When Ben Bernanke was named to succeed Alan Greenspan as Chairman of the Federal Reserve Board last January, the faculty at Tepper School鈥檚 Gailliot Center for Public Policy were widely quoted on the Fed鈥檚 new leader.
Professors Allan H. Meltzer, Adam Lerrick, and Marvin Goodfriend are recognized in the financial community as articulate interpreters of monetary policy and researchers who seek 鈥渕arket-based solutions to public policy questions.鈥�
Take inflation: When U.S. inflation passed 10 percent a year in the 1970s, conventional wisdom said that the solution was wage and price controls and other drastic regulatory interventions.
鈥淭oday, we know that the solution to inflation is to carefully control the money supply, and give maximum freedom of action to markets,鈥� says Goodfriend. 鈥淭hat lesson, painfully learned, is now solidly understood, and is knowledge that central bankers everywhere can use to avoid the misery that inflation inflicts. That is a market-based solution.鈥�
The Center was named in 2002 with support from Carnegie Mellon trustee Dr. Henry Gailliot to provide a university home for this approach to macroeconomics.
鈥淭he academic economist has the freedom to use his or her imagination to think beyond the everyday tasks that absorb the central bank staff economist,鈥� says Goodfriend. 鈥淲e can focus on problems still on the horizon. We can enlarge and discipline the debate.鈥�
The Gailliot Center faculty are each involved in enlarging and disciplining the debate both in the U.S. and overseas. They serve as international economic policy advisors to the U.S. Congress鈥檚 Joint Economic Committee. Professor Meltzer is the world鈥檚 leading expert on central banks and is now completing the second volume of his history of the Fed. Professor Lerrick helped sort out Argentina鈥檚 debt problem and is credited with devising the first market-based solution to such a debt crisis. Professor Goodfriend鈥檚 recent paper on Chinese monetary policy options is being discussed inside the People鈥檚 Bank of China.
Goodfriend also says that business students find his classes challenging and useful.
鈥淏usiness students must develop a coherent world view, a framework for understanding what is happening in the economy, especially if they aspire to be leaders,鈥� Goodfriend says. 鈥淥ur classes give students a foundation upon which to build a world view that will serve them well throughout their careers.鈥�
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