. the new york fed has been, and will continue to be, an active participant and supporter of this initiative. let me now turn to the primary routes of economic mobility and the impediments that too often block them. the primary avenue to higher incomes for most people is investment in their human capital, namely through education. indeed, the income returns on education are very high, and they continue to rise in spite of very significant increases in the supply of highly educated workers during much of the 20th century. since the 1980s, however, increases in the supply of welleducated workers in the united states have slowed, while demand for these workers has accelerated due to technological change. these forces have been a major contributor to the increase in the college wage premium. 7 while college graduation rates in the u. s. have stagnated, those in many other oecd countries have continued to rise. as a result, only onequarter of those in the 25 - to - 34 age bracket in the united states have more education than their parents, compared with an oecd average of one - third. 8 this represents a dramatic decline in college education ’ s influence as an engine of upward mobility. so, part of a solution to the increase in inequality and the reduction in social mobility is to increase the level of educational attainment in the population. there are many barriers to expanding post - secondary education, however. from the potential 3 / 7 bis central bankers'speeches student ’ s perspective, a lack of information, low college preparedness, and high costs are all substantial barriers to college attendance and completion, and these barriers restrict social mobility. let me discuss each of these in turn. by lack of information, i mean the recognition that in spite of its high price tag, a college degree typically offers an even larger payoff in terms of future earnings. many aspects of the college attendance decision are complex and hard to predict, especially for students from families without much experience with higher education. for example, research indicates that decisions about college attendance are highly correlated with an understanding of the future payoffs from attendance and particular majors. 9 new york fed research shows evidence of systematic underestimation of the average benefits — and overestimation of the costs — of a college education, with larger biases among lower - income and non - college households. 10 families may not realize that listed tuition prices may not be what a particular student actually pays. moreover, misperceptions about

a flexible currency will be in a favorable position to use monetary policy to attain its internal growth and inflation objectives. when foreign interest rates increase and financial conditions tighten, changes in relative prices brought about by currency fluctuations can help to absorb the external shocks. the positive expenditure switching effect from currency depreciation improves the trade balance and supports demand. it is sufficiently larger than the negative investment demand effect from higher interest rates, such that internal balance is attained and monetary policy is able to pursue domestic inflation and growth objectives. 4 linda goldberg, paolo pesenti, joseph tracy and matthew higgins contributed to these remarks. a global financial cycle refers to the global co - movement of credit by banks and capital markets, asset prices, term premia, and risk premia. fleming ( 1962 ) and mundell ( 1963 ). krugman ( 1999 ). the balance sheet effects imparted from a large international debtor position may work against achievement of an improved external balance and attainment of internal balance. bis central bankers ’ speeches different policy options are available to a country with a high degree of capital mobility and a preference for currency stability. a country may prefer currency stability as an effective nominal anchor, or because of concerns about the broader uncertainties associated with currency volatility. regardless of the reason and because the exchange rate is not available to absorb external shocks, this country will be in an unfavorable position to achieve domestic macroeconomic objectives by using monetary policy. instead, monetary policy is aimed at external adjustment. tighter foreign monetary policy and financial conditions need to be validated by tighter domestic monetary policy to maintain currency stability. with domestic monetary conditions effectively imported from abroad, they may sometimes conflict with domestic growth and inflation objectives. simply put, currency stability is prioritized. these policy considerations are summarized in the well - known international policy trilemma. it says that a country cannot simultaneously maintain independent monetary policy focused on domestic objectives, a high degree of capital mobility, and currency stability. any two of these regime characteristics can be chosen, but not all three. while the trilemma suggests sharp tradeoffs, additional policy tools can soften the tradeoffs. fiscal policy is one tool that serves this purpose. when foreign credit conditions tighten, expansionary fiscal policy can allow a country with a high degree of capital mobility, and a policy preference for currency stability, to effectively manage towards domestic macroeconomic objectives and internal balance. in fact, fiscal policy can also be used to rebalance the composition