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106 posts on "Monetary Policy"

August 15, 2016

What Drives Forecaster Disagreement about Monetary Policy?



LSE_What Drives Forecaster Disagreement about Monetary Policy?

What can disagreement teach us about how private forecasters perceive the conduct of monetary policy? In a previous post, we showed that private forecasters disagree about both the short-term and the long-term evolution of key macroeconomic variables but that the shape of this disagreement differs across variables. In contrast to their views on other macroeconomic variables, private forecasters disagree substantially about the level of the federal funds rate that will prevail in the medium to long term but very little on the rate at shorter horizons. In this post, we explore the possible explanations for what drives forecasts of the federal funds rate, especially in the longer run.

Continue reading "What Drives Forecaster Disagreement about Monetary Policy?" »

Posted by Blog Author at 7:00 AM in Macroecon, Monetary Policy | Permalink | Comments (1)

July 15, 2016

Implementing Monetary Policy Post-Crisis: What Do We Need to Know?



Columbia University’s School of International and Public Affairs and the New York Fed co-sponsored a recent workshop to discuss important issues related to monetary policy implementation. The May 4 event, held at Columbia, supports the extended effort that the Federal Reserve has undertaken to evaluate potential long-run monetary policy implementation frameworks, which was announced at a Federal Open Market Committee meeting last July.

Continue reading "Implementing Monetary Policy Post-Crisis: What Do We Need to Know?" »

Posted by Blog Author at 7:00 AM in Monetary Policy | Permalink | Comments (0)

June 29, 2016

Monetary Policy Transmission before and after the Crisis



LSE_Monetary Policy Transmission before and after the Crisis

The Federal Open Market Committee implements monetary policy by raising or lowering its target for the federal funds rate, the interest rate banks charge each other for overnight loans. Because the Federal Reserve has no direct control over most interest rates, it relies on arbitrage in money markets for the change in the fed funds rate to be transmitted to other short-term rates, thus causing all short-term rates to move in tandem. This transmission to other rates is an important first step for the Fed’s actions to influence the real economy. In this post, we describe the major developments that have affected monetary policy transmission since the recent financial crisis. We conclude that while arbitrage may have been impeded at the beginning of the crisis, it currently remains effective in transmitting changes in monetary policy via the money markets.

Continue reading "Monetary Policy Transmission before and after the Crisis" »

Posted by Blog Author at 7:00 AM in Financial Markets, Monetary Policy | Permalink | Comments (0)

June 27, 2016

Hey, Economist! How Is the Research and Statistics Group Changing?



LSE_Hey, Economist! How Is the Research and Statistics Group Changing?

As Director of Research for the New York Fed for the past seven years, Jamie McAndrews has been responsible for the Bank’s financial and economic policy research, as well as the collection of data and statistics from financial institutions. On the eve of his retirement on June 30, Jamie shared his perspective on how the Research and Statistics Group has changed with Andrew Haughwout, a senior vice president in the Group.

Continue reading "Hey, Economist! How Is the Research and Statistics Group Changing?" »

Posted by Blog Author at 7:00 AM in Macroecon, Monetary Policy | Permalink | Comments (1)

June 22, 2016

The Rapidly Changing Nature of Japan’s Public Debt



LSE_The Rapidly Changing Nature of Japan’s Public Debt

Japan’s general government debt-to-GDP ratio is the highest of advanced economies, due in part to increased spending on social services for an aging population and a level of nominal GDP that has not increased for two decades. The interest rate payments from taxpayers on this debt are moderated by income earned on government assets and by low interest rates. One might think that the Bank of Japan’s purchases of government bonds would further ease the burden on taxpayers, with interest payments to the Bank of Japan on its bond holdings rebated back to the government. Merging the balance sheets of the government and the Bank, however, shows that the asset purchase program alters the composition of public debt, with reserves in the banking system replacing government bonds, but not the amount of the debt taxpayers must pay interest on.

Continue reading "The Rapidly Changing Nature of Japan’s Public Debt" »

Posted by Blog Author at 7:00 AM in Fiscal Policy, Monetary Policy | Permalink | Comments (6)

June 03, 2016

At the N.Y. Fed: The Transatlantic Economy: Convergence or Divergence?



LSE_At the N.Y. Fed: The Transatlantic Economy: Convergence or Divergence?

On April 18, 2016, the New York Fed hosted a conference on current and future policy directions for the linked economies of Europe and the United States. "The Transatlantic Economy: Convergence or Divergence?"—organized jointly with the Centre for Economic Policy Research and the European Commission—brought together U.S. and Europe-based policymakers, regulators, and academics to discuss a series of important issues: Are the economies of the euro area and the United States on a convergent or divergent path? Are financial regulatory reforms making the banking and financial structures more similar? Will this imply a convergence in macroprudential policies? Which instruments do the United States and the euro area have at their disposal to raise investment, spur productivity, and avoid secular stagnation? In this post, we summarize the principal themes and findings of the conference discussion.

Continue reading "At the N.Y. Fed: The Transatlantic Economy: Convergence or Divergence?" »

June 01, 2016

Revisiting the Case for International Policy Coordination

Sushant Acharya, Ozge Akinci, Julien Bengui, and Bianca De Paoli

LSE_Revisiting the Case for International Policy Coordination

Prompted by the U.S. financial crisis and subsequent global recession, policymakers in advanced economies slashed interest rates dramatically, hitting the zero lower bound (ZLB), and then implemented unconventional policies such as large-scale asset purchases. In emerging economies, however, the policy response was more subdued since they were less affected by the financial crisis. As a result, capital flows from advanced to emerging economies increased markedly in response to widening interest rate differentials. Some emerging economies reacted by adopting measures to slow down capital inflows, acting under the presumption that these flows were harmful. This type of policy response has reignited the debate over how to moderate international spillovers.

Continue reading "Revisiting the Case for International Policy Coordination" »

May 25, 2016

The Macro Effects of the Recent Swing in Financial Conditions



Credit conditions tightened considerably in the second half of 2015 and U.S. growth slowed. We estimate the extent to which tighter credit conditions last year were responsible for the slowdown using the FRBNY DSGE model. We find that growth would have slowed substantially more had the Federal Reserve not delayed liftoff in the federal funds rate.

Continue reading "The Macro Effects of the Recent Swing in Financial Conditions" »

Posted by Blog Author at 7:00 AM in Financial Markets, Macroecon, Monetary Policy | Permalink | Comments (3)

May 23, 2016

The FRBNY DSGE Model Forecast—May 2016



The May 2016 forecast of the Federal Reserve Bank of New York’s (FRBNY) dynamic stochastic general equilibrium (DSGE) model remains broadly in line with those of our two previous semiannual reports (see our May 2015 and December 2015 posts). In the past year, the headwinds that contributed to slower growth in the aftermath of the financial crisis finally began to abate. However, the widening of credit spreads associated with swings in financial markets in the second half of 2015 and the first few months of this year have had a negative impact on economic activity. Despite this setback, the model expects a rebound in growth in the second half of the year, so that the medium-term forecast remains, as in the December post, one of steady, gradual economic expansion. The model also continues to predict gradual progress in the inflation rate toward the Federal Open Market Committee’s (FOMC) long-run target of 2 percent.

Continue reading "The FRBNY DSGE Model Forecast—May 2016" »

Posted by Blog Author at 7:00 AM in Macroecon, Monetary Policy | Permalink | Comments (0)

May 19, 2016

Just Released: Presenting U.S. Economy in a Snapshot at Our Economic Press Briefing



LSE_Just Released: Presenting U.S. Economy in a Snapshot at Our Economic Press Briefing


Monitoring the economic and financial landscape is a difficult task. Part of the challenge stems from simply having access to data. Even if this requirement is met, there is the issue of identifying the key economic data releases and financial variables to focus on among the vast number of available series. It is also critical to be able to interpret movements in the data and to know their implications for the economy. Since last June, New York Fed research economists have been helping on this front, by producing U.S. Economy in a Snapshot, a series of charts and commentary capturing important economic and financial developments. At today’s Economic Press Briefing, we took reporters covering the Federal Reserve through the story of how and why the Snapshot is produced, and how it can be helpful in understanding the U.S. economy.

Continue reading "Just Released: Presenting U.S. Economy in a Snapshot at Our Economic Press Briefing" »

Posted by Blog Author at 10:30 AM in Macroecon, Monetary Policy | Permalink | Comments (0)
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