Luci Ellis: Watching the invisibles

Text of the 2019 Freebairn Lecture in Public Policy by Ms Luci Ellis, Assistant Governor (Economic) of the Reserve Bank of Australia, at the University of Melbourne, 12 June 2019.

Central bank speech  | 
13 June 2019

It's great to be back at one of my alma maters to deliver the Freebairn Lecture in Public Policy. John Freebairn's extensive publication record and long history of contributions to public debate speak to his abiding interest in public policy across a broad range of areas. It is indeed an honour to be invited to speak as part of a lecture series named for him.

My lecture tonight is motivated from the point of view of someone tasked with advising on the setting of monetary policy. In doing so, we should occasionally step back and consider how we think about what we are trying to achieve. It has long been known that the effects of monetary policy occur with a lag. Less appreciated is that some of the crucial concepts in our analysis are in some sense invisible and therefore not directly observable. So it can be a question of how we can even know if monetary policy is achieving its goals. So that is the focus of my talk tonight.