The Fed, Financial Markets and the Economy
An Economic Forum for College and University Faculty
November 2, 2007
Federal Reserve Bank of Dallas

This economic forum examined the complexities of recent financial developments, their links to the U.S. and world economies, and the Fed's role in ensuring financial stability.

Speakers addressed the following topics:

• The Fed's Historical Role in Ensuring Financial Stability
• Factors That Led to the Recent Liquidity Crunch
• Shifts in Banking Strategy and the Role of Hedge Funds
• Turbulence in the Subprime Market
• Overall Economic Impact of Recent Financial Stresses
• Liquidity Crunch: An International Perspective

This conference was designed specifically to benefit faculty members and administrators in a variety of academic areas, in particular economics, finance, business, public policy and political science.

Keynote Speaker:

• Stephen Cecchetti
  Professor of International Economics and Finance
  International Business School, Brandeis University

Cecchetti addressed the topic, “Liquidity Crisis of 2007: How Should Policymakers Respond?"

Agenda

8:00 a.m.		Breakfast
8:30 a.m.		Welcome Sherry Kiser Director of Economic Education
		The Federal Reserve and Financial Crises Kenneth J. Robinson Senior Economist and Policy Advisor, Financial Industry Studies
9:20 a.m.		Making Sense of Subprime and Housing Market Developments John V. Duca Vice President and Senior Policy Advisor Handouts: The Rise and Fall of Subprime Mortgages, Economic Letter, Federal Reserve Bank of Dallas, November 2007 Making Sense of the U.S. Housing Slowdown, Economic Letter, Federal Reserve Bank of Dallas, November 2006. From Complacency to Crisis: Financial Risk Taking in the Early 21st Century, Economic Letter, December 2007.
10:35 a.m.		Break
10:55 a.m.		Shifts in Banking Strategy and the Role of Hedge Funds Jeffery W. Gunther Assistant Vice President and Senior Economist, Financial Industry Studies Handouts: Hedge Fund Investors More Rational Than Rash, Economic Letter, August 2007 Has the Housing Boom Increased Mortgage Risk? Southwest Economy, Sept/Oct. 2005 Auditing the Auditors, Economic and Financial Policy Review, v.1 no. 5, 2002.
11:45 a.m.		Luncheon Address
		Liquidity Crisis of 2007: How Should Policymakers Respond? Stephen G. Cecchetti Professor of International Economics and Finance International Business School, Brandeis University
1:20 p.m.		Measuring the Economy's Temperature: How Do We Know if a Recession Is Coming? Keith R. Phillips Senior Economist and Policy Advisor, San Antonio Branch
2:10 p.m.		Liquidity Crunch: An International Perspective Carlos E. Zarazaga Senior Economist and Policy Advisor, Latin American Affairs
3:00 p.m.		Open Forum Audience Participation
3:45 p.m.		Closing Remarks

About the Speakers

Stephen G. Cecchetti
Professor of International Economics and Finance
Brandeis University
Cecchetti is the Barbara and Richard M. Rosenberg Professor of Global Finance at Brandeis International Business School and a research associate of the National Bureau of Economic Research. Before coming to Brandeis, he held a number of positions, including executive vice president and director of research at the Federal Reserve Bank of New York and editor of the Journal of Money, Credit and Banking. Cecchetti has written numerous articles in academic and policy journals on a variety of topics, including banking, securities markets and monetary policy, and is a regular contributor to the Financial Times. He recently completed the second edition of his textbook, Money, Banking, and Financial Markets. Cecchetti received an S.B. in economics from Massachusetts Institute of Technology and a Ph.D. in economics from the University of California, Berkeley.

John V. Duca
Vice President and Senior Policy Advisor
Federal Reserve Bank of Dallas
Duca co-leads and conducts research in macroeconomics and finance for the Federal Reserve Bank of Dallas. An economist with the Bank since 1991, he has given numerous briefings on the economy to the Bank's president and board of directors. Duca has published more than 50 articles on money, credit, wages and housing in scholarly journals and Dallas Fed publications. Much of his research analyzes how innovations have altered economic relationships relevant to the macroeconomy and monetary policy. From 1986 to 1991, Duca was a staff economist at the Federal Reserve Board, where he briefed former chairmen Alan Greenspan and Paul Volcker and other Fed policymakers. Additionally, he was a part-time lecturer at the University of Maryland. He is currently a part-time lecturer at Southern Methodist University. He holds a B.A. from Yale University and a Ph.D. in economics from Princeton University.

Jeffery W. Gunther
Assistant Vice President and Senior Economist,
Financial Industry Studies
Federal Reserve Bank of Dallas
Gunther conducts and directs analysis of financial institutions and the supervisory framework in which they operate. His work focuses on supervisory policy issues of particular concern to the Federal Reserve. He has authored numerous related articles for publication in both academic and Federal Reserve journals, and he is a primary architect of statistical models used at the Federal Reserve to identify emergent banking problems. Gunther received a Ph.D. in economics from Southern Methodist University.

Keith R. Phillips
Senior Economist and Policy Advisor,
San Antonio Branch
Federal Reserve Bank of Dallas
Phillips joined the Dallas Fed in January 1984. His areas of concentration include regional economics and economic forecasting. Phillips developed business-cycle indexes for Texas and metro areas throughout the state. He is a contributing member of the Western Blue Chip Economic Forecasting Group, where he has been the most accurate Texas forecaster for seven of the past 11 years. His research has been covered by CNN, The News Hour with Jim Lehrer, USA Today, Business Week, The Wall Street Journal and The New York Times. In 1996, Phillips transferred to the San Antonio Branch to expand the Dallas Fed's regional economic coverage and better serve the needs of the South Texas community. Phillips teaches economics and statistics at Trinity, St. Mary's and Incarnate Word universities. He holds B.A. degrees in economics and journalism and an M.A. in economics from the University of Missouri–Columbia and a Ph.D. in economics from Southern Methodist University.

Kenneth J. Robinson
Senior Economist and Policy Advisor,
Financial Industry Studies
Federal Reserve Bank of Dallas
Robinson has been with the Dallas Fed since 1986, specializing in macroeconomics as well as money and banking. His current research focuses on how financial structure, monetary policy and economic activity affect U.S. financial markets. He has published articles in several academic journals, including the Journal of International Money and Finance, Journal of Financial Services Research and Journal of Macroeconomics, as well as in Dallas Fed publications. Robinson holds a B.S. from the University of New Orleans, an M.S. from Louisiana State University and a Ph.D. from Ohio State University.

Carlos E. Zarazaga
Senior Economist and Policy Advisor,
Latin American Affairs
Federal Reserve Bank of Dallas
Zarazaga has served as an economist at the Central Bank of Argentina and at the Federal Reserve Bank of Philadelphia. He has taught graduate level courses in the department of economics at the University of Minnesota and undergraduate courses in the Wharton School of Business at the University of Pennsylvania. His current research interests include the study of the consequences of different institutional arrangements and information structures on the outcome of alternative monetary regimes (currency boards, dollarization, common currency areas) and economic growth. Zarazaga participates regularly in academic and policymaking forums, where he presents his research and policy papers, some of which have been published in books, Dallas Fed publications and professional journals. He holds a Ph.D. in economics from the University of Minnesota.