General discussion : monetary policy and real stabilization
The inflation/output variability trade-off revisited
The monetary transmission mechanism: an empirical framework
This paper describes an empirical framework for analyzing the monetary transmission mechanism through which changes in monetary policy affect real GDP and inflation. The framework reflects the work of a large number of empirical researchers who have built econometric models of the impacts of monetary policy on real interest rates and real exchange rates. The framework is international in its scope and emphasizes the prices of financial assets rather than the quantities of these assets. In most cases expectations are assumed to be rational and the prices of goods and services are ...
Commentary : challenges for monetary policy : new and old
Getting back on track: macroeconomic policy lessons from the financial crisis
This article reviews the role of monetary and fiscal policy in the financial crisis and draws lessons for future macroeconomic policy. It shows that policy deviated from what had worked well in the previous two decades by becoming more interventionist, less rules-based, and less predictable. The policy implications are thus that policy should ?get back on track.? The article is a modified version of a presentation given at the Federal Reserve Bank of Philadelphia?s policy forum ?Policy Lessons from the Economic and Financial Crisis,? December 4, 2009. The presentation was made during a panel ...
Monetary policy and the long boom
This article is a reprint of a lecture - given in honor of Homer Jones - that examines the causes of the Long Boom. John B. Taylor defines the Long Boom from 1982 to the present - as the period of time in which the United States has known unprecedented economic stability. This period includes the first and second-longest peacetime expansions in American history, separated by one relatively short and mild national recession. Taylor explores the internal changes in the structure of our economy, as well as external shocks and economic policy. He also discusses the reasons for the change in ...
"The Importance of Being Predictable" by John B. Taylor -- "Monetary Policy Under Uncertainty" by Ben S. Bernanke -- "The Importance of Being Predictable" by William Poole
A black swan in the money market
At the center of the financial market crisis of 2007-2008 was a highly unusual jump in spreads between the overnight inter-bank lending rate and term London inter-bank offer rates (Libor). Because many private loans are linked to Libor rates, the sharp increase in these spreads raised the cost of borrowing and interfered with monetary policy. The widening spreads became a major focus of the Federal Reserve, which took several actions--including the introduction of a new term auction facility (TAF)--to reduce them. This paper documents these developments and, using a no-arbitrage model of the ...