The Luxury of Time
Shortly after Austan Goolsbee returned from Washington, DC, the American Economic Association met in Chicago. The winning papers, he noted, dealt with issues that were percolating well before the 2008 election. "They took five years to get written." Such lengthy time frames prompt some academics to stay in the public sector once they get there, preferring the immediacy and action to the slower, more considered life of research. For others, weighty research papers are the greatest contribution they can make.
"Academics can contribute to policy debates through three channels," said Anil Kashyap. "First and by far most importantly, by writing papers that are policy-relevant; second, by serving on advisory boards to policy institutions; third, through informal conversations and discussions with policy makers."
Papers are durable, he said, and "far more credible than something someone says in a meeting." The speech that Raghuram Rajan made in Jackson Hole, Wyoming, in 2005, in essence an academic paper delivered publicly, "serves as a marker and is referred to all the time."
With a basis in solid investigation, research papers can have long legs. Kashyap "has been producing research that is highly policy-relevant for central banks for many years," said Paul Tucker, deputy governor, financial stability, for the Bank of England. "That's true from research on credit supply to new papers on a framework for evaluating macroprudential tools."
Eric Rosengren, president and CEO of the Federal Reserve Bank of Boston, said Kashyap is more effective than many academics in making sure that his views are considered by policy makers as well as academics. "Anil does not just wait for ideas to be picked up by others. He is an advocate for important ideas and has the ability to reach people who can alter policies," Rosengren said. "His contacts and powers of persuasion are an important complement to his prodigious academic output."
Kashyap is one of the foremost experts on Japan's persistent economic stagnation, and he has been "effective in areas where economics and finance meet," Rosengren said, "such as the role that banks and other financial institutions play in mitigating or transmitting shocks to the economy."
Kashyap knows those shocks affect more than Japan. He also serves on the International Monetary Fund's Advisory Group developing macroprudential policy, which considers the interconnectedness of the global financial system. "Prior to the crisis, no one was thinking about how the whole thing fit together," Kashyap said.
"By only looking at one part of the system, there was a risk for things to build up, and there was no natural group or regulator to look at it and say, 'The same thing is happening here, here, and here. We missed some of this stuff. Why did we miss it?' No one was obliged to take that perspective."