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Federal Reserve Bank of New York
Staff Reports
Monetary tightening cycles and the predictability of economic activity
Arturo Estrella
Tobias Adrian
Abstract

Eleven of fourteen monetary tightening cycles since 1955 were followed by increases in unemployment; three were not. The term spread at the end of these cycles discriminates almost perfectly between subsequent outcomes, but levels of nominal or real interest rates, as well as other interest rate spreads, generally do not.


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Arturo Estrella & Tobias Adrian, Monetary tightening cycles and the predictability of economic activity, Federal Reserve Bank of New York, Staff Reports 397, 2009.
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Keywords: Monetary policy ; Business cycles ; Unemployment ; Interest rates
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