Macro Musings with David Beckworth · Monday, August 31, 2026
Donald Kohn reflects on Alan Greenspan's tenure, particularly his success in achieving price stability in the 1990s. Kohn notes that Greenspan resisted calls to lower interest rates despite high unemployment in the early 1990s, focusing instead on keeping inflation expectations in check.
“I think the second, a second episode, it's more than an episode, a period in my mind, that really, he was called the maestro for the productivity, call in the mid to late 90s, 1995, resisting calls to raise interest rates because the unemployment rate was so low.”
“So there was a mild recession in 1991, I think. And coming out of that recession, the Fed fund rate had been lowered to a very low rate of 3%. At the time.”
“And he was very skeptical about, you know, the future prospects. He was concerned about the inflation expectation. So he resisted any temptation to ease further.”
“We achieved price stability in the 1990s, but it wasn't instantaneous. And it was done with the economy expanding very, very nicely in those years. I think that's also Alan Greenspan.”