#102. Debt Management (Friday, October 30, 2015)

What was your best day…of meeting a celebrity in your field?

At the risk of oversimplifying a very complex subject, here is a two-minute summary of the Brookings Institution paper that got featured on this day:

The U.S. Treasury manages the selling of government bonds to the public
For various reasons, the Treasury has an incentive to sell more long-term bonds (vs. short-term bonds)
As part their QE program during the (first) financial crisis, the Federal Reserve was aggressively buying up long-term bonds in the market
There’s an inherent conflict between the two institutions’ incentives. Why don’t they coordinate?

If you bothered to click on the link, you’ll see one very big Harvard name (Larry Summers¹) on the author list. And three other Harvard names that are slightly less big, but still big – if you’re in the academic world.

So the fact that my department’s researchers got Dr. Robin Greenwood to visit that Friday to talk about this paper was a pretty big deal. Especially for me, as I had recently started working with one of our researchers, Jialong, on a project that was based on a similar idea.

The usual practice for a visiting academic was that they would spend the day in one of our offices meeting different staff at our institution by appointment. And some time in the middle of that, they would do an hour-and-a-half seminar in the downstairs auditorium.

Now at this point in my career, I was still relatively new. I had joined about a year and a half ago as an economist in the debt policy team; though by now, I had become somewhat well-versed in our core functions and was starting to have some more freedom to do more exploratory work that interested me (#115), e.g. this project with Jialong.

So this was my first opportunity to engage with a high-profile external academic, as a representative of my institution, on work that was mine. But if that wasn’t enough, on this day I was involved in not just one but two appointments with Dr. Greenwood. I was pumped in the lead-up.

First appointment, early in the morning, Jialong and I met with him to discuss our ongoing paper. Second one, in the afternoon, he met with my debt policy team – me, my director, and a senior economist Bastien. This was the first time at my institution that I was serving a research and policy role at the same time, and that was pretty exciting for me.² My proudest moment out of all this had to be taking the initiative of asking Greenwood at the end of our morning meeting what kind of information about our debt policy work he was interested in hearing – and then briefing my director afterward so she could prepare speaking points for that afternoon.

As for Greenwood’s talk on that Brookings piece, it went as you’d expect at any research presentation: i.e. an insightful ninety minutes filled with incisive questions, interruptions every second slide, and multiple side discussions that could have easily taken over the seminar (had Dr. Greenwood been any less assertive).³ I even asked a question of my own right at the end – about him having not considered the fiscal agent incentive of the Fed in addition to monetary policy – that Greenwood acknowledged was a good point, which again made me feel very proud.

Many, many more visiting speakers would come after this one. But while each time would be an exciting experience for me, nothing could ever match the first.

Former World Bank Chief Economist, U.S. Secretary of the Treasury, and Harvard President of The Social Network fame.
This would continue to be a source of irrational satisfaction for me, through the years that followed and the many, many meetings like this that would take place.
The only out-of-place part was at the start when Greenwood had some issues getting his slides projected; and going back and forth sorting it out was Laurent, one of the admin assistants…wearing a full-body cat costume (it was Halloween). To clarify, Dr. Greenwood did not dress up for Halloween.