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This paper develops a generalization of the formulas proposed by Kuttner (2001) and others for purposes of measuring the effects of a change in the federal funds target on Treasury yields of different maturities. The generalization avoids the need to condition on the date of the target change and allows for deviations of the effective fed funds rate from the target as well as gradual learning by market participants about the target. The paper shows that parameters estimated solely on the basis of the behavior of the fed funds and fed funds futures can account for the broad calendar regularities in the relation between fed funds futures and Treasury yields of different maturities. Although the methods are new, the conclusion is quite similar to that reported by earlier researchers—changes in the fed funds target seem to be associated with quite large changes in Treasury yields, even for maturities of up to 10 years. [ABSTRACT FROM AUTHOR]

Monetary policy analysts often rely on rules of thumb, such as the Taylor rule, to describe historical monetary policy decisions and to compare current policy with historical norms. Analysis along these lines also permits evaluation of episodes where policy may have deviated from a simple rule and examination of the reasons behind such deviations. One interesting question is whether such rules of thumb should draw on policymakers' forecasts of key variables, such as inflation and unemployment, or on observed outcomes. Importantly, deviations of the policy from the prescriptions of a Taylor rule that relies on outcomes may be the result of systematic responses to information captured in policymakers' own projections. This paper investigates this proposition in the context of Federal Open Market Committee (FOMC) policy decisions over the past 20 years, using publicly available FOMC projections from the semiannual monetary policy reports to Congress (Humphrey-Hawkins reports). The results indicate that FOMC decisions can indeed be predominantly explained in terms of the FOMC's own projections rather than observed outcomes. Thus, a forecast-based rule of thumb better characterizes FOMC decisionmaking. This paper also confirms that many of the apparent deviations of the federal funds rate from an outcome-based Taylor-style rule may be considered systematic responses to information contained in FOMC projections. [ABSTRACT FROM AUTHOR]

This paper estimates a Bayesian vector autoregression for the U.S. economy that includes a housing sector and addresses the following questions: Can developments in the housing sector be explained on the basis of developments in real and nominal gross domestic product and interest rates? What are the effects of housing demand shocks on the economy? How does monetary policy affect the housing market? What are the implications of house price developments for the stance of monetary policy? Regarding the latter question, we implement a Céspedes et al. (2006) version of a monetary conditions index. [ABSTRACT FROM AUTHOR]

This paper, using extensive archival material from several countries, brings together scattered information about Milton Friedman's views and predictions regarding U.S. monetary policy developments after 1960 (i.e., the period beyond that covered by his and Anna Schwartz's Monetary History of the United States). The author evaluates these interpretations and predictions in light of subsequent events. [ABSTRACT FROM AUTHOR]

Discusses the issue supply disturbances to the economy of the United States. How the short-run and non-neutrality of money influenced the respective policy prescriptions of economists David Ricardo and Henry Thornton; Evaluation of the economic policy prescriptions of the Ricardo and Thornton; Merits of their prescriptions.

The article focuses on nominal frictions and relative price adjustments, and the limits to monetary policy in the U.S. It states that if prices or wages are sticky in only one sector of an economy, and if there is no heterogeneity across regions, the monetary policy can loosen the effects of price stickiness. However, if there is more than one sector with sticky prices, the nominal rigidities cause distortions under any monetary policy. The author also described several examples of distortions, such as frictions in labor market or monopoly power in goods markets.

The article focuses on the issues on monetary policy during the period of 2008 to 2009 recessions, particularly in the U.S. Accordingly, credit markets have intensified the recession and the condition of monetary policy has been give emphasis on the intervention into individual credit markets. Further, it is said that the frictions operating in financial markets may become a greater impediment to intermediation in the recession.

The article offers information on the role of Phillips curve as an element of the macroeconomic policy during 1958-1996 in the U.S. It discusses the occurrence of inflation and unemployment, the beginning of Phillips curve as a policy tool, the relationship the macroeconomic policy and its battle against unemployment in the U.S. during 1962-1968, the breakdown of the Phillips curve in 1969-1979 and the role of the said macroeconomic policy towards inflation in the U.S. in 1980 until 1986. It concluded that the rise and fall of inflation in the U.S. led monetary policymakers and central banks to prioritize the role of expectations in governing macroeconomic activity in the country.

This article was originally published in the Board of Governors of the Federal Reserve System Open Market Policies and Operating Procedures—Staff Studies, July 1971. It is reprinted here as an addendum to these conference proceedings. [ABSTRACT FROM AUTHOR]

By providing guidance about future economic developments, central banks can affect private sector expectations and decisions. This can improve welfare by reducing private sector forecast errors, but it can also magnify the impact of noise in central bank forecasts. I employ a model of heterogeneous information to compare outcomes under opaque and transparent monetary policies. While better central bank information is always welfare improving, more central bank information may not be. [ABSTRACT FROM AUTHOR]

The article offers information on how the Volcker-Greenspan Federal Open Market Committees (FOMCs) controlled the inflation rate in the U.S. It mentions that monetary policy relinquished determination of real variables to the price system while providing a stable nominal anchor in the form of low, stable expected inflation. The FOMC during in the Volcker-Greenspan era reestablish the nominal expectational stability lost in the stop-go period rule-like behavior in the form of lean-against-the-wind (LAW) with credibility, which conditions the behavior of financial markets.

It is widely acknowledged that the Fed can control the average inflation rate over a period of time reasonably well. Because of this and the Federal Open Market Committee's (FOMC's) long-standing commitment to price stability, the author argues that the FOMC has an implicit long-run inflation objective (LIO)--lower and upper bounds to the long-run inflation rate. He shows that the statements made by the FOMC in 2003 clarified the lower bound of its LIO and that the average of long-run inflation expectations responded by rising about 80 basis points. Moreover, consistent with reducing the market's uncertainty about the FOMC's LIO, long-run inflation expectations became more stable. The FOMC has recently been more specific about the upper bound of its LIO as well. The FOMC could eliminate the remaining uncertainty by establishing an explicit, numerical inflation objective. [ABSTRACT FROM AUTHOR]

The article explores the nature of the rule followed by the U.S. Federal Reserve Board in making its monetary policy. It argues that monetary economists have not yet developed a formal rule that is likely to have better operating properties than the Federal Reserve's practice. It discusses the predictability of the Federal Reserve's policy decisions. It analyzes the goal of low and stable inflation as used to sustain economic growth.

Forecasts on the resurgence of the economic productivity of the U.S. for the year 2005. Information on productivity trends; Sources of the U.S. output and productivity growth; Significance of productivity outlook to the economic development of the country.

Reports on possible ways to sustain price stability in the U.S. Fundamental principle of price stability; Information on how monetary policy can counteract inflationary and deflationary shocks to the economy; Importance of credibility to effective monetary policy.

Discusses the implications of central bank transparency for the formation of U.S. monetary policy. Fundamentals of macroeconomics equilibrium; Cases of miscommunication; Examination of the economic purpose of disclosure.

Assesses the significance of U.S. Federal Reserve monetary policy in a low inflation environment. Key aspects of the evolution of monetary policy; Analysis of how price stability was lost in the 1970s and regained in the 1980s and 1990s; Essence of the strategy of Federal monetary policy; Challenges facing monetary policymakers in a low inflation environment.

Describes challenges in the U.S. government's methodology for measuring real consumption growth. Criticisms to the U.S. methodology; Information on recent research; Conclusions.

Offers a look at the inflation in the United States. Formulation used to understand the behavior of the inflation; Exclusion of the triangle model; Testing of the model used for measuring the impact of inflation.