for release on delivery 6 : 30 a. m. est ( 11 : 30 a. m. gmt ) february 11, 2017 “ i ’ d rather have bob solow than an econometric model, but... ” remarks by stanley fischer vice chairman board of governors of the federal reserve system at the warwick economics summit coventry, england february 11, 2017 introduction : econometric models and a eureka moment. eureka moments are rare in all fields, not least in economics. 1 one such moment came to me when i was an undergraduate at the london school of economics in the 1960s. i was talking to a friend who was telling me about econometric models. he explained that it would soon be possible to build a mathematical model that would accurately predict the future course of the economy. it was but a step from there to realize that the problems of policymaking would soon be over. all it would take was a bit of algebra to solve for the policies that would produce the desired values of the target variables. it was a wonderful prospect, and it remains a wonderful idea. but it has not yet happened. i want to talk about why not and about some of the consequences for policymaking. how the fed makes monetary policy let me begin with how we make monetary policy at the fed. the federal reserve system has both centralized and regional characteristics. the system comprises the board of governors, located in washington, d. c., and 12 regional reserve banks in cities across the united states ( figure 1 ). the members of the board of governors are appointed by the president, subject to confirmation by the u. s. senate. in contrast, the president of each reserve bank is selected by that reserve bank ’ s board of directors, subject to the approval of the board of governors. this scheme was designed both to i am grateful to ellen meade and robert tetlow of the federal reserve board staff for their assistance. views expressed are mine and not necessarily those of the federal reserve board or the federal open market committee. - 2insulate the federal reserve from day - to - day political pressures and to ensure that all parts of the country have a voice in the central bank. our monetary policy committee - - the federal open market committee ( fomc ) - meets eight times a year at the federal reserve board in washington to make decisions about whether to change the short - term policy rate and other aspects of monetary policy. 2 sitting around the massive conference table will be the policymakers

and swaffield ( 2008 ) find that although men and women enter the british labor force earning the same amount, among those who worked continuously and full time for 10 years, women would still earn 8 percent less than men, even if they have the same personality traits, were childless, and profess no interest in having children. also see blau and kahn ( 2016 ) and noonan, corcoran, and courant ( 2005 ). - 14 discrimination, attitudes that reduce women ’ s success in the workplace, and an absence of mentors. recent research has shown that although women now enter professional schools in numbers nearly equal to men, they are still substantially less likely to reach the highest echelons of their professions. 30 for instance, 47 percent of students at top - 50 law schools are female, and women obtain 40 percent of m. b. a. ’ s from top programs. nonetheless, women are still poorly represented among corporate ceos, as partners in top law firms, and as executives in finance. 31 even in my own field of economics, women constitute only about one - third of ph. d. recipients, a number that has barely budged in two decades. 32 this lack of success in climbing the professional ladder would seem to explain why the wage gap actually remains largest for those at the top of the earnings distribution. 33 one of the primary factors contributing to the failure of these highly skilled women to reach the tops of their professions and earn equal pay is that top jobs in fields such as law and business require longer workweeks and penalize taking time off. this would have a disproportionately large effect on women, who continue to bear the lion ’ s share of domestic and child - rearing responsibilities. 34 within academia, the short timeframe in which assistant professors have to prove themselves good candidates for moran ( 2015 ) ; olson ( 2016 ). on the status of women in finance and corporations see bertrand, goldin, and katz ( 2010 ) and the studies cited therein. for law partnerships, see new york city bar association ( 2016 ). bayer and rouse ( 2016 ), p. 223. blau and kahn ( 2016 ). bertrand, goldin, and katz ( 2010 ) ; goldin ( 2014 ). - 15 tenure by publishing typically overlaps with the period in which many women contemplate starting a family, forcing difficult trade - offs. 35 employers may require the long hours and short absences