Search Results
Briefing
How Likely Is a Return to the Zero Lower Bound?
The likelihood of returning to near-zero interest rates is relevant to policymakers in considering the path of future interest rates. At the zero lower bound, the Fed can no longer lower rates and thus can respond to a contraction only through alternative policy measures, such as quantitative easing. Recent research at the Richmond Fed has used repeated simulations of the U.S. economy to estimate the probability of such an occurrence over the next ten years. The estimated probability of returning to the zero lower bound one or more times during this period is approximately one chance in four.
Speech
Negative nominal central bank policy rates: where is the lower bound?
Remarks at the University of Wisconsin.
Working Paper
Real Rates and Consumption Smoothing in a Low Interest Rate Environment: The Case of Japan
We study the dynamics of consumption, the real interest rate, and measures of labor input in Japan over the period from 1985-2014. We identify structural breaks in macroeconomic aggregates during the 1990s and associate them with the zero interest rate policy pursued by the Bank of Japan and the surprise increase in the consumption tax rate in April 1997. Formal estimation using the Generalized Methods of Moments shows that the mid-1990s are characterized by breaks in the structural parameters governing household consumption and labor supply decisions. Specifically, following the tax hike and ...
What Is the Probability of a Recession? The Message from Yield Spreads
Statistical models using yield spreads can provide estimated odds of a future contraction. How do the odds change when using real vs. nominal interest rates?