Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of Cleveland
Economic Commentary
Where would the federal funds rate be, if it could be negative?
Ellis W. Tallman
Saeed Zaman
Abstract

In the wake of Great Recession, the Federal Reserve engaged in conventional monetary policy actions by reducing the federal funds rate. But soon the rate hit zero, and could go no lower. In such environments, policymakers still think in terms of where the federal funds rate should be, were it possible to go negative. To project the “unconstrained path” of the funds rate—ignoring the zero lower bound—and to identify the key underlying shocks driving that path, we employ a statistical macroeconomic forecasting model. We find that the federal funds rate would have been extremely negative during 2009-2010.


Download Full text
Cite this item
Ellis W. Tallman & Saeed Zaman, "Where would the federal funds rate be, if it could be negative?" , Federal Reserve Bank of Cleveland, Economic Commentary, issue Oct, 2012.
More from this series
JEL Classification:
Subject headings:
Keywords: Federal funds rate ; Forecasting
For corrections, contact 4D Library ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal