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Journal Article
Technology and growth: an overview
During the 1990s, the Federal Reserve has pursued its twin goals of price stability and steady employment with considerable success. But despite--or perhaps because of--this success, concerns about the pace of economic and productivity growth have attracted renewed attention. Many observers ruefully note that the average pace of GDP growth has remained below rates achieved in the 1960s and that a period of rapid investment in computers and other capital equipment has had disappointingly little impact on the productivity numbers. Most of the industrial world has experienced a similar decline ...
Conference Paper
Technology and growth: conference proceedings
Discussion Paper
Model uncertainty, expectation formation and shock persistence
Conference Paper
Beyond shocks: what causes business cycles? an overview
Journal Article
Commodity prices, the term structure of interest rates, and exchange rates: useful indicators for monetary policy?
Effective conduct of monetary policy requires accurate and timely indications of the current and future course of the ultimate targets of monetary policy. It is widely agreed that the monetary aggregates no longer provide reliable signals of inflation or of real activity. It is less widely agreed which variable or variables should replace the aggregates, or how they would be used in conducting monetary policy. This article considers whether the slope of the term structure of interest rates, commodity prices, and the exchange rate could be suitable replacements for the aggregates. The author ...
Journal Article
What role does consumer sentiment play in the U.S. macroeconomy?
Many in the press and general public see consumer sentiment as a significant, independent force in the economy. Some suggest that sentiment indexes forecast future economic activity, others that changes in consumer sentiment actually drive business cycle fluctuations. ; This article shows that consumer sentiment plays a much more passive role, primarily reflecting rather than causing current economic conditions such as levels of income growth, inflation, unemployment, and interest rates. The authors statistical tests show that most of the variation in consumer sentiment is explained by these ...
Working Paper
The role of expectations in U. S. inflation dynamics
A growing body of literature examines alternatives to the rational expectations hypothesis in applied macroeconomics. This paper continues this strand of research by examining the role survey expectations play in the inflation process and reports three principal findings. One, short-run inflation expectations appear to play a significant role in explaining U.S. inflation over the past 20?25 years. Two, long-run expectations generally do not appear to have a direct influence on U.S. inflation over the same period, although these longer expectations enter indirectly as a key determinant of the ...
Journal Article
Goals, guidelines, and constraints facing monetary policymakers: an overview
Central bankers in the United States and abroad must grapple with a broad array of questions about how best to conduct monetary policy. How much should the goal of price stability be emphasized relative to the goal of employment stability? Does central bank independence aid in achieving either or both of these goals? Does a stable, short-run trade-off between inflation and unemployment exist, and can it be exploited by a central bank? What instrument should the central bank manipulate in order to achieve its short-run and long-run goals? ; In June of 1994, the Federal Reserve Bank of Boston ...
Working Paper
Computationally efficient solution and maximum likelihood estimation of nonlinear rational expectation models
This paper presents new, computationally efficient algorithms for solution and estimation of nonlinear dynamic rational expectations models. The innovations in the algorithms are as follows: (1) The entire solution path is obtained simultaneously by taking a small number of Newton steps, using analytic derivatives, over the entire path; (2) The terminal conditions for the solution path are derived from the uniqueness and stability conditions from the linearization of the model around the terminus of the solution path; (3) Unit roots are allowed in the model; (4) Very general models with ...
Journal Article
Issues in economics: what is the cost of deflation?
A steady decline in the core rate of inflation over the past few years has prompted the question: What are the economic consequences when the inflation rate drops below zero?