Jackson Hole, WY

It has been the topic of discussion for weeks. The messages that will be used by central bankers to decorate the year’s awaited Jackson Hole symposium is a matter of serious curiosity. The symposium that kicked off yesterday and is hosting stakeholders from around the world, has been organized for years by the Kansas City Federal Reserve (Fed). The symposium titled, “Economic Policy Symposium,” does not actually originate from Jackson Hole Valley. The idea of the symposium is known to first begin in Kansas City, the bank’s central city, in 1978, with a focus on agribusiness. Back then agriculture had great significance for the states in the region under Fed. As a matter of fact, in conferences organized between 1979 and 1981, topics such as water sources and agricultural modelling were addressed.

IF IT WERE A LITTLE MORE GLOBAL

It should be noted that then-Fed President Guffey, who was in charge of the relevant region of the time, wanted to carry on the conferences with subjects that are of importance to all of the U.S. We see that as of 1982, the symposiums gain a more macro perspective in terms of the subjects addressed. It is at this point that our Jackson Hole story begins.

It is said that the reason behind choosing this peaceful valley as location was to draw into the symposium then-Fed President Volcker, who was going through a tough time with inflation. In this context, we notice that the theme of the Jackson Hole, WY conference in 1982 is money policies.

And from this point onward, we see a series of symposiums that take place around more global subjects – the kind of subjects on which multilateral, common struggles are involved.

A DYNAMIC ECONOMY

The 2017 leg of the Jackson Hole gathering is going to focus on a dynamic global economy problem: Fostering a Dynamic Global Economy. As I was writing this article yesterday, the detailed program was not yet revealed, however, there is no doubt that the 2017 theme is a common issue that has been in the world’s spotlight for some time now.

Although the excitement surrounding the conference evolves around what the Fed and European Central Bank (ECB) presidents may or may not say, the real issue that will have participants thinking hard at the skirts of Teton is going to be how economies will achieve a reasonable and sustainable dynamism.

Of course, there is no doubt that the constantly discussed money policies and normalization periods, accordingly, constitute a critical segment. Hence, ECB President Draghi’s tapering plans and Fed President Janet Yellen’s budget downsizing agenda are certainly of significance.

THESE FINANCIAL CONNECTIONS

We hear that the comprehensive topic Yellen will be touching on at Jackson Hole is going to be “financial stability.” Putting aside the subjects’ effects on economic development; in an atmosphere in which the world is now intertwined at the financial level, surely the related risks need to be determined well. Hence, financial connectedness, which hold the ropes of the systemic bells, should not be taken lightly at a global scale.

Of course, the degree of the connection in question also differs from country to country. According to the 2016 financial connectedness ranking announced by the McKinsey Global Institute, while the U.S. is taking the lead in this matter, it is followed by various European countries and Japan. In accordance with this, while the connectedness of developed economies to the global financial system is quite strong, China is also in the top 10. The majority of developing economies are more far behind in this regard.

Meanwhile, as pointed out in reports by various international organizations, global financial stability on which Yellen will be talking, has been giving signals of improvement in recent periods. Various reasons ranging from macroeconomic dynamics to monetary conditions can be listed in relation to this. Additionally, it needs to be accepted that certain risks are still waiting in ambush. For example, among these, ambiguities resulting from national as well as international policies, create concern.

Hence, it is seen that financial stability will be addressed as one of the fundamental conditions within the scope of this year’s theme in Wyoming. Meanwhile, the big picture that depicts a dynamic global economy includes several interconnected components such as added value, efficiency and the labor market.

As a result, with its short and long-range focuses of interest, Jackson Hole, WY is the favorite location of the week.

+