Bernanke: Economists need to study financial markets more

WASHINGTON -- Federal Reserve Chairman Ben Bernanke said Thursday that the global financial crisis highlights the need for economists to deepen their understanding of how events on Wall Street can affect the broader economy.

"The rationale for such research has certainly been underscored by the financial crisis that began in August 2007 and the powerful adverse effects of the crisis on economic activity around the globe," Bernanke said in prepared remarks to a Federal Reserve conference.

Bernanke didn't talk about current economic conditions, or offer clues as to whether the central bank would announce any additional steps to shore up the economy at its meeting later this month.

Bernanke said existing research has been invaluable in helping the Fed chart a course to battle the worst crisis since the 1930s. But the debacle also has highlighted "how much additional research is needed on this topic," he said.

To lift the country out of recession, the Fed has cut a key lending rate to a record low, near zero. It also has used unconventional tools, including buying government debt and mortgage-backed securities, with the goal of making cash more available, driving down borrowing costs and spurring economic activity.

Some economists believe a recent rise in rates on mortgages and Treasury securities could prompt the Fed to step up purchases of government debt to keep rates low.

Bernanke, who spent most of his professional career as an economics professor, is a student of the Great Depression and has written extensively on the subject.