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Newsletter
Inflation Expectations, the Phillips Curve, and the Fed’s Dual Mandate
This Summer 2021 issue of Page One Economics describes how to think about stable prices, how inflation has evolved in recent years, how the relationship between inflation and employment is changing, and what the Federal Open Market Committee (FOMC) has recently stated about its strategy to meet its price stability goal.
Newsletter
Economics and the environment
How are economics and the environment related? The quick answer is that environmental quality is a worthy goal, but there is an economic trade-off -- a clean environment does not come without costs. The September 2014 Page One Economics article, "Economics and the Environment", provides some economic strategies for protecting the environment.
Newsletter
How Federal Reserve Bank Presidents Ensure “Main Street” is Represented in Monetary Policy
The Federal Reserve’s Federal Open Market Committee conducts monetary policy to promote maximum employment and price stability in the U.S. economy. Monetary policy is made at the national level, but it’s important that policy reflects the economic voices beyond Washington, D.C., and Wall Street. The November issue of Page One Economics explains how Federal Reserve Bank presidents ensure the voices of “Main Street” are reflected in monetary policy decisions.
Newsletter
Minding the Output Gap: What Is Potential GDP and Why Does It Matter?
Potential output is an estimate of what the economy could produce. Actual output is what the economy does produce. If actual is below potential -- a negative output gap -- there is "slack" in the economy. If actual is above potential -- a positive output gap -- resources are fully employed, or perhaps overutilized. This issue of Page One Economics explains how the output gap is useful for checking the health of the economy. It also points out how errors in the estimation of potential real GDP can reduce the effectiveness of policy.
Working Paper
Let's Close the Gap: Revising Teaching Materials to Reflect How the Federal Reserve Implements Monetary Policy
The topic of the Federal Reserve’s (the Fed’s) implementation of monetary policy has a significant presence in economics textbooks as well as standards and guidelines for economics instruction. This presence likely reflects the fact that it is the implementation framework that helps ensure that the Fed’s desired level of its policy interest rate is transmitted to financial markets, which helps it steer the economy toward the Congressional dual mandate of maximum employment and price stability. Over the past decade or so, the Fed has purposefully shifted the way it implements monetary ...
Newsletter
What’s in Your Market Basket? Why Your Inflation Rate Might Differ from the Average
Does it feel like your dollars go as far as they used to? If not, how does that mesh when reports say inflation rates are lower than average? The October issue of Page One Economics explains the disconnect between what you might experience as a consumer and what the data show.
Newsletter
Bitcoin: Money or Financial Investment?
Bitcoin has become a cultural and financial phenomenon. While many people have heard of Bitcoin, far fewer understand it. In short, Bitcoin is a digital currency, or "cryptocurrency," that allows person-to-person transactions independent of the banking system. Bitcoin is not a physical coin that you keep in your purse or wallet. Rather, it is a virtual currency?a digital computer code you store in a virtual wallet in cyberspace and access with a computer or smartphone app. Some see Bitcoin as revolutionary because it allows people to transfer money to each other very easily (like sending ...
Journal Article
Making Technical Adjustments: The Difference Between “Conducting” and “Implementing” Monetary Policy
Technical adjustments to the Fed’s administered rates help to implement existing monetary policy in changing market conditions.
Newsletter
Falling Oil Prices Create Winners and Losers
Oil prices affect the U.S. economy in many ways. For example, fluctuations in the price of oil can influence inflation, unemployment, and disposable income. Some local economies with close ties to the oil industry, however, are affected even more directly in both positive and negative ways. This essay covers one recent example of the local impact of oil prices.
Newsletter
The great inflation: a historical overview and lessons learned
All inflation isn't bad?a moderate amount can signal a healthy economy. But high inflation, such as that during the Great Inflation, can lead to a viscious cycle where expectations of higher inflation lead to further increases in the price level. Read the October 2012 Page One Economics Newsletter to find out what caused the Great Inflation, how tough (and painful) policy brought it to an end, and two key lessons learned.