a moment ago. but this conference offers an important opportunity to investigate all of the possible factors that influence the extent of diversity among economists at the federal reserve and elsewhere, including those factors that are affecting the education and advancement of economists everywhere in the united states. as a longtime member of the aea, i am proud of the work our association has done to collect data and study diversity in the economics profession. among the questions raised by the aea ’ s work on this topic is why relatively few women and minorities seem to consider economics as a concentration in college. the evidence is fairly clear that majoring in economics offers relatively high returns to college graduates whether or not they pursue further education in economics. it is worth knowing, for example, what undergrads who might consider concentrating in economics think about the curriculum and the employment prospects for economics majors compared with what those prospects actually are. to what extent might the lack of diversity among economics majors reflect a more general need to make basic economics more relevant and otherwise appealing to undergrads? bis central bankers ’ speeches the aea has also done important work documenting and investigating the “ leaky pipeline, ” trying to determine why some groups are more likely to abandon economics education and work before, and even after, receiving ph. d. s. in reviewing the data on the representation and advancement of certain groups in the profession, there are differences in outcomes for women and minorities. to what extent are these disparities caused by differences in the experiences of those groups or due to broader and more general challenges faced in academia? do the leaks from the pipeline that may be more noticeable for some groups reflect a broader lack of opportunity in academia? when economists delve into why there isn ’ t more diversity among them, they end up asking about what is being taught in college, how economists are being trained in graduate school, and other questions that bear on the health and the future of the economics profession in general. these are not idle questions. all of you know that there has been a fair amount of public debate in recent years about the health of the economics profession, prompted in part by the failure of many economists to comprehend the dire threats and foresee the damage of the financial crisis. when the public asks whether economists did all they could have to understand those threats, in part they are asking whether our profession did enough over the years to test ideas and assumptions that turned out in some cases to have been mistaken or misplaced. and part of that question is this one

effect could be higher inflation in the united states, even though there may be no measurable effect on the prices of u. s. imports. the idea is intriguing but again, unfortunately, the evidence is so far inconclusive. early work, including some done at the federal reserve bank of boston, found no effect of global demand conditions on u. s. inflation, as did most of the subsequent research. 10 recently, however, several researchers affiliated with the bank for international settlements ( bis ) have reported results favorable to the global output gap hypothesis ( borio and filardo, 2006 ). using data for sixteen industrialized countries ( plus the euro area ) for 1985 - 2005, they found significant effects of the global output gap on domestic inflation rates – indeed, effects that were generally larger than those of domestic output gaps and that were rising over time. this provocative result has in turn been challenged by federal reserve board researchers, who find that the empirical support for a role for the global output gap does not survive modest changes in the way the data are analyzed. as domestic output gaps are difficult to measure, even with the benefit of hindsight, it is perhaps not surprising that measuring and assessing the effects of a global output gap have proved contentious. a clear resolution of the question of how global economic conditions affect domestic inflation may continue to elude us. overall, global factors do seem to influence domestic inflation. most directly, increasing trade with china and other developing countries has led to slower growth in the prices of imported manufactured goods. however, this effect has been offset in the most recent period by the increases in the prices for energy and commodities associated with the rapid growth in these emerging market economies. other, more indirect channels may exist, including the possibilities that trade promotes productivity growth and thus lower costs and that global demand conditions influence domestic pricing decisions. however, more research is needed to pin down the significance of these indirect influences. conclusion i have foreshadowed my conclusions. without doubt, ongoing global economic integration is a phenomenon of the greatest importance, one that will help shape the u. s. economy for decades. globalization has not materially affected the ability of the federal reserve to influence financial conditions in the united states, nor has it led to significant changes in the process which determines work finding no role or, at best, a marginal one for a global output gap includes tootell ( 1998 ), hooper, slok, and dobridge ( 2006 ), pain, koske, and