Guest lecture: How Aggressively Did the Fed Stabilize the Economy Pre-ZLB?

On September 14, I had the opportunity to present a guest lecture to Professor Rich Clarida's Columbia SIPA course on Global Monetary Policy in the 21st Century. My lecture was entitled, How Aggressively Did the Fed Stabilize the Economy Pre-ZLB? (Here's a link to the slides.) My talk looked into how aggressively the Fed acted …

Update

Thanks for following my blog! Going forward, I will be shifting the emphasis of my posts. I will be using the blog more as an outlet for research-focused pieces, and less for policy analysis. As an example of my new direction, see my two most recent posts: Expectations, Then and Now and Would a Recovery …

Expectations, Then and Now

On March 30, I participated in a very stimulating conference hosted by Kenyon College entitled What’s My Dollar Worth? Inflation’s Causes, Consequences and Cures. The conference included speakers with a broad range of views on the causes of recent high inflation and what policy can do about it. My own contribution compared the current situation …

Would a Recovery in Real Wages Make the Fed’s Job Harder?

Since 2020, real wages have fallen far short of their pre-Covid trend. In a new working paper, Steve Kamin and I ask, Will a Recovery in Real Wages Obstruct Progress toward Disinflation? Here's the abstract from the paper, along with a key figure: Many observers, including officials at the Federal Reserve, have focused on the …

Interpreting the March 2023 SEP

This post is the latest of a series that uses a small-scale macroeconomic model to interpret the latest edition of the Federal Open Market Committee’s Summary of Economic Projections; here’s a link to the previous edition. This post looks at the March 2023 SEP. The SEP provides important insights into policymaker thinking. It presents Committee …

What If the Economy Remains Resilient?

The economy in 2022 was remarkably resilient to higher interest rates and tighter financial conditions. Although residential construction fell, consumer spending continued to expand. The labor market remained strong in the second half of the year, with payrolls rising 357 thousand per month and the unemployment rate averaging 3.6 percent. And as the January labor-market report suggested, …

Interpreting the December 2022 SEP

As in posts earlier this year (here’s a link to the previous one), I interpret the outlook in the FOMC’s latest Summary of Economic Projections (SEP) through the lens of a simple macroeconomic model. This edition is shorter than previous ones, because the revisions since the FOMC’s previous projections from September are relatively straightforward to …

What If Inflation Comes Down Quickly?

If inflation comes down more quickly than the Fed currently anticipates, the Fed would likely cut interest rates sooner—sooner, for example, than in their most-recent economic projections, when the first cut was in 2024. Lower rates would mean that unemployment wouldn’t rise as much. But monetary policy affects the economy with a lag, so a …

Interpreting the September 2022 SEP

Following up on a couple of previous posts (here and here), I take a look at the forecasts in the FOMC’s September 2022 Summary of Economic Projections (SEP) through the lens of a simple macroeconomic model. One key highlight: The latest projection poses some problems of interpretation for the approach I had been using in …

How much is the Phillips curve boosting inflation?

Inflation is currently much higher than it was pre-Covid: as of August 2022, the twelve-month change in the prices of personal consumption expenditures excluding food and energy (core PCE) was 4.9 percent. Another measure of “core” PCE, the Dallas Fed trimmed mean, had increased 4.7 percent over the same period. That compares with 1.6 and 1.9 …