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Discussion Paper
The Post-Pandemic r*
The debate about the natural rate of interest, or r*, sometimes overlooks the point that there is an entire term structure of r* measures, with short-run estimates capturing current economic conditions and long-run estimates capturing more secular factors. The whole term structure of r* matters for policy: shorter run measures are relevant for gauging how restrictive or expansionary current policy is, while longer run measures are relevant when assessing terminal rates. This two-post series covers the evolution of both in the aftermath of the pandemic, with today’s post focusing especially ...
Speech
Remarks at the 2015 U.S. Monetary Policy Forum
Remarks at the 2015 U.S. Monetary Policy Forum, New York City.
Speech
The U.S. economic outlook and monetary policy
Remarks at the Economic Club of New York, New York City.
Report
Safety, liquidity, and the natural rate of interest
Why are interest rates so low in the Unites States? We find that they are low primarily because the premium for safety and liquidity has increased since the late 1990s, and to a lesser extent because economic growth has slowed. We reach this conclusion using two complementary perspectives: a flexible time-series model of trends in Treasury and corporate yields, inflation, and long-term survey expectations, and a medium-scale dynamic stochastic general equilibrium (DSGE) model. We discuss the implications of this finding for the natural rate of interest.
Speech
Important choices for the Federal Reserve in the years ahead: remarks at Lehman College, Bronx, New York
Remarks at Lehman College, Bronx, New York.
Discussion Paper
The Evolution of Short-Run r* after the Pandemic
This post discusses the evolution of the short-run natural rate of interest, or short-run r*, over the past year and a half according to the New York Fed DSGE model, and the implications of this evolution for inflation and output projections. We show that, from the model’s perspective, short-run r* has increased notably over the past year, to some extent outpacing the large increase in the policy rate. One implication of these findings is that the drag on the economy from recent monetary policy tightening may have been limited, rationalizing why economic conditions have remained relatively ...
Briefing
How Do Demographics Influence r*?
Demographic trends are evolving in the U.S. as well as globally, potentially affecting the behavior of interest rates. This includes the natural rate of interest, denoted r*. Through the lens of a simple model, we describe supply and demand channels through which these demographic trends may affect r* and show a range of estimates for the potential quantitative impact.