Search

During the recovery from the 2001 recession, the business press and economic analysts used payroll employment data released monthly by the U.S. Bureau of Labor Statistics (BLS) as evidence of protracted weakness in the labor market. But using these monthly releases for this type of analysis can be premature and potentially misleading. The initial BLS releases can differ substantially from payroll employment data that are revised to incorporate information from less timely but more complete sources. This article highlights the historical revisions to the aggregate nonfarm payroll employment series. Examining both monthly survey-based revisions and the more extensive annual benchmark revisions, the authors focus specifically on how the sequence of data revisions modifies payroll employment estimates from their initial release. The graphs in the article display the magnitude and direction of each revision from the initial estimate for a particular month to its currently published value, demonstrating that the largest portion of enduring change for the estimates occurs in the benchmark revisions. The authors then investigate empirically whether these revisions contain information that can be exploited to anticipate future revisions. The analysis shows that previous benchmark data revisions are useful for explaining the variation in subsequent payroll employment benchmark data. Such information, the authors note, could prove useful for further research aimed at modeling better real-time estimates of employment conditions., Following the 2001 recession, the business press and economic analysts focused intently on the protracted weakness in the labor market, using as evidence the monthly nonfarm payroll employment data released [...]

Seventy years after the Great Depression, economists still debate the causes of this economic catastrophe. Two leading explanations are distinguished by whether or not the Federal Reserve's monetary policies are perceived as being chiefly responsible for propagating and magnifying the initial contraction into a depression. This article surveys recent modeling efforts and empirical work that examine aggregate explanations for the Great Depression from both the extensive literature using vector autoregression techniques and the more recent literature using dynamic stochastic general equilibrium modeling. Neither of these approaches has yielded a consensus about the causes of the depression. Data alone are insufficient to distinguish the precise role of monetary policy during that period. The modeling strategies impose restrictions that help isolate the meaningful economic interactions in the data. In each literature, the ways in which the respective models identify monetary policy can differ substantially, and these differences are why monetary policy shocks may or may not explain much of the output contraction. Also, these modeling approaches vary in their ability to capture important institutional features of the banking and financial system. The authors believe that the search for one conclusive empirical study of the Great Depression is futile. The most promising path for future research models, they conclude, will entail a sharper focus on the financial sector, a refined specification of how monetary policy affects the real economy, and further methods to incorporate elements of labor market frictions., The Great Depression (1929-33) was the most severe economic contraction in the United States during the twentieth century (see Figures 1-3). During the contraction industrial production fell nearly 50 percent [...]

In March 2003 the Federal Reserve Bank of Atlanta hosted a conference focusing on the relationship between monetary policy and learning. The conference papers and discussions are part of an emerging literature that introduces learning--about the economy or the model used by policymakers--into dynamic macroeconomic models. In some models, monetary policymakers learn about how the economy works while in others private agents learn about the model(s) the central bank uses to formulate monetary policy. This article outlines key issues, raised in a 1999 book by Thomas Sargent, about how to interpret monetary policy behavior and economic performance over the past thirty years using the Phillips curve framework and different assumptions about learning. To a large extent, several conference papers follow from Sargent's work. Some conference papers focus on understanding recent inflation history, attempting to detect monetary policy's role in generating the recent, more benign inflation performance. Other conference papers investigate the role of learning behavior in a variety of settings. This article outlines the implications from some of the papers. Finally, the article describes economic literature relating to central bank transparency, its relevance for effective communication to the public about monetary policy, and its likely role in future learning models. Through the transparency discussion, the article foreshadows Lars Svensson's keynote address at the conference (reprinted here), citing it as a 'suggested user's guide for monetary policymakers to improve policy effectiveness.', Conferences sponsored by Federal Reserve Banks tend to focus on well-defined, policy-oriented topics related to issues faced by policymakers and the economic research staff. Such conferences present an opportunity for [...]

Some combinations of fiscal and monetary policies have generated inflation in certain historical stages. Fiscal deficits have been a primary determinant for inflationary cases spanning the Roman Empire period to American history. It is also shown that hyperinflation is generated by unguarded fiscal spending and fiscal deficits. Thus, specific taxation measures for revenue generation may be considered over seigniorage financing's potentially negative economic impact.

In the wake of Great Recession, the Federal Reserve engaged in conventional monetary policy actions by reducing the federal funds rate. But soon the rate hit zero, and could go no lower. In such environments, policymakers still think in terms of where the federal funds rate should be, were it possible to go negative. To project the 'unconstrained path' of the funds rate--ignoring the zero lower bound--and to identify the key underlying shocks driving that path, we employ a statistical macroeconomic forecasting model. We find that the federal funds rate would have been extremely negative during 2009-2010., At the press conference following the April 2012 FOMC meeting, a reporter asked Chairman Bernanke where he thought the federal funds rate would be if it could go below zero. [...]