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Federal Reserve Bank of Dallas announces change in organization and focus of the Eleventh District research function

For immediate release: May 5, 2005

DALLAS-The President of the Federal Reserve Bank of Dallas, Richard W. Fisher, today announced a change in the organization and focus of the bank's Research Department in order to better analyze the effects of globalization on monetary policy. Mr. Fisher appointed Harvey Rosenblum to the newly created post of Executive Vice President to oversee the expansion of the Dallas Fed's research agenda.

The global economy is undergoing dramatic and significant changes that affect the gearing of the United States economy, Mr. Fisher said. The emergence of China and India as economic competitors and transformations taking place in Europe, together with the deepening of U.S. integration with our NAFTA partners and Latin America, challenge our comprehension of basic economic relationships that inform monetary policymaking.

For example, globalization tests our understanding of the tradeoff between unemployment and wage inflation, the maximum growth potential of the economy, and the degree to which the U.S. economy has slack or tight resource capacity, Mr. Fisher said. We know that jobs can now be arbitraged' by manufacturers or service providers to low-cost providers around the world. Due to the lowering of trade barriers, we know that retailers and wholesalers can source their inputs from numerous providers at home or abroad. And we know that technology has increased the ability of money, ideas, and business oversight and management to transcend national boundaries. But we do not have a full grasp on the direct and indirect impact of these influences on our economy. At the Dallas Fed, we plan to develop the analytical framework to better inform monetary policymaking.

Harvey Rosenblum is perfectly suited to lead this effort, Fisher said. He is a brilliant economist with a sophisticated understanding of the global economy. He also understands where there are gaps in the profession's comprehension of the influences of globalization on monetary policy.

Mr. Rosenblum had been scheduled to retire from the Federal Reserve System, where he was most recently director of research at the Dallas Fed. He is past President of the National Association for Business Economics (NABE), a prestigious professional association with nearly 3,000 members worldwide. Past presidents of NABE include Federal Reserve Chairman Alan Greenspan, several former Fed presidents, and many well-known business economists from industry and finance. Mr. Rosenblum currently serves as a visiting faculty member in the Finance Department at Southern Methodist University's Cox School of Business, where he has taught since 1986. Prior to joining the Dallas Fed as senior vice president and director of research in November 1985, Mr. Rosenblum was vice president and associate director of research with the Federal Reserve Bank of Chicago.

The Dallas Fed has been on the front line of understanding the effects of integrating Mexico into the U.S. economy and is proud of its reputation for high quality work on the economics of Latin America, Mr. Rosenblum said. The economy of Texas is so porous and interconnected to Mexico alone that economic concepts such as 'output gaps,' the 'Phillips Curve,' and 'the natural rate of unemployment,' have limited value when applied to the dynamics of the Texas economy, which, measured in dollars, is the 12th largest in the world. This leads us to ask how the largest economy in the worldthe being affected by the new interconnectivity of a globalized economy and what it all means for determining the appropriate monetary policy.

Finn Kydland, the 2004 Nobel Laureate in Economics who has been affiliated with the Dallas Federal Reserve Research staff for the last dozen years, commented, Richard Fisher and Harvey Rosenblum are an ideal team. Fisher spent four years as Deputy U.S. Trade Representative overseeing NAFTA, negotiating China 's entry into the WTO, and working on bilateral trade agreements with the Latin American and the Asian and Pacific countries. He knows that stuff from A' to Z'. Rosenblum knows monetary policy like the back of his hand. He is respected within the Federal Reserve System and throughout the economics profession. The quality of the economics team backing them up at the Dallas Fed is superb. This initiative has great potential for the evolution of monetary policy research.


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