Before 2008, U.S. monetary policy was primarily conducted in terms of a target set by the Federal Reserve for the fed funds rate, which is the interest rate a bank pays to borrow funds overnight from other banks. A large academic literature used the fed funds rate as a summary of monetary policy, looking at its correlations in dynamic regressions with other variables of macroeconomic interest. But the fed funds rate has been stuck near zero for the last 5 years, and will likely be replaced by an alternative policy focus even once we exit the zero lower bound. Economic researchers face not just the difficulty of summarizing what the Fed has been doing in the current and future environment, but also the practical challenge of how to update their historical regressions to try to describe the full set of historical data along with the new experience in a coherent way. Here I describe a new research paper that suggests one solution to these problems.
Monthly Archives: November 2013
U.S. economy continues moderate growth
Yesterday the BEA finally reported GDP numbers for the third quarter, a month later than originally scheduled owing to the earlier shut-down of federal operations. The U.S. economy is estimated to have grown at an annual rate of 2.8%. That’s below the historical average, but better than the previous three quarters.
China, Development, and the US-China Economic Relationship
A Feasible Measure for Mitigating Income Inequality
Raise the Minimum Wage!
In the wake of New Jersey’s raise in the minimum wage,[0] it seems like a good time to re-assess the case for a nationwide increase. Back in the February State of the Union message, President Obama proposed an increase to $9.00 by the end of 2015. Figure 1 places in historical context the proposal.
Great Expectations, Deferred
Still waiting for large, economy-wide job increases from the “shale revolution”
Changing plans
Found this in my inbox this week:
UC has changed the menu of the health care plans
that will be offered in 2014. Most notably, the three currently available PPO
plans (Anthem Blue Cross PPO, Anthem Plus, and Anthem Lumenos) are being
discontinued. They are replaced by Blue Shield Health Savings Plan and UC
Care.
Who Supports SNAP Cuts?
From reader Hans, commenting on the advisability of the reductions in Supplemental Nutrition Assistance Program (SNAP) expenditures, effective today:
You ax nothing from the recipient and everything from the tax slave…