March 6, 2012
Donald Kohn (right), retired Federal Reserve Vice-Chair and a 1964 College of Wooster graduate, makes a point, as Richard Reimer (left), emeritus professor of economics, and Amyaz Moledina and James Warner, both associate professors of economics, listen.
WOOSTER, Ohio — Donald Kohn and Richard Reimer were reunited in the classroom last week at The College of Wooster, but this time their roles were reversed. Kohn, retired vice-chair of the Federal Reserve and a 1964 Wooster graduate, was there to lecture; Reimer, emeritus professor of economics, was there to listen…and maybe even take a few notes.
Kohn, who was on campus for a meeting of the Board of Trustees, spoke to a combined gathering of about 25 students from James Warner’s class in international finance and Barbara Burnell’s course in public finance. The discussion focused on how monetary policy works and what the central bank can do in times of economic crises, like the recession that began in 2008.
“When we were considering what the Federal Reserve needed to do [about the crisis], I actually started thinking back to my macroeconomics class with Dr. Reimer and the lessons learned there,” said Kohn, an economics major at Wooster and a member of the Jenny Investment Club as an undergraduate. Kohn may also have been thinking about his senior I. S. (Wooster’s nationally acclaimed Independent Study program in which students work one-on-one with a faculty mentor on a research topic that results in a written work, performance, or exhibition of artwork), which dealt with flexible exchange rates.
Coincidentally, much of Kohn’s recent talk focused on a different kind of I.S. — the Investment-Saving Curve, a staple of macroeconomics that deals with the relationship between interest rates and production of goods and services and the money market. “We were looking at where we were relative to employment and inflation expectations,” said Kohn about the crisis. “Keeping expectations anchored is critical to keeping prices stable.”
Kohn went on to talk about the discussions that took place as the Federal Reserve tried to develop a strategy to counter the crisis. Among the proposed responses was the decision to lower the short-term interest rate to zero percent and keep it there for an extended period of time, which he said ultimately helped to stabilize the situation. “The Fed has done a good job of being credible and transparent,” he said. “We may now be seeing some traction in the labor market as the economy grows slowly.”
Kohn’s presentation was very well received by the group, which included Muhammad Daud, a sophomore economics major from Pakistan, who called it “insightful,” and added that it was crucial to his understanding of the current status of the U.S. economy as well as what steps the Federal Reserve has taken to ensure that the economy recovers steadily from this recession.
Reimer, in reflecting on his prized pupil after the lecture, described Kohn as a very bright student, who wrote well and went on to graduate school, where he continued to excel. “I knew he had the ability to do very well,” said Reimer, who invited Kohn to speak to his classes on a number of occasions over the years. “I am very pleased [with what he accomplished]. That’s what makes teaching fun, enjoyable, and rewarding.”
Likewise, Kohn expressed respect and admiration for his former mentor. “He was very influential,” said Kohn, who is the recipient of an honorary degree and a Distinguished Alumni Award from his alma mater. “The chance to interact with him in small classes and through I.S. really shaped my interest and knowledge [of the discipline].” Kohn also noted the value of his I.S. experience. “It forced me to stretch my mind about the topic I had chosen and then express myself through writing, which was a very important part of the process,” he said. “It was a great experience for me.”
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