Christopher J Waller: Monetary policy analysis and the development of Federal Reserve policymaking

Speech by Mr Christopher J Waller, Member of the Board of Governors of the Federal Reserve System, at the "The Legacy of Bennett McCallum and Lessons for Monetary Policy Today", a conference sponsored by the Mercatus Center at George Mason University, Washington DC, 10 October 2023. 

The views expressed in this speech are those of the speaker and not the view of the BIS.

Central bank speech  | 
17 October 2023

It is a pleasure to be here to honor the legacy of Bennett McCallum by discussing his work on monetary policy. Over the years, I was fortunate to cross paths with Ben several times-from when I was a young academic economist to when I was research director at the Federal Reserve Bank of St. Louis. But, like many of you, most of my exposure to Ben McCallum's thinking has consisted of reading, and learning from, his writings on monetary policy.

Ben was an influential researcher who focused on a number of topics that are key to monetary policy, some of them highlighted in today's panel sessions, including policy rules, instruments, and targets. When I was an academic, these were research interests that I shared with Ben. More recently, since I became a member of the Federal Open Market Committee (FOMC), the same issues have been at the forefront of my work, as I will explain in my remarks today.

I will cover these issues in the context of discussing broad developments in U.S. monetary policy over the past quarter-century. In doing so, I'm motivated by McCallum's 1999 paper "Recent Developments in Monetary Policy Analysis: The Roles of Theory and Evidence," which was a review of the previous 25 years. In my remarks, I'll first talk about changes that have taken place since the 1990s in the way in which the FOMC has conducted policy. Then I'll turn to a discussion of monetary policy rules, how Ben thought about them, their use as an input into policymakers' decisions, and the choice of instruments and targets in policy rules.