"The Fed's mandate calls for keeping inflation low while maintaining maximum sustainable economic progress, a charge we cannot fulfill without understanding and weighing the forces driving productivity," Fisher writes. He asserts that policymakers must develop better measures of the global services economy.
"Data that do not reflect the world in which we live increase the chances for errors in decision making," he says. "The Best of All Worlds: Globalizing the Knowledge Economy" - the 2006 annual report essay - contends that a technology revolution that makes access to information cheaper and more democratic has sped up globalization and touched nearly every part of the world.
According to the essay's authors, Senior Vice President and Chief Economist W. Michael Cox and economics writer Richard Alm, this democratizing of knowledge is increasing productivity around the world, lowering costs and raising living standards "in ways unimaginable just a few years ago."
"Knowledge is the ultimate source of wealth," they write. The essay examines 10 ways a more integrated knowledge economy is impacting productivity and costs-for example, raising foreign investment, creating new competition, extending economies of scale and broadening
markets.
"The combination of knowledge and globalization provides the U.S. with the best of all worlds - the benefits of not only our nation's intelligence but the entire planet's," the authors conclude.
