Quick links to a few items I found interesting.
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Category Archives: Federal Reserve
Guest Contribution: “Does legislating a rule for the Federal Reserve make sense?”
Today we are fortunate to have a guest contribution written by Carl E. Walsh, Distinguished Professor of Economics at the University of California, Santa Cruz.
Guest Contribution: “Should Congress ReFORM Fed Transparency?”
Today, we are pleased to present a guest contribution written by Alex Nikolsko-Rzhevskyy, Associate Professor of Economics at Lehigh University, David Papell and Ruxandra Prodan, respectively Professor and Clinical Assistant Professor of Economics at the University of Houston.
Commodity prices and exchange rates
The dramatic decline in the prices of a number of commodities over the last 16 months must have a common factor. One variable that seems to be quite important is the exchange rate.
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Links: Housing Bubbles, Trilemma, Policy Timing Uncertainty
Food for thought over the long weekend.
Closing the Output Gap
…very slowly
Potential GDP, Again
There are various ways of estimating potential output. I typically refer to the CBO’s estimates, which are basically a production function approach (use trend labor and capital stock, and total factor productivity growth, to infer potential output). However, An alternative is to examine price pressures to infer potential output, as in Ball and Mankiw (JEP, 2002).
“…inflation expectations can change quickly”
One of the arguments for acting sooner rather than later on monetary policy is that if the slack disappears, inflationary expectations will surge. That’s represented in this quote from reader Peak Trader’s comment. While I don’t rule out this possibility, it seems reasonable to me to empirically assess whether this is true for the United States over the past thirty years.
What the Taylor Rule(s) Say(s)
The St. Louis Fed has a handy webpage where it shows the Taylor-rule implied Fed funds target rate given measures of the output and inflation gaps, and the natural real rate of interest. Here’s recent snapshot I downloaded for my classes.
Preparing for lift-off
The strong October employment report makes it look likely that the era of zero interest rates will soon come to an end, at least for the United States.
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