Each year, the Federal Reserve Bank of Kansas City hosts its Economic Policy Symposium. Its location – in beautiful Jackson Hole, Wyoming – was chosen in 1982 to lure then-Federal Reserve Chairman Paul Volcker into attending through his love of fly-fishing. When they are not admiring its surrounding nature, the conference’s attendees – which include the world’s central bankers; as well as influential researchers, media members, representatives of financial organizations and government – discuss the pressing issues the global economy faces.

The symposium relies on the research of leading academics to inform the discussions. Professor Sebnem Kalemli-Ozcan presented her work on how U.S. monetary policy can spill over into higher-risk emerging market economies and have negative consequences for them. She argued that emerging market economies responding to U.S. policy with their own active interest rate policy could have the counterproductive effect of increasing borrowing costs for their consumers and businesses. Instead, she argued that these countries would be better-served by moving to a floating exchange rate regime and focusing on improving their institutions to reduce the risks that investors face when investing in them.

New assistant professor Thomas Drechsel’s work was also presented. Drechsel and his co-authors study how commodity-exporting economies should optimally design their monetary policy, while taking into account global financial conditions. In response to global commodity prices rising, they recommend that these countries allow exchange rate appreciation and raise interest rates so their domestic economies can best respond to the commodity sector’s expansion and its increased demand for inputs.

Image: Federal Reserve Chairman Jerome Powell (left) and Bank of England Governor Mark Carney (right) in front of Mt. Moran at the Jackson Hole Economic Policy Symposium (Amber Baesler/Associated Press)