1.0Liberty Street Economicshttps://libertystreeteconomics.newyorkfed.orgblog authorhttps://libertystreeteconomics.newyorkfed.org/author/blog-author/The FRBNY DSGE Model Forecast—May 2016 - Liberty Street Economicsrich600338<blockquote class="wp-embedded-content" data-secret="Uq15TFMJwa"><a href="https://libertystreeteconomics.newyorkfed.org/2016/05/the-frbny-dsge-model-forecastmay-2016/">The FRBNY DSGE Model Forecast—May 2016</a></blockquote><iframe sandbox="allow-scripts" security="restricted" src="https://libertystreeteconomics.newyorkfed.org/2016/05/the-frbny-dsge-model-forecastmay-2016/embed/#?secret=Uq15TFMJwa" width="600" height="338" title="“The FRBNY DSGE Model Forecast—May 2016” — Liberty Street Economics" data-secret="Uq15TFMJwa" frameborder="0" marginwidth="0" marginheight="0" scrolling="no" class="wp-embedded-content"></iframe><script>
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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.https://libertystreeteconomics.newyorkfed.org/wp-content/uploads/sites/2/2016/05/6a01348793456c970c01b8d1e8b9f2970c-500wi.jpg