philip r lane : the academy and the economy remarks by mr philip r lane, governor of the central bank of ireland, to the trinity business + technology forum 19, trinity college dublin, dublin, 23 may 2019. * * * introduction i am pleased to be invited to speak at the trinity global business + technology forum 19, especially on the occasion of the opening of the new trinity business school building. let me start by commenting on the important potential economic and social contributions of business schools, before turning to the more general role of universities. first, high - quality business education and training at all levels ( undergraduate, postgraduate, executive education ) is a significant determinant of living standards and economic performance. on this point, the most compelling evidence has been generated by the long - running world management survey, which measures the contribution of management practices to firm performance in a large - scale cross - country cross - industry panel of firms ( worldmanagementsurvey. org ). the many studies that have exploited this dataset conclusively show that a major factor driving productivity differentials across countries and across firms is the quality of management. second, business education is especially pivotal in countries that specialise in the provision of business services on an international scale ( see also mckinsey global institute 2019 ). this broadly describes the irish economy, with the irish affiliates of multinational firms ( plus the domestic ecosystem of supporting professional services firms ) typically providing a range of business services to the global operations of these companies and many irish firms exporting business services to overseas clients. third, business education is itself a significant export activity, with irish business schools and universities educating many international students, both locally and through a range of external partnerships. fourth, given the importance of the business sector in delivering essential and socially - valuable goods and services, business schools have a special responsibility to ensure that their graduates are properly equipped to fulfil their social and ethical responsibilities to wider society. fifth, the diversity and dynamism of the business sector constitutes a gold mine for research across a wide range of disciplines. this is especially true for a business school that is an integral part of a full - scale university, in view of the high potential of multi - field approaches in understanding both the drivers of firm performance and the economic and social impact of business. this last point is well illustrated by today ’ s event. a basic function of a university is to explore the inter - connections across different fields of knowledge : the agenda and list of participants for

limit the temptation to use the fed ’ s balance sheet as an instrument of fiscal policy. a road map to the future once we know where we want to go, we can begin to map out a path that will take us there. by articulating a systematic plan that gets us to our objective, we improve communication with the public, reduce uncertainty in the marketplace, and lend credibility to the commitment that policymakers will follow through. bis central bankers ’ speeches any exit plan that is to lead us to a corridor - like operating system has to describe how the fed funds rate or interest rate on reserves will be increased and how the balance sheet will be reduced. there are many ways to do so, but in every case, we must remember that monetary policy decisions should be contingent on the evolution of the economy. in late march 2011, i outlined a proposal for a systematic, rule - based approach that would involve the fed ’ s selling assets from its portfolio as it increased its policy rate, with the pace of sales dependent on the state of the economy. the plan would get us back to a normal operating environment in a timely manner, with the fed ’ s balance sheet reduced to a size that would again allow the federal funds rate to be the primary policy instrument. i also suggested that the first step of the normalization process would be to increase the interest rate paid on reserves and the targeted federal funds rate away from the zero bound, perhaps to 50 basis points. the federal open market committee would also announce its intention to stop re - investing the proceeds from maturing agency and treasury securities. these decisions would initiate the normalization process and begin to raise the funds rate and shrink the balance sheet from the start. how the process evolves from that point will depend on the plan and the state of the economy. the committee would also announce that at subsequent meetings it would regularly evaluate the policy rate based on economic conditions, as it always does. sales of assets between meetings beyond those maturing would also be tied to economic conditions, just as policy rate decisions are. the fed would announce a pace of sales, which would increase when the committee chose to increase the policy rate. since the amount of securities to be sold between meetings would be determined in advance, the public and markets would see the fed shrinking its balance sheet in a predictable manner. for example, the committee might set a sales pace of $ 20 billion of assets between fomc meetings and announce that for each 25 basis points the funds rate target