A Conference on Federal Credit Allocation

It is 10:00 a.m., and Paul Davidson is telling the assembled economists how to pull rabbits out of a hat. Metaphorically, of course: Professor Davidson was discussing the assumptions behind a thought-provoking paper presented at the Conference on Credit Allocation: Theory, Evidence, and History, held last October 17-19 in Cleveland. The Federal Reserve Bank of Cleveland and the Journal of Money, Credit, and Banking sponsored this conference to support research into the costs, causes, and consequences of credit allocation by the federal government. It is one of those peculiar paradoxes that federal credit allocation remains an esoteric topic despite the general familiarity with student loans, deposit insurance, and the Federal Reserve's influence on interest rates. The conference aimed to bring together an emerging body of work that looks at these issues from the standpoint of modern economics, emphasizing both common concerns and methodological differences to highlight an area that deserves greater attention.