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During the 1990s, the Federal Reserve has pursued its twin goals of price stability and steady employment with considerable success. But despite--or perhaps because of--this success, concerns about the pace of economic and productivity growth have attracted renewed attention. Many observers...
Persistent link: https://www.econbiz.de/10005428439
A time-honored description of the "monetary transmission channel" suggests that the Fed controls the federal funds rate, which affects the rates on longer-term credit market instruments, which affect the expected real (inflation-adjusted) rates on longer-term instruments, which affect real...
Persistent link: https://www.econbiz.de/10005428458
What makes economies rise and fall? What caused the Asian crisis, the recessions of the 1970's and 1980's, and even the Great Depression? According to many modern economists, shocks did. This unsatisfying answer lies at the heart of a currently popular framework for analyzing business cycle...
Persistent link: https://www.econbiz.de/10005428488
How costly would it be in terms of lost output and jobs to lower the inflation rate to zero? One can answer this counterfactual question only in the context of a model that allows us to estimate the effects of pursuing counterfactual monetary policies. The answer to the question can vary widely...
Persistent link: https://www.econbiz.de/10005428495
Effective conduct of monetary policy requires accurate and timely indications of the current and future course of the ultimate targets of monetary policy. It is widely agreed that the monetary aggregates no longer provide reliable signals of inflation or of real activity. It is less widely...
Persistent link: https://www.econbiz.de/10005428507
The most obvious economic cost of recessions is that workers become involuntarily unemployed. During the average business cycle contraction, total employment declines by about 1.5 percent, the unemployment rate rises by 2.7 percentage points, and it takes almost two years before employment...
Persistent link: https://www.econbiz.de/10005428600
Central bankers in the United States and abroad must grapple with a broad array of questions about how best to conduct monetary policy. How much should the goal of price stability be emphasized relative to the goal of employment stability? Does central bank independence aid in achieving either...
Persistent link: https://www.econbiz.de/10005428603
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