that the central banker cares about the state of the economy as well as about the income provided by his incentive contract. in personal communication, walsh reports to me that he was visiting a research institute in new zealand at the time of these discussions. walshs reflection on the new zealand proposals helped to inspire his paper. several authors have shown this point in models in which the inflation bias arising from non - credible policies differs across states of nature ; see, for example, herrendorf and lockwood ( 1997 ) and svensson ( 1997 ). could not cover in this short review, such as the central bank ’ s reputation for veracity as established over time, may also strengthen its credibility ( barro and gordon, 1983b ; backus and driffill, 1985 ). 14 let me end where i began, with reference to paul volcker and his contributions. i have discussed today how volcker ’ s personality and performance inspired one seminal piece of research about the determinants of central bank credibility. in focusing on a few pieces of academic research, however, i have greatly understated the impact of the volcker era on views about central banking. the volcker disinflation ( and analogous episodes in the united kingdom, canada, and elsewhere ) was undoubtedly a major catalyst for an explosion of fresh thinking by economists and policymakers about central bank credibility, how it is obtained, and its benefits for monetary policy - making. over the past two decades, this new thinking has contributed to a wave of changes in central banking, particularly with respect to the institutional design of central banks and the establishment of new frameworks for the making of monetary policy. ironically, the applicability of the ideas stimulated by the volcker chairmanship to the experience of the u. s. economy under his stewardship remains unclear. though the appointment of volcker undoubtedly increased the credibility of the federal reserve, the volcker disinflation was far from a costless affair, being associated with a minor recession in 1980 and a deep recession in 1981 - 82. 15 evidently, volcker ’ s personal credibility notwithstanding, americans ’ memories of the inflationary 1970s were too fresh for their inflation expectations to change quickly. it is difficult to know whether alternative tactics would have helped ; for example, the announcement of explicit inflation objectives ( which would certainly have been a radical idea at the time ) might have helped guide inflation expectations downward more quickly, but they might also have created a political backlash that would have doomed

, one of the principles guiding our cra modernization work is that any redesign of cra regulations should continue to encourage banks to seek opportunities in underserved areas, including rural communities. i understand that the hac has done considerable research and stakeholder engagement to shed light on the barriers to the effective use of cra in rural communities ; all of that work will benefit our reform efforts. the fed ’ s ongoing series of for example, see ann carpenter, douglas white, and mary hirt ( 2018 ), “ rental housing affordability in the southeast : data from the sixth district, ” community and economic development discussion paper 2 - 18 ( atlanta : federal reserve bank of atlanta, july ), https : / / www. frbatlanta. org / communitydevelopment / publications / discussion - papers / 2018 / 02 - rental - housing - affordability - in - the - southeast - 201807 - 19. aspx ; and andrew dumont ( 2018 ), “ rural affordable rental housing : quantifying need, reviewing recent federal support, and assessing the use of low income housing tax credits in rural areas, ” finance and economics discussion series 2018 - 077. ( washington : board of governors of the federal reserve system, november ), https : / / www. federalreserve. gov / econres / feds / files / 2018077pap. pdf. - 5roundtable discussions in communities across the country will also allow us to hear suggestions for improving cra from local stakeholders, including many people from rural communities. these perspectives will inform our deliberations on this critical regulation, and we will make a summary of our discussions available to the public. in closing, while the economy is strong overall, we recognize that some communities have yet to feel the full benefits of the ongoing expansion. we are conducting research, collaborating with communities, and assessing financial regulations so that our nation ’ s current prosperity will benefit small towns and cities alike. the work being done by tonight ’ s award recipients and by each of you in this room is critical to making progress toward that goal. thank you for being our partners in this work, and enjoy the conference.