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Talk: “The Effect of Global Factors on the Neutral Policy Interest Rate” by Richard Clarida

Professor Clarida will discuss his 2017 NBER working paper on the factors that affect the "neutral policy rate". The "policy rate" is the interest rate set by the Federal Reserve for loans between banks (currently about 2%), and the "neutral policy rate" is the steady-state interest rate that is consistent with full employment (an unemployment rate of 4%), and modest inflation (2%). The neutral policy rate for the U.S. economy will depend on the economic fundamentals in the U.S. such as productivity and population growth. Professor Clarida will explain why the neutral policy rate for the U.S. economy will also depend on "global factors" common to all economies. These global factors include technological change, global economic growth, and savings rates around the world. Professor Clarida will then discuss the implications for exchange rates and the benefits and costs of coordinated monetary policies across countries.

Dr. Clarida completed his undergraduate degree in Economics from the University of Illinois in 1979 and received his MA and PhD from Harvard University. On August 28, 2018, the US Senate confirmed Dr. Clarida's appointment as the Vice-Chairman of the Federal Reserve Bank. He has most recently taught international affairs in the School of International and Public Affairs at Columbia University, holding the C. Lowell Harriss Professor of Economics Chair. From 1997 until 2001, he served as chairman of the Department of Economics at Columbia University. He currently serves as a managing director and global strategic advisor for PIMCO in the New York Office. From February 2002 to May 2003 he served as Assistant Secretary of the United States Treasury for Economics Policy where he was awarded the United States Treasury Medal for Distinguished Service in May 2003. Additionally, Dr. Clarida has served on many boards, in consulting roles, served as editor of notable publications, and published extensively. Dr. Clarida is slated to be the 2020 Convocation Speaker for the Department of Economics.

This talk is cosponsored by the Department of Economics, College of Liberal Arts & Sciences, and Gies College of Business.

Visit the event profile at the Department of Economics (external link) for more information.

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For further information, contact Marsha L. Carter-Hatchel at

To request disability-related accommodations for this event, please contact Brian Cudiamat at or (217) 244-5586.