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Journal Article
Communicating a policy path: the next frontier in central bank transparency?
In the last two decades, central banks have taken a variety of steps to increase the transparency of monetary policy. Today, many economists are suggesting ways to further increase transparency. One area of considerable interest is the outlook for the future path of the policy rate. The policy rate is the short-term, typically overnight, interest rate that central bankers use to adjust the stance of monetary policy. While central banks typically announce changes in the policy rate when they occur, very few central banks provide an explicit description of where the policy rate is likely to be ...
Journal Article
Monetary Policy at the Zero Lower Bound: Revelations from the FOMC's Summary of Economic Projections
George A. Kahn and Andrew Palmer assess how FOMC participants' projections that policy would lift off from its effective lower bound related to their projections for inflation and unemployment. The article is summarized in The Macro Bulletin.
Journal Article
The changing interest sensitivity of the U.S. economy
Journal Article
What is the optimal inflation rate?
With inflation in the United States and elsewhere low by historical standards, the question of what inflation rate policymakers should aim for has moved front and center. Knowing what inflation rate to aim for is critically important for maximizing the economic well-being of the public. ; Most policymakers agree they should not allow inflation to fall below zero because the costs of deflation are thought to be high. They disagree, however, about how much above zero, if any, central banks should aim to keep inflation. Unfortunately, rigorous estimates of an "optimal inflation rate" have ...
Journal Article
Has the cost of disinflation declined?
Journal Article
Nominal GNP: an anchor for monetary policy?
Nominal GNP has some theoretical appeal as a guide for monetary policy. Its principal strength is that it would prevent policy from drifting away from the long-run goal of price stability. However, whether policymakers can translate this theoretical appeal into an actual policy that improves economic performance is an open question.
Journal Article
Estimated rules for monetary policy
Estimated policy rules describe how monetary policy has responded in the past to key economic indicators. Such rules can be used to evaluate past decisions and help guide the appropriate path for current policy. ; However, there may be unique features of a given economic situation?such as the current binding zero lower bound on interest rates and the desire to manage downside risk to economic activity?that warrant flexibility in following any rule based on past performance. ; Kahn estimates what rules best describe past monetary policies that coincided with periods of favorable economic ...
Journal Article
Wage behavior in the United States: 1907-80
Working Paper
The output and inflation effects of dollar depreciation
Working Paper
The Taylor rule and the practice of central banking
The Taylor rule has revolutionized the way many policymakers at central banks think about monetary policy. It has framed policy actions as a systematic response to incoming information about economic conditions, as opposed to a period-by-period optimization problem. It has emphasized the importance of adjusting policy rates more than one-for-one in response to an increase in inflation. And, various versions of the Taylor rule have been incorporated into macroeconomic models that are used at central banks to understand and forecast the economy. ; This paper examines how the Taylor rule is used ...