Search Results
Working Paper
Lliquidity, trends, and the great recession
The authors study the impact that the liquidity crunch in 2008-2009 had on the U.S. economy?s growth trend. To this end, the authors propose a model featuring endogenous productivity a la Romer and a liquidity friction a la Kiyotaki-Moore. A key finding in the authors? study is that liquidity declined around the Lehman Brothers? demise, which led to the severe contraction in the economy. This liquidity shock was a tail event. Improving conditions in financial markets were crucial in the subsequent recovery. Had conditions remained at their worst level in 2008, output would have been 20 ...
Briefing
Five Decades of Decline: U.S. Construction Sector Productivity
Construction labor productivity fell by more than 30 percent from 1970 to 2020, while overall U.S. economic productivity doubled over the same period.Despite potential biases in price deflators, multiple studies confirm that the productivity decline is real, with physical measures like housing units per worker showing similar stagnation.Increasing land-use regulations may be a plausible cause for the decline, as more strict land-use regulations disincentivize construction companies from pursuing larger projects, keeping them relatively small. In addition, this reduces incentives for ...
Journal Article
President's Message: How Do Small Towns Grow?
Following the Great Recession, the dominant narrative around rural communities has been one of population loss: opportunities are few, so kids leave small hometowns behind. No one moves in to replace them. And a sad but real demographic reality is that an older population means larger natural population losses, as well.
Briefing
Can China Avoid a Liquidity-Trap Recession? Some Unintended Consequences of Macroprudential Policies
A liquidity trap is a nightmare for central banks because the zero lower bound constrains them from further reducing the nominal interest rate to stimulate the economy. The nightmare can be long: For example, Japan — formerly the world's second-largest economy after the U.S. — has been battling its liquidity trap since its real-estate bubble burst in 1990. Recently, some commentators have argued that a liquidity trap is imminent in China — currently the world's second-largest economy — pointing to signs such as deposit surge (despite declining interest rates), mounting deflationary ...
Briefing
Goodfriend Memorial Lecture: Productivity and Structural Change
Introduced in 2023, the Goodfriend Memorial Lecture series honors the legacy of Marvin Goodfriend, long-time Richmond Fed economist, research director and senior policy advisor. The lecture was delivered as part of the Richmond Fed's Collaboration of Research Economists (CORE) Week model, which brings together Richmond Fed economists and visiting economists from a range of disciplines for seminars, conferences, networking and collaboration.
Expected U.S. Macroeconomic Performance during the Pandemic Adjustment Period
St. Louis Fed President James Bullard recommends declaring a “National Pandemic Adjustment Period” and discusses three broad goals of macroeconomic policy during this period.
Speech
Economic Outlook, November 2013
Earlier this year, I argued that annual GDP growth would likely be roughly 3 percent. I have since revised downward my estimate to roughly 2 percent. However, I still see room for optimism regarding our fundamental prospects, in contrast to some “stagnationists,” who see growth as becoming increasingly harder to achieve over time.Among the reasons for decreased growth estimates is a post-crisis belief among lenders that fewer consumers may be creditworthy borrowers. Compounding that, many consumers themselves have become more cautious in their spending behavior.Policy uncertainty has led ...
Speech
The Economic Outlook, Monetary Policy, and Normal Policymaking Now and in the Future; 10.25.18 Money Marketeers of New York University, Inc., New York, NY
I thank the Money Marketeers of New York University for inviting me back to speak tonight. When I was here four years ago, I discussed the important role that Federal Reserve communications play in making effective monetary policy and the need for these communications to evolve as we moved from a period of extraordinary monetary policymaking to more normal policymaking. At this point, that transition to more normal policymaking has been underway for some time, reflecting the health of the U.S. economy and the progress that?s been made on the FOMC?s monetary policy goals. Tonight, I?ll talk ...
Speech
2025 Economic Outlook
A strong but choosier consumer, coupled with a better-valued, more productive workforce has landed the economy in a good place.My baseline outlook is good. How economic policy uncertainty resolves will matter. But, with what we know today, I expect more upside than downside in terms of growth. I see more risk on the inflation side.The Fed remains well-positioned regardless of how the economy develops. Were employment to falter or inflation to re-emerge, we have the tools to respond.
Briefing
Is Fiscal Austerity Good for the Economy?
Concerns about fiscal imbalances in Europe and the United States have led to intense debates about whether governments should dramatically cut spending or increase taxes to reduce government debt ? a course of action often called fiscal "austerity." But is austerity likely to hurt economic growth? That question has not been definitively answered ? but even if austerity is costly in the short run, it may provide long-run benefits.