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Keywords:Monetary Policy 

Working Paper
The International Spillovers of Synchronous Monetary Tightening

We use historical data and a calibrated model of the world economy to study how a synchronous monetary tightening can amplify cross-border transmission of monetary policy. The empirical analysis shows that historical episodes of synchronous tightening are associated with tighter financial conditions and larger effects on economic activity than asynchronous ones. In the model, a sufficiently large synchronous tightening can disrupt intermediation of credit by global financial intermediaries causing large output losses and an increase in sacrifice ratios, that is, output lost for a given ...
International Finance Discussion Papers , Paper 1384

Working Paper
Optimal Monetary Policy under Negative Interest Rate

In responding to the extremely weak global economy after the financial crisis in 2008, many industrial nations have been considering or have already implemented negative nominal interest rate policy. This situation raises two important questions for monetary theories: (i) Given the widely held doctrine of the zero lower bound on nominal interest rate, how is a negative interest rate (NIR) policy possible? (ii) Will NIR be effective in stimulating aggregate demand? (iii) Are there any new theoretical issues emerging under NIR policies? This article builds a model to show that (i) money ...
Working Papers , Paper 2017-19

Working Paper
The Impact of Covid-19 Related Policy Responses on Municipal Debt Markets

Municipal (muni) bonds are an important source of funding for state and local governments. During the Covid-19 pandemic, muni debt markets became severely distressed. In response, the Federal Reserve established the Municipal Liquidity Facility (MLF). Meanwhile, Congress enacted extensive fiscal measures that included direct aid to cities and states. To understand whether and how these policies worked, we employ a state-level regression model to estimate the relative efficacy of monetary and fiscal policy interventions for the term structure of muni-Treasury yield spreads. We find that fiscal ...
Working Paper Series , Paper WP-2021-14

Working Paper
The Effects of Liquidity Regulation on Bank Demand in Monetary Policy Operations

We estimate the effects of the liquidity coverage ratio (LCR), a liquidity requirement for banks, on the tenders that banks submit in Term Deposit Facility operations, a Federal Reserve tool created to manage the quantity of bank reserves. We identify these effects using variation in LCR requirements across banks and a change over time that allowed term deposits to count toward the LCR. Banks subject to the LCR submit tenders more often and submit larger tenders than exempt banks when term deposits qualify for the LCR. These results suggest that liquidity regulation affects bank demand in ...
Finance and Economics Discussion Series , Paper 2016-090

Discussion Paper
Preparing for Takeoff? Professional Forecasters and the June 2013 FOMC Meeting

Following the June 18-19 Federal Open Market Committee (FOMC) meeting different measures of short-term interest rates increased notably. In the chart below, we plot two such measures: the two-year Treasury yield and the one-year overnight indexed swap (OIS) forward rate, one year in the future. The vertical line indicates the final day of the June FOMC meeting. To what extent did this rise in rates following the June FOMC meeting reflect a shift in the expected future path of the federal funds rate (FFR)? Market participants and policy makers often directly read the expected path from ...
Liberty Street Economics , Paper 20130909

Journal Article
Federal Reserve: The Future of Forward Guidance

For much of the Fed's history, its leaders prided themselves on their inscrutability. Alan Greenspan, who served as Fed chair from 1987 to 2006, famously perfected the art of "Fedspeak," carefully crafting his statements on monetary policy to be vague and obscure so that he could avoid roiling financial markets. But by the end of his tenure, the Fed had become increasingly transparent in its communications with the public. Today, Fed Chair Jerome Powell holds a press conference after every FOMC meeting, and the committee issues a post-meeting statement explaining both its current policy ...
Econ Focus , Volume 22 , Issue 4Q , Pages 18-21

Global Perspectives: Tom Hoenig on the Costs of COVID-19, Modern Monetary Theory and Fed Leadership

Hoenig and Dallas Fed President Rob Kaplan discussed Hoenig’s views on the costs of the current crisis, potential solutions and the elements of effective leadership at the Fed.
Dallas Fed Economics

Speech
The U.S. Economic Outlook and Monetary Policy 07.13.16 Australian Business Economists, Sydney, Australia

As an economist and policymaker, I appreciate hearing the perspectives of market and business economists. Just as the different views expressed by my colleagues around the monetary policy table help to inform my own policy views, the insights of economists like you help to shape my own economic outlook. The chance to hear perspectives from this side of the Pacific is particularly welcome at this time because we live in a global economy. Today, I will focus my remarks on the U.S. economy and monetary policy. To help put the discussion into context, I will start with a brief overview of the ...
Speech , Paper 74

Working Paper
From Deviations to Shortfalls: The Effects of the FOMC’s New Employment Objective

The Federal Open Market Committee (FOMC) recently revised its interpretation of its maximum employment mandate. In this paper, we analyze the possible effects of this policy change using a theoretical model with frictional labor markets and nominal rigidities. A monetary policy that stabilizes employment “shortfalls” rather than “deviations” of employment from its maximum level leads to higher inflation and more hiring at all times due to firms’ expectations of more accommodative future policy. Thus, offsetting only shortfalls of employment results in higher inflation, employment, ...
Research Working Paper , Paper RWP 21-04

Global Perspectives: John B. Taylor on the Taylor Rule, Accommodative Policy, Low Interest Rates and Expanded Central Bank Mandates

Taylor and Dallas Fed President Robert S. Kaplan discussed the origins of the Taylor Rule, the dangers of holding monetary policy too accommodative for too long, the distributional effects of low interest rates and expanded central bank mandates.
Dallas Fed Economics

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Mester, Loretta J. 19 items

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