How Should The Fed Respond To Supply Shocks?

Chicago Fed President Austan Goolsbee joins Steve Davis to discuss his recent speech on how central banks should respond to supply shocks. Goolsbee argues that the Fed should not simply “look through” supply shocks but should instead treat them as persistent or recurring and, hence, as a call for tightening by the Fed. The discussion ranges widely from oil shocks and inflation in the 1970s to supply-chain disruptions and tariffs in the 2020s. They also discuss wage stickiness and its implications for monetary policy.

Recorded on September 21, 2026.

ABOUT THE GUEST

Austan D. Goolsbee is president and CEO of the Federal Reserve Bank of Chicago. In this capacity, he serves on the Federal Open Market Committee—the Federal Reserve System’s monetary policymaking body—and leads the Chicago Fed, which conducts research and monitors local economic conditions in support of the formulation of monetary policy, supervises and regulates banking organizations, and provides financial services to banks and similar institutions, as well as to the US government.

Prior to becoming president of the Chicago Fed in January 2023, Goolsbee served as the Robert P. Gwinn Professor of Economics at the University of Chicago Booth School of Business where he first joined the faculty in 1995. He is known for his empirical research on many different industries and on economic policy. He has been a Fulbright Scholar and an Alfred P. Sloan Fellow.

Goolsbee served as a member and then chairman of the Council of Economic Advisers from 2009 through 2011 and was a member of the President’s cabinet. 

RELATED SOURCES

• “Monetary Policy in and Uncertain World,” speech by Austan Goolsbee delivered to the OMFIF in London on 21 September 2026.
• “A Field Guide to FOMC Meetings,” Austan Goolsbee, September 2026.
• "Construction Productivity: Strange and Awful," with Austan Goolsbee on Economics, Applied,1 October 2025.
• “Sticky Wages on the Layoff Margin,” Steven J. Davis and Pawel Krolikowski. American Economic Review, 114, no. 2 (February) 2025.
• A Monetary History of the United States, 1867-1960, Milton Friedman and Anna J. Schwartz, 1963.
• Monetary Trends in the United States and the United Kingdom: Their Relation to Income, Prices, and Interest Rates, 1867-1975, Milton Friedman and Anna J. Schwartz, 1982.