output, of reversing unwelcome increases in longer - run inflation expectations. thus, a flatter phillips curve makes it all the more important that longer - run inflation expectations remain anchored at levels consistent with our 2 percent inflation objective. 6 for assessments of the risks that u. s. monetary policy will be constrained by the elb and its implications for economic activity and inflation, see kiley and roberts ( 2017 ), erceg and others ( 2018 ), swanson ( 2018 ), and chung and others ( 2019 ). for evidence of a flattening of the slope of the phillips curve in the united states and abroad, see, among others, simon, matheson, and sandri ( 2013 ) ; blanchard, cerutti, and summers ( 2015 ) ; and bank for international settlements ( 2017 ). one potential contributor to the flattening of the phillips curve is a change in the conduct of monetary policy since the 1980s toward greater stabilization of inflation and economic activity ; for evidence of such a change, see clarida, gali, and gertler ( 2000 ) ; boivin and giannoni ( 2006 ) ; and boivin, kiley, and mishkin ( 2010 ). as discussed in roberts ( 2006 ) and bullard ( 2018 ), greater stabilization on the part of a central bank can lead to the estimation of flatter phillips curves in reduced - form regressions. similarly, the adoption of an explicit inflation objective, along with greater certainty regarding the conduct of monetary policy, can help anchor longer - term inflation expectations and stabilize actual inflation in response to shocks. see yellen ( 2015 ) for a discussion of inflation dynamics and monetary policy ; see erceg and others ( 2018 ) for a quantitative exploration of the monetary policy implications of a flat phillips curve in an uncertain economic environment. since the mid - 1980s, movements in both realized inflation and measures of longer - term inflation expectations have been somewhat muted, complicating the task of extracting the precise role of inflation expectations as a determinant of realized inflation. faust and wright ( 2013 ) review the literature on inflation forecasting and present evidence in support of the conclusion that measures of inflation expectations help predict the trend in inflation. in a paper discussed at this forum two years ago, - 4scope of the review in the federal reserve act, the congress assigned the federal reserve the responsibility to conduct monetary policy “ so as to promote effectively the goals of

risks not desirable for the firm as a whole. to a considerable extent, then, fostering sound risk - management practices serves the overlapping interests of both shareholders and regulators. the possible divergence of interests comes not in the architecture of risk management but in substantive decisions on risk appetite. how, then, might corporate governance be changed to incorporate risk considerations consistent with micro - and macroprudential regulatory objectives? one way would be to broaden the fiduciary duties of boards and management. the other, which has already been followed to some degree, is to apply regulatory and supervisory requirements to relevant corporate governance processes. of course, realization of the first approach would require either changes in state corporate law or amendments to federal securities or financial regulatory statutes. i shall speak briefly to this possibility after describing some examples of the second approach already in place, along with some possibilities for further measures. aligning corporate governance and financial regulation with no claim to comprehensiveness, let me suggest three kinds of regulatory and supervisory measures that can better align corporate governance of financial firms with regulatory objectives. first, regulatory requirements can be directed at changing the incentives of those making decisions within a financial firm. one good example is incentive compensation for senior managers and other bank employees with substantial decisionmaking authority. compensation arrangements that create high - powered incentives using stock options or other forms of reward dominantly based on equity have their origins in efforts better to align management and shareholder interests. otherwise, managers who stand to suffer reputational or job loss as their firm declines or fails may have a more conservative risk appetite than diversified shareholders, who value the upside of risk - taking and whose limited liability makes them relatively less concerned with catastrophic downside possibilities. as has been observed by numerous commentators, 9 however, where these kinds of incentive dodd - frank act § 165 ( h ). this provision further requires that the risk committee include “ at least one risk management expert having experience in identifying, assessing, and managing risk exposures of large, complex firms. ” see, for example, lucian bebchuk and holger spamann ( 2010 ), “ regulating bankers ’ pay, ” georgetown law journal, vol. 98 ( 2 ), pp. 247 – 87 ; and kenneth r. french, m. n. baily, j. y. campbell, j. h. cochrane, d. w. diamond, d. duffie, a. k. kashyap, f. s. mishkin, r. g