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We estimate perceptions about the Federal Reserve's monetary policy rule from panel data on professional forecasts of interest rates and macroeconomic conditions. The perceived dependence of the federal funds rate on economic conditions varies substantially over time, in particular over the monetary policy cycle. Forecasters update their perceptions about the Fed's policy rule in response to monetary policy actions, measured by high-frequency interest rate surprises, suggesting that they have imperfect information about the rule. Monetary policy perceptions matter for monetary transmission, as they affect the sensitivity of interest rates to macroeconomic news, term premia in long-term bonds, and the response of the stock market to monetary policy surprises. A simple learning model with forecaster heterogeneity and incomplete information about the policy rule motivates and explains our empirical findings. [ABSTRACT FROM AUTHOR]

The federal funds target rate is commonly considered to be an important indicator of the state of the US economy and is of keen interest to individual investors, financial firms, and other economic agents. In this paper, we focus on the discrete changes in the federal funds target rate during the period from January 1994 to June 2022 and apply the ordinal forest model, a random forest‐based prediction method for ordinal response variable. We examine the model's performance with 45 predictor variables which include macroeconomic and financial variables as well as forward‐looking survey measures. For an accurate and honest measure of the model performance, we employ single‐period‐ahead out‐of‐sample forecasting accuracy instead of evaluating the in‐sample fit. Our empirical results show the ordinal forest method significantly outperforms a benchmark that uses the most recent data among previous studies on federal funds target rate. We find that TB spread is the most informative from a forecasting perspective along with GDP, initial jobless claims, and survey measures. [ABSTRACT FROM AUTHOR]

The article discusses the annual revisions to GDP for the US economy, indicating a higher short-term growth rate and reduced risk of layoffs. The GDP growth forecast for 2025 is above consensus at 2.5%. Factors such as productivity growth and positive employment reports contribute to the strengthening of the forecast. The Federal Reserve is expected to cut interest rates further, with a cumulative decline of 100bps by the end of the year. [Extracted from the article]

This paper develops a theoretical and empirical framework to assess the heterogeneous effects of mortgage rates on housing returns when accounting for the zero lower bound regime of the policy interest rate and local market supply and demand conditions. Based on an interacted panel VAR, estimated on a dataset comprising of 146 metropolitan statistical areas for a time period between January 1995 and December 2020, our empirical findings show that the response of housing returns to a mortgage rate shock is larger in magnitude when the federal funds rate is at its zero lower bound. Various supply and demand conditions, including housing permits, personal income, employment, and population, matter for the transmission of a mortgage rate shock to housing returns in local markets. A partial equilibrium model supports our empirical results. [ABSTRACT FROM AUTHOR]

The article introduces the Kansas City Fed's Measure of Policy Rate Uncertainty (KC PRU), which aims to measure uncertainty about future policy rates using financial options prices. The KC PRU is calculated daily and has shown correlations with changes in policymakers' communication strategies and macroeconomic events. The measure indicates a recent increase in policy rate uncertainty, attributed to factors such as inflation outlook, large increases in the funds rate, and regional banking stresses. Overall, the KC PRU provides a timely and consistent measure of policy rate uncertainty, reflecting historical movements and recent developments. [Extracted from the article]

Importance: Racial and ethnic disparities in chronic disease are a major public health priority. Objective: To determine if the amount of federal grant funding to federally-qualified health centers (FQHCs) was associated with baseline overall prevalence of uncontrolled hypertension and uncontrolled diabetes, as well as prevalence by racial and ethnic subgroup. Design: Cross-sectional multivariate regression analysis of Uniform Data System 2014–2019, which includes clinic-level data from each FQHC regarding demographics, chronic disease control by race and ethnicity, and grant funding. Exposures: Our main exposure were the average values of the prevalence of uncontrolled hypertension and uncontrolled diabetes among the overall population and by racial and ethnic group from 2014–2016. Main outcomes: Average federal grant funding per patient from 2017–2019, as measured by annual health center funding from the Bureau of Primary Health Care (BPHC) and overall federal grant funding. Results: We analyzed 1,205 FQHCs from 2014–2019; the average BPHC grant per patient across all FQHCs in 2019 was $168 while the average total federal grant was $184 per patient. Increasing shares of total patients with uncontrolled hypertension or uncontrolled diabetes were not associated with increased total federal grant funding in either unadjusted or adjusted analysis. Increased shares of patients who are American Indian or Alaskan Native (AI-AN) with uncontrolled hypertension and diabetes were associated with increasing total federal grant funding in both unadjusted and adjusted analysis (adjusted beta hypertension $168.3, p <0.001; adjusted beta diabetes 59.44, p = 0.02). However, cardiovascular clinical need among other racial and ethnic groups was not significantly associated with grant funding. Conclusions: FQHCs with higher overall rates of uncontrolled hypertension or diabetes do not receive more federal funds, and there is no significant association between federal funding levels and rates of uncontrolled blood pressure or diabetes within most racial and ethnic groups, with the exception of AI-AN populations. To narrow inequities in cardiovascular disease, HRSA should consider more explicitly targeting federal grants to clinics with higher levels of clinical need. [ABSTRACT FROM AUTHOR]

The Supreme Court's recent ruling on the Chevron Doctrine will impact future groundwater policy in the United States by limiting federal agencies' interpretative authority. This change may lead to increased judicial involvement, regulatory uncertainty, and shifts in state versus federal dynamics in groundwater regulation. Additionally, the ruling could affect the EPA's ability to address emerging groundwater contamination issues effectively. The decision underscores the need for clear legislative guidance on groundwater management and protection as the regulatory landscape evolves. [Extracted from the article]

Federal funds for human trafficking victim programmes and services in the United States have increased from approximately USD 10 million in 2002 to more than USD 90 million in 2022. This increase in fund availability, however, has not necessarily translated into meaningful or accessible services for trafficking survivors. This paper examines the distribution of Department of Justice anti-trafficking funds through the Office for Victims of Crime (OVC), particularly looking at OVC recipients in Alaska. It highlights certain trends in OVC funding in the state, including changes in funding distribution, the emphasis on task force creation and collaboration between service providers and law enforcement, and discussions of equity and inclusion. The paper further explores institutional mechanisms of exclusion and harm of some victims, complexities in collaborating with law enforcement, criminalisation of trafficking survivors, and criteria to qualify for services. As the reality faced by trafficking survivors does not always align with OVC narratives, these mechanisms are illustrated through the experiences of a sex trafficking survivor who has been turned away as not qualifying for services by many of the OVC funded providers in Alaska. The paper concludes by exploring the implications of this research for policymakers and service providers. [ABSTRACT FROM AUTHOR]

We examine the relationship between gold prices and the U.S. dollar exchange rate, arguing that their interactions are state-dependent and asymmetric under different market conditions. State dependency hinges on different short-term interest rate zones. To prove this point, we determine three distinct levels or zones of the effective federal funds rate using SETAR(2,p) tests. Subsequently, we perform conditional least square estimations of log changes in gold prices as a function of log changes in the nominal broad U.S. dollar exchange rate index for each of the obtained zones. Their relationship is consistently inverse, suggesting that gold and the U.S. dollar are risk-hedging substitutes for normal market periods. This also implies that gold is a safe-haven asset against the U.S. dollar exchange rate risk against a broad range of currencies. The substitution is weaker in the low-interest rate zone, more robust in the intermediate zone, and very pronounced in the high zone. We also perform a Markov switching test on the double-log function of gold prices and the exchange rate. The tests show a pronounced inverse relationship, i.e., substitution between assets, at normal market conditions. The relationship becomes significantly positive during episodes of financial distress, indicating complementarity between gold and U.S. dollar assets. [ABSTRACT FROM AUTHOR]

This article examines empirical patterns of interest rate spreads between yields on long-term corporate bonds and the Federal Funds Rate (FFR) in the United States over the period from 1960 through 2023. Since the early 1980s, discernible patterns of interest spreads have emerged, revealing marked deviations in corporate bond yields from the FFR. We focus on financial market forces particularly arising from financial intermediaries in analyzing these patterns. To this end, the article develops a theoretical framework based on the concept of liquidity preference in Keynes's 1937 papers and the works of Hyman Minsky and Victoria Chick. We also conduct cointegration analyses for corporate bond yields, the FFR, and financial intermediaries' leverage ratios. Overall, our empirical results indicate that the relationship between the FFR and corporate bond yields—particularly with respect to their long-run relationship and interest rate markups—has markedly changed since the 1980s and is significantly affected by financial intermediaries' asset/capital leverage ratios. As a policy implication, regulatory reforms aimed at enhancing the Federal Reserve Bank's capacity to steer long-term rates and contain intermediaries' balance sheet leverage, particularly those centered on risky asset trading to increase gains from price differentials, are required JEL Classification: B26, E11, E43, E52 [ABSTRACT FROM AUTHOR]

Purpose: The transmission of monetary policy has received considerable attention due to the sizable enlargement of the Federal Reserve's balance sheet and consequently of the large reserve balances held by the Depository Institutions. This paper aims to investigate whether changes in the quantity of the reserve balances during the so-called normalization period and the COVID-19 crisis put significant pressure on short-term interest rates and specifically on the Effective Federal Funds rate (EFFR). Design/methodology/approach: Under the new monetary policy regime, with two newly administered interest rates, the authors use the spread of the Federal Funds rates and the Interest on Reserve Balances (as a measure of the price of liquidity. With the means of various models such as the structural vector autoregression, the authors investigate, for two different subsample periods, the effectiveness of the monetary policy and the creation of (any) liquidity effects. Findings: The results showed that when the Fed decreases its balance sheet size, during the normalization period, significant liquidity effects are present meaning that the authorities could influence the stage of the short-term interest rates under the new monetary policy regime. However, this relationship appears to weaken considerably as the level of reserve balances, particularly in response to the COVID-19 pandemic, increases substantially. The authors enriched the findings by highlighting the role of the benchmark repo rate. During the COVID-19 period, and in light of abundant reserve balances, the repo rate reacts more vigorously to a reduction in reserves, whereas an increase in the repo rate seems to exert a strong positive influence on the EFFR. Originality/value: The findings are very important for the efficiency of the monetary transmission mechanism. An expanded balance sheet is still considered an arcane concept in regard to the structure and its effects on monetary policy implementation. This is one of the only few studies that investigates the effect of the abundant reserve balances on the short-term interest rates for two different in nature subsample periods. It shows as well the interplay between short-term interest rates, secured and unsecured. [ABSTRACT FROM AUTHOR]

"Janet Yellen, Pioneer and Policymaker" is a book review that discusses two biographies of Janet Yellen, the first woman to serve as Federal Reserve chair and Treasury secretary in the United States. The authors provide accounts of Yellen's life and accomplishments, highlighting her intelligence, attention to detail, and dedication to improving living standards. The review acknowledges the challenges faced by women in the economics profession and the progress that has been made. It also discusses Yellen's career as a policymaker at the Federal Reserve, her role in guiding the US economy through the financial crisis, and her contributions to internal reforms and the adoption of a 2 percent inflation goal. The article concludes by mentioning controversies surrounding Yellen's views on the American Rescue Plan and acknowledges that a definitive history of her legacy is yet to be written. [Extracted from the article]

The US economy is going through a challenging transition, with a lowered GDP growth forecast of 2.3% for 2024. Some sectors, such as housing and manufacturing, are struggling, but this does not necessarily indicate a broader economic downturn. The rise in the unemployment rate is concentrated among younger workers, reducing the risk of a negative cycle. Inflation is expected to remain low, and the Federal Reserve is predicted to cut interest rates. Overall, the short-term growth outlook is moderate, with factors such as household balance sheets and equipment spending supporting the economy. Consumer spending has slowed due to inflation, but this is expected to moderate in the coming months. The job market remains strong, although job gains have slowed, and the unemployment rate may inch higher. The Federal Reserve is considering cutting interest rates, and fiscal policy is expected to remain stable. [Extracted from the article]

The establishment of the Federal Reserve System (FRS) in 1913 marked a pivotal moment in ensuring financial stability. This article scrutinizes the structure, trajectory, and evolution of monetary policy since the inception of the Fed. With shifting trends and the achievement of a low inflation environment coupled with the lower bound challenge, maintaining a dual mandate and the autonomy of the Fed raises questions about the efficacy of current monetary policies. The authors analyze the effectiveness of implemented policies and propose an alternative approach to monetary policy implementation, advocating for mechanisms beyond quantitative easing and forward guidance. They suggest leveraging macroprudential policies and preemptive strategies, such as introducing safeguards and simultaneously setting a diverse range of federal fund rates to address specific market segments in alignment with the Fed's objectives. [ABSTRACT FROM AUTHOR]

Two federal district courts in Maryland and California have ruled that private schools are subject to Title IX of the Education Amendments of 1972 because their tax-exempt status under Section 501(c)(3) of the Internal Revenue Code counts as federal financial assistance. This major development in the interpretation of Title IX threatens to subject tax-exempt private schools not only to Title IX, but to a number of other statutes and regulations that apply to recipients of federal financial assistance. This would be a significant economic and administrative burden to small schools whose limited resources make it difficult or even impossible to afford compliance. But there is clear evidence that the decisions of the district courts were misguided. While case law on the matter is sparse, the legislative and executive branches have indicated in a variety of ways that they do not consider tax-exempt status to be federal financial assistance. Further, the conduct of private schools who choose to opt out of receiving federal funds to avoid having to comply with Title IX and similar federal laws demonstrate a widespread public understanding that it is possible for a tax-exempt organization to not be subject to Title IX. This Note examines the evidence that 501(c)(3) tax-exemption is not federal financial assistance under Title IX and urges the legislative and executive branches to clarify this fact for the sake of schools that would be adversely affected by a wider acceptance of a contrary interpretation. [ABSTRACT FROM AUTHOR]

This study examined the relationship between a firm’s revenue as a measure of growth and the firm’s financial ratios and macroeconomic variables. Fifty firms from the New York Stock Exchange were chosen at random for the period from 2009 to 2022. The variables included in the study were: Earnings per share (EPS), free cash flow (FCF), debt-to-equity ratio (DER), return on assets (ROA), current ratio (CR), inflation (CPI), GDP, federal fund rate (FFR), and unemployment rate (Unempl). The results showed that each variable was significantly related to revenue for some firms. Across firms, the percentage of relationships for each variable was low (56% or less). In particular, the percentages over firms were as follows: EPS (56%), FCF (40%), CPI (30%), GDP (30%), DER (24%), FFR (24%), Unempl (20%), ROA (20%), and CR (22%). Financial ratios showed positive effects, as well as negative relationships with growth. These findings indicated that financial ratios are not good growth indicators. [ABSTRACT FROM AUTHOR]

This study examines the relationships between inflation, interest rates, and US dollar exchange rates from 2013 to 2023. The main objective is to evaluate the value of the US dollar (USD) and understand how key economic indicators interact. Using advanced quantitative analysis, we identify patterns that define these variables. A macro model incorporating the natural logarithms of the USD Index (USDX), Federal Funds Rate (FFR), and Consumer Price Index (CPI) addresses time-related and growth factors. By tracking inflation, interest rates, and dollar fluctuations, we gain insights into the factors influencing the US economy. The findings highlight the slow adjustment of inflation towards long-term stability and reveal significant causal relationships among the variables. As global financial conditions evolve, this study offers relevant insights for policymakers, economists, and market participants on navigating the dynamics of inflation, interest rates, and exchange rates in today's economic landscape. [ABSTRACT FROM AUTHOR]

I analyze time series momentum along the Treasury term structure. Yield curve momentum is primarily due to changes in the level factor of yields. Because yield changes are partly induced by changes in the federal funds rate, yield curve momentum is related to post-FOMC (Federal Open Market Committee) announcement drift. The momentum factor is unspanned by the information in the term structure today and is hence inconsistent with standard term structure, macrofinance, and behavioral models. I argue that the results are consistent with a model with unpriced longer term dependencies. [ABSTRACT FROM AUTHOR]

In this paper, different monetary policy rules are re‐estimated employing real‐time data, known as Greenbook data, through MLE and Bayesian Estimation. The results favour the rule with persistent shocks and show that the inertial movement of the Federal funds rate is an illusion, as mentioned by Rudebusch (2002). Since it would be possible to have an omitted variable bias due to impure serial correlation, however, the rule with persistent shock could imply that the other serially correlated variable is required to explain the inertial movement of Federal funds rates. Based on this idea, serial correlation tests are implemented, showing the possibility of an omitted serial correlated variable. Therefore, it is reasonable to search for other persistent variables. As an illusion implies unpredictability in the movement of the Federal funds rate, this hypothesis could be against the credibility of the central bank. In order to have a reasonable explanation for the inertial movement other than persistent shocks, therefore, modifying the rule with a 3‐month t‐bill rate is re‐estimated. The result shows that the rule with the t‐bill rate outperformed in all aspects and is compatible with one theoretical explanation of minimizing the financial volatility for inertial movement. [ABSTRACT FROM AUTHOR]

This article investigates silver price as a fluctuating commodity price since the financial crisis of 2007–2009. In this regard, a structural vector autoregression (VAR) was applied to observe the sensitivity of the silver price and future pricing due to changes in macroeconomic variables and to review changes in macroeconomic variables due to changes in the silver price. The main results show that the silver price is susceptible to changes in the gold price, increasing sideways. A shock to OECD GDP caused the silver price to increase which makes logical sense, thus showing a positive correlation between output and the silver price. A shock to the oil price caused the silver price to spike over the short term, then move sideways over the long term. A shock to the US Federal funds rate caused the silver price to dip over the short term, then increase slightly over the medium and move sideways over the long term, while a shock to the real effective exchange rate of the USA caused the silver price to increase sideways. The article sheds some light on the reactive status of the silver price to macroeconomic variables and its influence as a safe haven commodity. [ABSTRACT FROM AUTHOR]

Purpose: Bank failures are critical events that have far-reaching implications for the financial system and various stakeholders. This study aims to focus on analyzing the phenomenon of small bank failures in the USA. Design/methodology/approach: This study adopts the coarsened exact matching (CEM) technique to enhance the reliability of the analysis. By matching similar observed characteristics, the CEM approach helps to address potential selectivity bias and facilitates a more accurate estimation of the treatment effect. This study uses a data set covering the period from 2000 through 2019 and includes 523 failed bank observations and 43,605 nonfailed bank observations. Findings: The results reveal several key findings. Small banks, especially those with lower yields on earning assets, those with lower charge-offs on loans and leases, those with higher core capital ratios and those with higher Fed Funds rates are found to be more susceptible to failure. Research limitations/implications: Some results align with initial predictions, whereas others present contrasting outcomes. Practical implications: This study underscores the significance of understanding the factors contributing to bank failure and emphasizes the importance of studying small bank failures in particular. Originality/value: This study uses the CEM method. CEM is a comprehensive approach that combines matching, sample trimming and reweighting techniques. When applying CEM, researchers carefully select a set of core variables to achieve balance between the treated and control groups. The CEM process involves discretizing each continuous variable into distinct bins or categories, a process known as "coarsening." It then requires an exact match among these binned variables between the treated and control units, which constitutes the matching step in CEM. [ABSTRACT FROM AUTHOR]

Discount rates affect stock prices directly via the discount-rate channel or indirectly via the cash-flow channel because expected future cash-flow growth varies with the discount rate. The traditional Macaulay duration captures the effect from the discount-rate channel. I propose a novel duration measure, the effective equity duration, to capture the effects from both channels. I estimate it around unexpected policies in the federal funds rates. I find that the equity yield curve is ump-shaped because expected future cash-flow growth increases with the discount rate. The effective equity duration captures information other than monetary policy risk. [ABSTRACT FROM AUTHOR]

The Federal Reserve System (Fed) is a regular feature in the media. When the Fed communicates with the public, its focus is on forward guidance related to monetary policy--specifically, for achieving low unemployment and low inflation. Fed participants on the Federal Open Market Committee (FOMC) convey what they see as the likely path of policy, including changes in the federal funds rate, a standard monetary policy tool. Because financial markets find this information useful, news stories thoroughly cover Fed communication. However, such communication fails to explain the structure of the economy that disciplines how the FOMC achieves its objectives for employment and inflation. The FOMC necessarily conducts monetary policy based on assumptions about this structure. What is now implicit should be made explicit. Such explicitness by the FOMC is necessary for the public to understand the monetary standard that it has created. That is, the Fed needs to explain the framework it assumes to then explain how its actions translate into achievement of its objectives. Such transparency will be challenging. The standard Fed narrative implicitly assumes that a free-market economy and financial markets are inherently unstable. Economic instability originates in the private sector, and an independent Fed is required to mitigate this instability. Again, implicitly, the assumption is that the Fed understands the structure of the economy so that it knows the origin of instability and how its actions will offset that instability. Despite the Fed narrative, there is a need for a debate over the optimal monetary standard. In the 1960s, the monetarist-Keynesian debate raised the key issues relevant to the design of the optimal monetary standard. Is inflation a monetary or a nonmonetary phenomenon? What accounts for the simultaneous occurrence of monetary instability and real instability. Does the direction of causation go from monetary to real instability or vice versa? The intent of this article is to revive the earlier debate. To do so, it will be necessary to re-exposit monetarism in a way relevant to current central bank practice. To do so, I re-exposit monetarism in a way that is relevant to current central bank practice, using the term "Wicksellian monetarism" as the descriptive label. Such a debate is especially urgent at present given the FOMC's current policy of disinflation. The FOMC needs to articulate a monetary policy in terms of a long-term strategy (rule) that will restore price stability and then maintain that stability. How does current policy ensure that a declining rate of inflation will stop at 2 percent and then remain there? That is, for the long run, the policy needs to provide a stable nominal anchor. Such a policy should allow the FOMC to lower the federal funds rate to prevent a serious recession while maintaining credibility for a long-run policy to restore price stability. [ABSTRACT FROM AUTHOR]

One of the crucial jobs of central banks is to rein in inflation as it creates uncertainty in the economy and in private investment and ultimately negatively impacts the economy. If the source of inflation is positive demand shock, then raising the federal funds rate target is the right way to rein in inflation. If the source of inflation is negative supply shock, then raising the federal funds rate target will make things worse. In this study, the impact of FFR (federal funds rate) on CPI (consumer price index) and producer price index (PPI) is examined. Findings indicate that raising the federal funds rate will have a negative impact on both CPI and PPI with a 2-period lag. The possible explanation of this finding is that raising federal funds rate lowers aggregate demand, lowers the price level and thereby the CPI. And when CPI falls, it lowers perunit profit, prompting producers to cut supply, which in turn lowers the demand for producer goods and services, and thereby lowers PPI. [ABSTRACT FROM AUTHOR]

The US economic outlook for 2024 has been upgraded, with a forecast of 2% growth in real GDP following a 2.5% expansion in 2023. Factors such as a strong labor market, lower inflation, looser financial market conditions, and indications of an earlier pivot by the Federal Reserve contribute to this optimism. However, there are balanced risks, including potential easing in financial market conditions and a larger wealth effect, as well as downside risks such as weakness in the supply-side of the economy and fiscal policy uncertainty. The report also mentions the strength of the labor market and the disconnect between hard and soft economic data. Another report predicts moderate growth in 2024, with factors like past monetary policy tightening, less accommodative lending conditions, restrictive fiscal policy, and policy uncertainty impacting the economy. The forecast includes a 1.6% year-on-year increase in real GDP in the first half of 2024, followed by a 1% gain in the second half. Inflation is expected to ease, and the job market is projected to rebalance, with the unemployment rate peaking at 4.25% this year. While there is a risk of a recession, the odds have decreased. Overall, the US economy is expected to continue its unsynchronized cycle, with a rebalancing between goods and services sectors. [Extracted from the article]

Purpose: The authors empirically aim to study the implications of uncertainty generated by oil price volatility on some key macroeconomic variables, including production, exchange rates and interest rates, of both oil-exporting and oil-importing countries. Using a block exogeneity structural Vector Auto Regression (VAR) model that mutes the effects of domestic variables on global factors and that is suitable for small open economies because of significant differences in the responses of domestic production in oil-importing countries will most likely decrease through reducing planning horizons, postponing investment projects and relocating resources more inefficiently. Design/methodology/approach: The authors integrated into the structural vector autoregressive (SVAR) model the block exogeneity feature since all the countries in this study are small open economies that cannot influence the global economic variables. The block exogeneity feature imposes the restriction that the domestic variables have neither a contemporaneous nor a lagged impact on the global variables. This model has eight variables: oil price volatility, world demand and federal funds rate as the global variables; and domestic production, monetary aggregate, inflation rate, exchange rate and interest rate as domestic variables. The authors assemble the data for 12 developing countries for which the necessary data for the analysis are available: six oil exporting countries (Russia, Saudi Arabia, Iran, Kazakhstan, Mexico and Colombia) and six oil importing countries (Turkey, India, Philippines, Poland, South Africa and Indonesia). Findings: The results point out significant differences in the responses of macroeconomic variables to oil price volatility shocks between oil-exporting and oil-importing countries. Furthermore, the local currencies of these countries depreciate due to concerns about possible current account worsening. In response to the shock, domestic interest rates are reduced so as to alleviate the negative exposure of the shock on domestic economic activity. While domestic production in some oil-exporting countries (i.e. Russia, Saudi Arabia and Iran) increases during oil price uncertainty; in some other countries (i.e. Mexico, Kazakhstan and Colombia), domestic production decreases. Originality/value: Several components of the study contribute to its novelty. One of them is the period under consideration. The time frame that encompasses the most significant geopolitical and financial events, such as the Middle East Spring and the global financial crisis of 2007–2008. The research was conducted using the block-exogeneity SVAR model, which includes 12 oil exporting and importing developing countries. With this model, the global dynamics, particularly the energy market, that these nations may influence and are influenced by, i.e. global and nonglobal factors can be constrained. This makes it easy to determine the various effects prices have on macroeconomic variables. Highlights: Oil prices and volatility still matter to the global economy Monetary and fiscal policy interventions in response to oil price volatility create uncertainty and impede investment activity The response of macroeconomic variables to volatility shocks in oil prices varies across oil importers and exporters Interest rates help stabilize production in oil-importing economies that have well-functioning financial markets [ABSTRACT FROM AUTHOR]

Purpose: This study investigates the monetary policy responses of emerging market inflation targeters to financial factors both before and after the 2008 global financial crisis (GFC). Methodology: Taylor rules, augmented with the nominal exchange rate, the exchange market pressure index, and the U.S. federal funds effective rate, are analyzed by using the augmented mean group (AMG) panel estimator for 12 emerging market economies (EMEs) that adopted an inflation targeting regime. The sample is divided into two periods around the GFC: 2002Q1-2007Q4 and 2010Q1-2019Q4. Results: Inflation significantly and positively impacted interest rate settings during both periods. The panel AMG results indicate that the EMEs' responses to financial variables only had a significant effect during the post-crisis period, while the federal funds effective rate had the most impact among the financial variables. The country-specific results indicate that some central banks also reacted to financial variables before the GFC. Conclusion: Inflation played an important role in policy rate decisions for both periods despite the slightly decreasing weight in interest rate settings after the GFC due to the increasing influence of financial variables. Although financial variables were important in setting interest rates during both periods, the EMEs' post-GFC monetary policies focused more on financial stability. Furthermore, their monetary policies became more compatible with external financial conditions after the GFC. [ABSTRACT FROM AUTHOR]

We present a novel framework to predict recessions, the depth of recessions (mild or severe) and monetary policy pivots. The first phase introduces three ways to predict recessions. The first method evaluates the effectiveness of a few inverted U.S. Treasury yield curves. The second approach identifies a threshold between the federal funds rate and the 10-year Treasury yield. The final tool employs Probit modeling. The second phase of our analysis utilizes the 10-year/1-year Treasury yield spread to predict the duration of a recession. Historically, 12 consecutive months of a negative 10-year/1-year spread is associated with deeper recessions. When evaluating the tools using data going back to 1955, the 10-year/1-year spread has predicted all 10 recessions with an average lead time of 12 months. The 10-year/FFR threshold has predicted all recessions and monetary policy pivots with an average lead time of 18 months. At present, all three tools are signaling that a recession and/or Fed policy pivot is more likely than not within the next year. Through June 2023, the 10-year/1-year spread has remained negative for 12 consecutive months, which highlights the risk that an upcoming recession may not be mild. Given the historical accuracy of our framework, decision-makers may consider a possibility that the upcoming recession may be severe. [ABSTRACT FROM AUTHOR]

I introduce the "trimmed persistence PCE," a new measure of core inflation in which component prices are weighted according to the time-varying persistence of their price changes. The components of trimmed persistence PCE display less tendency to mechanically pass-through the level of the prior period's inflation to the current period; thus, the impact of the current stance of monetary policy and real economic factors are more likely to be visible in recent trimmed persistence inflation compared to headline inflation. Trimmed persistence inflation performs comparably to existing popular measures of core inflation in terms of volatility and relationship with economic slack. Model selection procedures confirm trimmed persistence PCE contributes additional information to inflation forecasting models when stacked against other popular measures of core inflation. Applying the new index in a Taylor rule analysis suggests the Fed's aggressive path of federal funds rate hikes during the pandemic may have achieved appropriately restrictive levels by the fourth quarter of 2022, clearing the way for more measured policy adjustment thereafter as risks of policy overshooting became more salient. [ABSTRACT FROM AUTHOR]

Inflation in 2021 and 2022 grew much faster than the Federal Reserve expected. The Fed downplayed inflation in 2021 and then increased the federal funds rate by 500 basis points between March 2022 and May 2023. This paper investigates how this unprecedented tightening has impacted the stock market. To do so, it estimates a fully specified multi-factor model that measures the exposure of 53 assets to monetary policy surprises over the 1994 to 2019 period. It then uses the monetary policy betas to gauge investors' beliefs about monetary policy between 2020 and 2023. The results indicate that changing perceptions about monetary policy multiplied uncertainty and stock market volatility. [ABSTRACT FROM AUTHOR]

This article, titled "A New Measure of Monetary Accommodation," discusses the development of a quantitative measure of central bank monetary accommodation. The authors argue that monetary accommodation is increasingly linked to financial stability and propose a Central Bank Accommodation Index that combines the growth rates of the money supply and GDP, as well as the difference between inflation and the Fed Funds rate. The index is used to analyze historical trends and the impact of the COVID-19 pandemic on monetary policy. The authors also raise questions about the future trajectory of the index and its predictive power. [Extracted from the article]

According to the article titled "Global: Growth is beginning to regain momentum," recent news suggests that the worst is over for the global economy. However, the article also states that any increase in growth will be gradual. The GDP growth forecasts for 2024 and 2025 have been raised by 0.2 percentage points to 2.5% and 2.8% respectively. The US has maintained its resilience, and GDP growth is expected to exceed expectations this year. The eurozone and China, on the other hand, are experiencing subdued rates of growth, but there are signs of building growth momentum. Inflation data in the US have been stronger than expected, but it is predicted to ease gradually. The article also mentions that the Federal Reserve is likely to gradually reduce interest rates. The forecasts for other key advanced economies remain unchanged. [Extracted from the article]

The article explores the impact of the Federal Reserve's recent interest rate hikes on emerging markets. It reveals that central banks in these markets primarily respond to domestic inflation but also consider capital outflows and exchange rate depreciation. The study analyzes the relationship between U.S. monetary policy, international capital flows, and emerging market responses.