam presenting her paper. It is called Global Networks,
Speaker 4: Risks and the US Economy.
Speaker 3: You know, paper after paper, we realize the issue with
Speaker 3: the conventional macro open economy view.
Speaker 7: What is this view?
Speaker 3: This view takes US as a relatively closed economy because
Speaker 3: of the law, trade shares exports ten percent of GDP,
Speaker 3: imports fourteen percent of GDP, and that, of course combines
Speaker 3: with the fact that the US is governing the world
Speaker 3: in terms of dollar dominance and the financial markets. And
Speaker 3: on top of that, US has an amazing central bank.
Speaker 3: As we are all here right now, you know that
Speaker 3: Federal Reserve acts as a global lender of last resort
Speaker 3: when things goes soup. The benchmark implication of this view
Speaker 3: is that US has limited exposure to glow all risks.
Speaker 3: It would like to revisit the issue in terms of
Speaker 3: asking directly have sensitive the US economy to global risks
Speaker 3: once we account for full global trade, production and finance
Speaker 3: networks and really think about trades off and counterfactuals, and
Speaker 3: basically revisit this issue that the fact that maybe your
Speaker 3: trade shares are long.
Speaker 4: We caught up with Chevnham after her presentation to better
Speaker 4: understand exactly what she's trying to do here.
Speaker 3: All right, So, yes, we found something different because we
Speaker 3: work with networks.
Speaker 8: And let me explain what that is.
Speaker 3: When you say networks again, the traditional we're first going
Speaker 3: to think about, of course, the trade networks. Why because
Speaker 3: the trade networks directly linked to supply chains, right, and
Speaker 3: we already realized you know it is that those are vulnerable.
Speaker 3: I mean, you know, shock after shock, starting with the pandemic,
Speaker 3: you know told us that, yes, maybe kind of our
Speaker 3: final goods trade or just if I focus on manufacturing,
Speaker 3: not that big, but if I look at the supply chains,
Speaker 3: value chains, then US is integrated to that, and then
Speaker 3: that changes the thanks because that means even in the
Speaker 3: added number you might not see that big.
Speaker 9: Of exports and imports, there might be indirect exporture through
Speaker 9: all those things. Because when you think a network, you
Speaker 9: know you are linked through trade. This is now where
Speaker 9: were also add a traditional view.
Speaker 3: But you also have to think about the financing, right,
Speaker 3: I mean, so the networks to us is trade networks, yes,
Speaker 3: you know countries buying and selling, sectors buying and selling,
Speaker 3: firms buying and selling from each other, but also financial networks.
Speaker 3: I mean you know, investors investing in companies in other countries.
Speaker 3: You know, these supply chains finance by different investors in
Speaker 3: other countries. And on top of that, of course the
Speaker 3: production right. I mean you know, so a product right
Speaker 3: now is assembled in one country, designed in another country,
Speaker 3: manufacturing in another country, with parts coming from many many countries,
Speaker 3: and skills and knowledge also coming from inny many countries.
Speaker 3: So when you have this start of the comprehensive view
Speaker 3: of the network global network as trade, production, and finance,
Speaker 3: then I think US becomes very vulnerable to global shocks
Speaker 3: and global risks.
Speaker 6: So you can see why there should be an important
Speaker 6: area of research for the FED, right, Right.
Speaker 4: And the conventional thinking has always been that the US
Speaker 4: is kind of insulated from global shocks because it's so big,
Speaker 4: because the dollar is so dominant. External factors it's thought,
Speaker 4: don't really affect the US economy.
Speaker 6: So much, right, And also we don't actually export that
Speaker 6: much relative right speaking.
Speaker 4: Right, we import. So that's the conventional view. But if
Speaker 4: per Shebnam's research, the US is in fact more exposed
Speaker 4: to global shocks than previously thought, if it's more intertwined
Speaker 4: with the network of the global economy through second order effects,
Speaker 4: then policy makers should be aware of that.
Speaker 2: Right, It wasn't clear. This is an enormous body of work,
Speaker 2: expanding several papers, hundreds of pages, all with many applications
Speaker 2: and scenario.
Speaker 6: That is Aaron Flahn, he's a principal economist at the
Speaker 6: Boston FED and he's also the discussion for this particular paper.
Speaker 4: The discustant role is really interesting.
Speaker 6: Yeah, this was probably one of the most fascinating sort
Speaker 6: of dynamics I knew existed but didn't quite appreciate how
Speaker 6: it works. So basically, every presenter gets paired with an
Speaker 6: official discussion whose job is just to interpret and critique, frankly,
Speaker 6: the paper for a wider audience.
Speaker 2: So those are my main comments. I do just want
Speaker 2: to emphasize that what sometimes doing here is policy relevant
Speaker 2: research at its finance. It's our profession working at its
Speaker 2: finess fly answering these very timely questions in ways.
Speaker 7: That authors are very close to the paper. You wrote
Speaker 7: these details, and you can see in the presentations, right,
Speaker 7: they know insight out and stuff that, so they provide
Speaker 7: a position. The Really what a discussing does is sort
Speaker 7: of essentially, let me translate what the author does for
Speaker 7: the broader audience. Right, A good discussing role is really
Speaker 7: to sort of reframe the paper, pull out key takeaways,
Speaker 7: and then provide some constructive comments.
Speaker 4: But sometimes things get a little awkward.
Speaker 6: Definitely awkward, but you know, everyone's still very polite, still.
Speaker 4: Very polite, Yes, but more on that after this break.
Speaker 4: Let's go to another paper. This one is by Tamaso Monicelli.
Speaker 4: He's a professor of economics at Universita Butchoni, and his
Speaker 4: paper is called Supply chain Uncertainty, Energy Prices and Inflation,
Speaker 4: and it is actually about one of our favorite topics, Joe,
Speaker 4: supply chains.
Speaker 8: Now that's right, because that's exactly right. So supply chain
Speaker 8: disruptions can sort of change state of the economy, so
Speaker 8: the environment, that's our idea where farms make production and
Speaker 8: pricing decisions, right.
Speaker 6: And so the key idea is that.
Speaker 8: The state of the world in which farms operate right
Speaker 8: can can change underlying So as economists we say that
Speaker 8: the state of the economy changes even starting from potentially
Speaker 8: minor events along the supply chain. So we make the
Speaker 8: example of this apparently small episode like in the Sewez
Speaker 8: Canal two years ago, sort of ship container shipping oil
Speaker 8: and other inputs got stuck for.
Speaker 3: A few days.
Speaker 10: We remember, well literally right, but that was the.
Speaker 8: Episode sort of got resolved in a few days, but
Speaker 8: I didn't have the time to show the data. But
Speaker 8: then this the effect on transportation disruptions. Okay, along supply
Speaker 8: chains lasted four months. Okay. So the analogy here is
Speaker 8: think of an airport, okay, like a hub. Okay, what
Speaker 8: a lot of flights? So how many airports function as hubs? Okay,
Speaker 8: many flights coming from different directions, and right, you can
Speaker 8: have a disruption like a single delay on a single
Speaker 8: flight in the in the in the hub. But then
Speaker 8: the propagates, you know, along the day and then across
Speaker 8: many different flights and amplifying the delay downstream.
Speaker 4: A cascade effect.
Speaker 8: Yees.
Speaker 6: So at the heart of Tomas's research is the sort
Speaker 6: of very important question are supply chain disruptions real? Are
Speaker 6: they real thing? Or are they simply manifestations or symptoms
Speaker 6: of access demand may be caused by too much physcal stimulus.
Speaker 4: Yeah, so after the pandemic, a lot of people criticize
Speaker 4: the government for handing out checks to people and businesses,
Speaker 4: helping supposedly to fan inflation. But actually, if small supply
Speaker 4: chain disruptions can reverberate for longer than previously thought through
Speaker 4: energy prices or whatever, then per Tomasa's research, they can
Speaker 4: be a pretty important source of inflation. And the important
Speaker 4: thing is that it's not the size of the supply
Speaker 4: chain shock that matters. It's the actual volatility itself, the
Speaker 4: uncertainty that matters for inflation.
Speaker 6: So again, I think, you know, you can see why
Speaker 6: this would be of interest to policymakers. Even five years
Speaker 6: after the pandemic, we're still trying to figure out exactly
Speaker 6: what happened, and we'll probably be researching that for years.
Speaker 7: Totally.
Speaker 8: Yes, so Tierra, in the in our search, we emphasize
Speaker 8: the interaction, So the complementarity between you know, shocks two,
Speaker 8: let's say the price of oil. Okay, that typically central
Speaker 8: banks look at, right, but they have a typical altitude
Speaker 8: let's say normal times. If there are all shocks, yes,
Speaker 8: we should monitor that those don't feed are not too persistent,
Speaker 8: they don't feed onto inflation expectations and so on. But
Speaker 8: their activist is typically let's look through Okay, this oil price.
Speaker 8: All prior oil prices jump around very much in the markets.
Speaker 8: But here we're saying even the same original let's say
Speaker 8: oil price shocks or energy gas price shocks, they can
Speaker 8: have a very different amplified effects on inflation, Okay, depending
Speaker 8: on whether the state of supply chain is disrupted or not. Okay,
Speaker 8: So it's really the interract so it's not really that
Speaker 8: we believe that we emphasize supply chain shocks. We say
Speaker 8: typical supply shocks, like oil shocks or gas price shocks.
Speaker 8: They can get really amplified and in a very persistent
Speaker 8: way if the underlying conditions of supply chains are disrupted,
Speaker 8: so that that state of the economy should be monitored,
Speaker 8: and in those states of the world, the central bent
Speaker 8: should be very, very reactive, way more reactive to oil
Speaker 8: shocks or energy price shocks than in periods where supply
Speaker 8: chain disruptions are minimal.
Speaker 4: So that's the basic thrust of the paper, and the
Speaker 4: data seem to bear it to Masso's thesis out, but
Speaker 4: things got a little awkward when it was time for
Speaker 4: the discussion.
Speaker 10: I'm Ludwig Straub. I'm a professor of economics at Harvard.
Speaker 10: I am a quantitative macroeconomist, so I try to build
Speaker 10: models that describe the macroeconomy and can be used for
Speaker 10: policy analysis and forecasting. I'm a discussion of a paper
Speaker 10: on supply chain uncertainty and energy shocks and how those
Speaker 10: two relate to the post COVID inflation episode.
Speaker 6: Right as Ludwig puts it, being a discussiant is a
Speaker 6: pretty big commitment, and we should just mention here that
Speaker 6: neither the researchers nor the discussiants are getting paid for
Speaker 6: their time. They're doing this for other reasons. Obviously the
Speaker 6: contribute to policy, but there's another big motivation that we'll
Speaker 6: get into in a minute. So here's Lidvig.
Speaker 10: So not everybody has time and energy to do this.
Speaker 10: In my case, I love being at the Boston FED
Speaker 10: and I'm close, so it's not a big travel to
Speaker 10: come here. And yeah, so I said yes. And you know,
Speaker 10: about a month before the conference, you typically receive the
Speaker 10: paper and then you spend a significant amount of time
Speaker 10: I'd say maybe half a week a week, you know,
Speaker 10: of your research time with the paper and trying to
Speaker 10: understand the ins and outs, trying to understand the empirics
Speaker 10: the model, and then hopefully give a balanced view of
Speaker 10: the paper during the discussion.
Speaker 4: And from what we saw at the conference, it feels
Speaker 4: like discussions can have different styles. Some basically summarize the
Speaker 4: paper and explain why it's relevant, and others others, you know,
Speaker 4: maybe pick it apart very critically. Here's Ludwig talking about
Speaker 4: the discussions.
Speaker 10: Some tend to be more like what you just mentioned
Speaker 10: and more like the latter that you know, pick up
Speaker 10: hard papers and kind of come across as a little
Speaker 10: bit destructive rather than constructive. You know, the last discussing
Speaker 10: at the conference was a lot more constructive, for example,
Speaker 10: and would be you know, building off the author's results
Speaker 10: and you know, showing them what they could do next
Speaker 10: with with the paper. Some are very very kind and
Speaker 10: just praise the results, which I tend to. I tend
Speaker 10: to try to be somewhere in between.
Speaker 3: You know.
Speaker 10: I tend to shed some critical light on the author's
Speaker 10: results if that, you know, is something that I think
Speaker 10: helps understand the paper. But I also want to be
Speaker 10: constructive and I want to be kind to the authors too,
Speaker 10: so you know, you want to kind of balance those
Speaker 10: two sides.
Speaker 4: I guess and Loudveig did shed some critical light on
Speaker 4: Tamaso's research.
Speaker 6: Suggestions for improvement, right, suggestions.
Speaker 4: For improvement, right, that's a good way of putting it.
Speaker 10: So as the economy reopened, as we had ample fiscal stimulus,
Speaker 10: and I tend to think that that means we ran
Speaker 10: up a marginal cost curve, meaning you know, costs went
Speaker 10: up just because there was a lot of demand, and
Speaker 10: so bottlenecks emerged, ports got clogged, and I think that
Speaker 10: alone can lead to an increase in what looks like
Speaker 10: supply chain issues, even though they're not really the root
Speaker 10: cause of things. Now, I still think this paper has
Speaker 10: a lot of merits to it, but you know, I
Speaker 10: tend to think that not all that looks like an
Speaker 10: energy shock is really truly a shock, rather than just
Speaker 10: a consequence of increased demand.
Speaker 4: TAMASO also use the Baltic Dry index as a proxy
Speaker 4: for shipping costs, which, as anyone who has spent a
Speaker 4: bit of time on finance Twitter will tell you, is
Speaker 4: an index that gets criticized a.
Speaker 10: Lot, exactly. And then if it's just one episode in
Speaker 10: that time series that's kind of responsible for some of
Speaker 10: the results, then I would worry about that.
Speaker 8: Now.
Speaker 10: I don't know if that's exactly what's going on, but
Speaker 10: did play around a little bit and it was not
Speaker 10: as robust as you know, I was maybe hoping it
Speaker 10: or day, or maybe hoping it.
Speaker 6: To be so tracy speaking of Twitter. You know, look,
Speaker 6: both you and I are used to getting criticism, right,
Speaker 6: but even if you're used to it, I think it
Speaker 6: would be pretty uncomfortable the hell of your work sort
Speaker 6: of publicly criticized by one of your peers in front
Speaker 6: of a big group of peers.
Speaker 4: Yeah, I would think so too, although Tomasso actually seemed
Speaker 4: pretty fine with it.
Speaker 8: No, okay, so that you learned learn out of experience
Speaker 8: through time, right, that you have to filter the reaction
Speaker 8: of the audience and get the good and the bad signals. So,
Speaker 8: first of all, I had great comments, very useful. I
Speaker 8: both myself and my coat are very happy. The discussion
Speaker 8: was fantastic.
Speaker 6: I know him.
Speaker 8: He is a fantastic researcher. He's one of the best macroeconomists.
Speaker 8: I admire his researchers. I was very happy that it
Speaker 8: was pleased with the with the with the paper, but
Speaker 8: also that the audience had that very interesting comments that
Speaker 8: only will be very useful for for keeping up with
Speaker 8: the research. And and again, uh, sometimes you get some
Speaker 8: more aggressive comments. But you know, there's a there's a
Speaker 8: sort of there's an interesting role type of dynamics that
Speaker 8: happens in academic conferences that you have to internalize.
Speaker 6: Cray, I really do. I want to go to one
Speaker 6: of those workshops that you hear about where the you know,
Speaker 6: the young the young student or the young professor, maybe
Speaker 6: someone applying for a job. They're presenting their paper, and
Speaker 6: then the old professor in the back of the room
Speaker 6: sort of puts on a big show and humiliates them.
Speaker 4: At this point, that is a very interesting point because
Speaker 4: Tomaso says, the days of older professors publicly humiliating younger
Speaker 4: students are pretty much over.
Speaker 8: That happens in sort of a behind secret doors in
Speaker 8: a way. No, but but especially as of late, the
Speaker 8: profession is discussing that a lot. So we we we
Speaker 8: now are becoming much more aware that the climate, especially
Speaker 8: in economics, much more than in other social sciences or
Speaker 8: art sciences, that the climate during seminars, during presentations, especially
Speaker 8: within closed door seminars might be might be sort of
Speaker 8: not conducive for for for younger researchers to actually take
Speaker 8: risks and uh and and and learn from the art.
Speaker 8: And so we are becoming way more mindful that it
Speaker 8: is very important to to keep it, to keep a
Speaker 8: civilized climate in in in in in research environments.
Speaker 4: Speaking of civilized climates, we should just mention that things
Speaker 4: can get pretty heated in the public discussion too.
Speaker 6: Right, So this is also part of it where it
Speaker 6: tend to get a chance to ask questions or often
Speaker 6: make their own points about the papers being questioned. Many
Speaker 6: many statements in the form of a question.
Speaker 4: Yeah, lots of that, and things got a little well,
Speaker 4: I don't want to say combative, but loud or loud.
Speaker 4: Things got kind of loud. After a paper was presented
Speaker 4: on the idea of policy trade offs, so trade offs
Speaker 4: between geopolitical risks and economic risks.
Speaker 11: Perhaps it's too early to tell. Standard models of the
Speaker 11: type that Shemnham talked about without the nominal rigidities would
Speaker 11: also predict optimal uniform tariffs that are very high twenty
Speaker 11: forty percent range. So the current environment looks pretty good.
Speaker 4: The voice you hear is Paul Antris. He is a
Speaker 4: professor at Harvard giving the keynote address on the first
Speaker 4: day of the conference.
Speaker 11: According to this models, we are in a sweet spot.
Speaker 11: I'm not so sure why, because the standard models are
Speaker 11: models that I think have features that I think I
Speaker 11: am not in line with many of the things that
Speaker 11: I see when I look at the data.
Speaker 4: His presentation, the Evolving role of the United States and
Speaker 4: Global value chains, it touched on some of the same
Speaker 4: areas that Shevnham had covered earth And the beauty of
Speaker 4: a conference like this is that she was sitting right
Speaker 4: in the audience and she was able to weigh in
Speaker 4: right then and there.
Speaker 3: You just raised couple issues and I realized maybe I
Speaker 3: wasn't clear during my presentation. I fully agree on the
Speaker 3: whole firm level and how the input output data we
Speaker 3: have is kind of this sausage, but I would disagree
Speaker 3: that you do want to understand how the sausage made
Speaker 3: so that we can do better.
Speaker 6: Right, So the economists were fighting.
Speaker 4: Well, actually I asked Shepnham about this later and here's
Speaker 4: what she said.
Speaker 3: Well, actually, I characterized that is a very healthy debate
Speaker 3: and a little bit also, you know the artifact of
Speaker 3: these conferences where you have twenty five minutes to present, right,
Speaker 3: so I didn't have that much time. And then, of
Speaker 3: course because I didn't show the parts where we use
Speaker 3: the firm level data and more, you know, discipline the
Speaker 3: macro model with more you know, micro identified elasticities and
Speaker 3: all that.
Speaker 4: Joe, all of this raises the question of why economists
Speaker 4: choose to do this in the first place. And you know,
Speaker 4: you spend a huge chunk of time writing a paper,
Speaker 4: you probably have a few research assistants that are working
Speaker 4: on it, and they could be doing something else, and.
Speaker 6: Then it gets scrutinized in this very public way.
Speaker 11: Maybe you felt that I was I was speaking on you.
Speaker 11: I didn't mean to do that. Now, of course, I
Speaker 11: take your point. Let me just push back though, in the.
Speaker 4: Sense that obviously one of the motivations is the policy
Speaker 4: aspect economists. I think many of them want to inform
Speaker 4: policy in an accurate and useful way. That's pretty obvious.
Speaker 4: But there was also something that I didn't quite realize
Speaker 4: peer review and publishing. People want to be published.
Speaker 6: Yeah, look, I get it, Believe me, I get it. Researchers, yes,
Speaker 6: they want to influence policy. Who doesn't, But they also
Speaker 6: want to get their papers rubber stamped by other economists
Speaker 6: and then published in the most prestigious academic journals. And
Speaker 6: so one thing I wondered is whether there's a ten between,
Speaker 6: you know, just from the economist's perspective, is there some
Speaker 6: sort of tension between the goal of writing a paper
Speaker 6: is actually useful for making better policy or just sort
Speaker 6: of maximizing your chances of getting into a peer review journal.
Speaker 4: Yeah, I think that is a very fair question, and
Speaker 4: Shepnam talked about that too.
Speaker 3: Yes, this is the story of my life because this
Speaker 3: is this is a very uh serious tension, and I'm
Speaker 3: hoping we will make the best use of these times
Speaker 3: now we are living in to uh to change this
Speaker 3: because yes, unfortunately, academia UH publishing values very narrow research
Speaker 3: and very tightly defined specialized research.
Speaker 8: UH.
Speaker 3: And that's why economists are in silos right there are
Speaker 3: there are labor economists, there are macroeconomists, there are io economists,
Speaker 3: international economists, finance economists, and generally these groups don't talk
Speaker 3: to each other much and they just do one thing.
Speaker 3: But but then you want to do post relevant research,
Speaker 3: you talk to postmakers. And then the minute you start
Speaker 3: talking to postmakers and spend time in post institutions, you
Speaker 3: realize these problems don't come like that. Oh, here's you know,
Speaker 3: a problem about you know, labors, I need labor economers.
Speaker 3: Here's a problem about like, you know, uh, financial markets.
Speaker 3: I mean the problem about mother post. The problems are linked.
Speaker 3: The problems are linked, and economics profession actually is is
Speaker 3: capable of you know, answering those problems, creating solutions for
Speaker 3: those problems if you know, these insights from these different
Speaker 3: sub fields come together, which is you know what I
Speaker 3: try to do. Uh, And I'm hoping you know which
Speaker 3: kind of you know, Academy publishing you know doesn't value
Speaker 3: that much. But I am you know, I'm an optimist.
Speaker 8: I'm hopeful.
Speaker 3: I think these are the times people now coming together,
Speaker 3: writing with each other more and you know, realizing this
Speaker 3: more and more. So hopefully you know, we'll we'll all
Speaker 3: down to a better pattern this. Yeah.
Speaker 11: So as I consumer, so if everything you're saying is right,
Speaker 11: so that's awesome. I would encourage you to kind of
Speaker 11: like obviously you want to come in and give some numbers,
Speaker 11: but give us like versions of the model that shut
Speaker 11: down this down And you're telling me the real not
Speaker 11: itself generates a lot of things that are not in
Speaker 11: standard models. So I'm really excited, and i'd like to say, and.
Speaker 3: I think I agree, you can do this not thing
Speaker 3: as little as you want. That's where the data is
Speaker 3: going to help. You need data power. But you have
Speaker 3: to put this in a macro model. I mean, otherwise
Speaker 3: you are not going to go back to inflation, out
Speaker 3: to trade off and all these post questions, you have
Speaker 3: to put it on.
Speaker 11: I agree with that, So all right, I will step
Speaker 11: in in here.
Speaker 7: We have an iron cage in there, and I have
Speaker 7: things well, well, we'll put that on a on a YouTube.
Speaker 7: I'll have.
Speaker 4: You know, Joe, there was in fact one major policymaker
Speaker 4: in the room along with everyone else, and that is
Speaker 4: Susan Collins.
Speaker 6: That's right, directly. There are two prominent Susan Collins. This
Speaker 6: one is the president of the Federal Reserve Bank of Boston,
Speaker 6: and she was there the whole time, sitting in the
Speaker 6: front row. Susan herself actually was an academic. She taught
Speaker 6: at Harvard and Georgetown and the University of Michigan.
Speaker 12: Right, there are lots of themes going on. I have
Speaker 12: to say that I'm struck by the sense that understanding
Speaker 12: some of the complexities may change traditional ways of thinking
Speaker 12: about things. So that's a theme that I'm hearing. So
Speaker 12: the first paper it was really you if you account
Speaker 12: for the linkages through networks that include not only trade
Speaker 12: flows but also financial flows, and you know, and across
Speaker 12: sectors and countries, not just through country, but add the
Speaker 12: sector component in we may historically, with simpler, more traditional
Speaker 12: models have underestimated the potential for larger and more persistent
Speaker 12: effects of different kinds of shocks. And then similarly, the
Speaker 12: second paper had kind of a similar theme that when
Speaker 12: you really focus on some of the supply chain connections,
Speaker 12: increases and uncertainty can make a shock have a bigger impact.
Speaker 12: So putting the different things making those connections, that's complicated work.
Speaker 12: I'm really glad that we have experts who are digging
Speaker 12: in and able to explain them and present them for
Speaker 12: us and have us ask questions and try to understand
Speaker 12: them better.
Speaker 4: So Susan mentioned ideas, and one thing I'm very curious
Speaker 4: about is how the ideas being presented in these papers
Speaker 4: actually filter through into policy osmosis. Right, well, right, I'm
Speaker 4: sure there's some of that, But also, like, do you
Speaker 4: think Susan is taking the most interesting paper and attaching
Speaker 4: it to an email and sending it off to Tom
Speaker 4: Barkin at the Richmond and being like, you have to
Speaker 4: read book.
Speaker 6: I would, Hey, Tom, here's something you might find interesting.
Speaker 3: Yeah.
Speaker 12: So, the lots of different ways. So sometimes you know,
Speaker 12: sometimes we have the time to go to each other's conferences,
Speaker 12: and it's hard, right, because we there's a lot going on.
Speaker 12: So sometimes people, sometimes my colleagues will actually be sitting
Speaker 12: in and hear from themselves. Some of their research teams
Speaker 12: are often tuning in, whether in person or virtually. Our
Speaker 12: research teams talk to each other, they're very active relationships.
Speaker 12: They co author papers, they're engaged in that way, and
Speaker 12: certainly if they're things that are really informative for me,
Speaker 12: I will share them with colleagues in a variety of
Speaker 12: different ways. Maybe not as much attach the paper. You know,
Speaker 12: we have a lot to read and to go through.
Speaker 12: I would try to distill why I'm really interested, but
Speaker 12: you know, we're always looking for important ideas, trying to
Speaker 12: be better informed. That's something that's important to all of us.
Speaker 12: And again, thank you for joining us for the sixty
Speaker 12: ninth conference. We're delighted to have odd lots here.
Speaker 4: So that was the Boston Fed's Research Conference show.
Speaker 6: It was great, But before we go, should tell people
Speaker 6: how Omar's presentation went.
Speaker 4: Oh yeah, So we started this episode talking to Boston
Speaker 4: Fed economist Omar Barbiero, and I feel like he was
Speaker 4: under more pressure than most because he was presenting not
Speaker 4: just in front of its peers, but in front of
Speaker 4: his actual boss, actually multiple bosses, because there's Susan Collins,
Speaker 4: but also egon to Krys Check, so his boss and
Speaker 4: his boss's boss.
Speaker 6: Yeah, and his was actually the last paper of the conference.
Speaker 6: I thought it went really well.
Speaker 7: That's some interesting insights on that.
Speaker 6: Thank you very much.
Speaker 3: Exictarly what I have to say.
Speaker 2: I think it's an exciting effort, very impressive.
Speaker 10: Did a collection the reset of results.
Speaker 2: It's a muscle.
Speaker 8: I think it's a presentition was very interesting. I think the.
Speaker 6: The effort is it's quite important.
Speaker 2: This is really cool to see.
Speaker 3: Have three quick Okay, this is a great paper, and
Speaker 3: I fully agree with Andrea that this is actually huge work.
Speaker 3: So you didn't even mention, but we are also now
Speaker 3: matching Panjia. It's the larger set.
Speaker 6: Of for hoorai.
Speaker 4: That's a good outcome. And you know, I should just
Speaker 4: mention Joe. We've obviously been summarizing all these papers because
Speaker 4: we're trying to compress a day and a half of
Speaker 4: discussion into I don't know, forty sixty minutes. But all
Speaker 4: of these papers are available online at the Boston Fed's website.
Speaker 6: Totally and if you want to actually see the conference itself,
Speaker 6: if this episode if somehow this episode was not enough
Speaker 6: for you. Actually, the entire conference is on videos. You
Speaker 6: could see all of the presentations and the discussions and
Speaker 6: so forth. It's all available online.
Speaker 4: But I'm so glad we went because I feel like
Speaker 4: I have a much better understanding of how policy actually develops,
Speaker 4: how research develops, and what economists are kind of aiming
Speaker 4: for totally.
Speaker 6: So when we went to Boston, you know, in my mind,
Speaker 6: I was thinking that we're there to learn more about economics,
Speaker 6: which of course we did, and there are all kinds
Speaker 6: of interesting ideas on supply chains, inflation, all this stuff
Speaker 6: we talked about. But it was also and I hadn't
Speaker 6: appreciated this, it was a sociology trip. Like I learned
Speaker 6: about the sociology of how academic work works, the relationship
Speaker 6: between academic work and policy and stuff, which is just
Speaker 6: one of these things that of course intuitively is very important,
Speaker 6: but I don't think like anyone really thinks about and
Speaker 6: when you think about, like how economists could be under
Speaker 6: this sort of dual pressure of like do I want
Speaker 6: to influence policy and is there some cost if I'm
Speaker 6: focusing on maximizing total published output. You could see some
Speaker 6: real interesting tensions that emerge in that process.
Speaker 4: Right, it's sort of a microcosm of academia. I guess
Speaker 4: which we got to study for a day and a half,
Speaker 4: so I don't know. Maybe maybe next year we'll be
Speaker 4: in the room at Jackson Hall.
Speaker 6: We can hope if anyone at the Kansas City Fed
Speaker 6: is listening.
Speaker 4: All right, shall we leave it there?
Speaker 6: Let's leave it there.
Speaker 4: This has been another episode of the Audthoughts podcast. I'm
Speaker 4: Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 6: And I'm Joe Wisenthal. You can follow me at the Stalwart.
Speaker 6: Big thanks to Susan Collins and the rest of the
Speaker 6: Boston FED for inviting us to observe and participate in
Speaker 6: their conference. And once again all the people who took
Speaker 6: the time to chat with us, We really appreciate them.
Speaker 6: You should go to the Boston Fed's website and really
Speaker 6: check out those papers and presentations, all of it excellent.
Speaker 6: Follow our producers Carmen Rodriguez at Carmen Armitt, dash Ol
Speaker 6: Bennett who actually joined us on the trip. He's at
Speaker 6: Dashbod and Cal Brooks at Calebrooks. For more Odd Lots content,
Speaker 6: go to Bloomberg dot com slash odd Lots with a
Speaker 6: daily newsletter and all of our episodes, and you can
Speaker 6: chout about all of these topics twenty four to seven
Speaker 6: in our discord discord dot gg slash odline.
Speaker 4: And if you enjoy odd Lots, if you want to
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