| Title |
Date |
Publication |
Author(s) |
Type |
| Has the Beveridge Curve Shifted?
|
August, 2010 |
|
John Lindner; Murat Tasci; |
Economic Trends |
| Abstract: Has the Beveridge curve, an empirical relationship between job openings and unemployment, changed in a way that would indicate that the labor market’s longer-term adjustment process has been adversely impacted by the recession? It is too early to tell for sure, but the curve’s recent behavior looks very similar to that of previous recessions.
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| W(h)ither the Fed's Balance Sheet?
|
July, 2010 |
|
John Lindner; John B Carlson; Joseph G Haubrich; |
Economic Commentary |
| Abstract: The Federal Reserve balance sheet's size and composition have changed dramatically since September 2008. Federal Reserve policymakers have expressed their support for eventually shrinking the Fed's balance sheet and returning the composition of its securities portfolio to include only U.S. Treasury issues. Through the careful study of public Federal Open Market Committee documents, this Economic Commentary concisely explains some of the FOMC's decisions concerning an appropriate sequence of policy actions.
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| Market Expectations for Policy Rates
|
June, 2010 |
|
John Lindner; John B Carlson; |
Economic Trends |
| Abstract: The recent financial turmoil in Europe has been associated with a general shift in market expectations about the future course of domestic and foreign monetary policy. Many market participants are now expecting the federal funds rate to remain near the 0–25 basis point range through the early part of 2011. Going forward, market anxieties will have to recede before forward rate curves can accurately portray policy expectations.
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| Monetary Policy and an Extended Period of Time
|
May, 2010 |
|
John Lindner; Charles T Carlstrom; |
Economic Trends |
| Abstract: The FOMC met on April 27 and 28 and, like at previous meetings, continued to assert that the “Committee will maintain the target range for the federal funds rate at 0 to ¼” for an “extended period.” Trying to figure out when the Committee should increase the funds rate is complex. But John Taylor in a seminal 1993 paper argued that a useful guidepost for conducting monetary policy can be given by a simple rule or strategy whereby the central bank sets the federal funds rate in response to two variables—inflation and deviations of output from potential output.
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| Recent Firming in the Federal Funds Market
|
April, 2010 |
|
John Lindner; John B Carlson; |
Economic Trends |
| Abstract: The effective federal funds rate has been rising since the end of February 2010, reflecting a number of factors. Some of those factors are the revival of the Treasury’s Supplemental Financing Program, an increase in the Fed’s discount rate, collateral effects generated by new Treasury debt around the April tax deadline, and the tightening of credit lines by GSEs.
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| Market Expectations for Monetary Policy in the U.S. and Europe
|
March, 2010 |
|
John Lindner; Timothy Bianco; Kent Cherny; Ben R Craig; |
Economic Trends |
| Abstract: On March 16, the Federal Open Market Committee released a statement saying it would hold the Federal Funds target rate at 0 to 1/4 percent, and that “low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” Was the market surprised by anything in this statement?
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| The Beginnings of Normalcy
|
February, 2010 |
|
John Lindner; Charles T Carlstrom; |
Economic Trends |
| Abstract: The Federal Reserve announced a reduction in its primary credit rate (often called the discount rate) yesterday, as part of its ongoing normalization of lending facilities. Market reactions to the news were relatively subdued.
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| Real GDP: Fourth-Quarter 2009 Advance Estimate
|
February, 2010 |
|
John Lindner; |
Economic Trends |
| Abstract: GDP had its strongest quarter in more than six years, coming in above the majority of analysts’ estimates. However, the Blue Chip consensus forecast matches the overwhelming concern that a recovery from the current recession will be a slow one. Growth through 2010 should reflect such a return, as forecasters are predicting growth rates closer to the long-run average in all four quarters of the year.
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| A Sign of Normalization
|
February, 2010 |
|
John Lindner; John B Carlson; |
Economic Trends |
| Abstract: During the recent financial turmoil, the Federal Reserve created several emergency credit facilities to address the extreme demands for liquidity. Several of these facilities involved lending to institutions outside the set of those permitted by the Federal Reserve Act in normal circumstances. Four of the Federal Reserve’s new credit facilities—AMLF, CPFF, PDCF and TSLF—were allowed to expire on February 1.
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| Treasury Deposits and Excess Bank Reserves
|
January, 2010 |
|
John Lindner; John B Carlson; |
Economic Trends |
| Abstract: An interesting development on the Federal Reserve’s balance sheet is a decline in excess bank reserves. This decline has occurred despite an increase in the overall size of the Fed’s balance sheet. The key factor accounting for the decline in excess reserves is a substantial increase in U.S. treasury deposits at the Fed, which were made as a consequence of having issued new debt.
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| Real GDP: Third-Quarter 2009 Third Estimate
|
January, 2010 |
|
John Lindner; |
Economic Trends |
| Abstract: Third-quarter GDP growth was revised down again in the third estimate. The downward revision was largely driven by an additional 1.8 percentage point decrease in business fixed investment and smaller reductions in personal consumption and private inventories. Other declines occurred in government spending and residential investment.
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| Real GDP: Third-Quarter 2009 Second Estimate
|
November, 2009 |
|
John Lindner; |
Economic Trends |
| Abstract: Third-quarter GDP was revised down in the second estimate, as the annualized growth rate dropped from 3.5 to 2.7 percent, which was close to consensus expectations. The Blue Chip consensus forecast for 2009 real GDP growth improved again, despite the expected downward revisions to the third-quarter estimate. Released alongside the GDP revision was the preliminary estimate of third-quarter profits.
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| Real GDP: Third-Quarter 2009 Advance Estimate
|
November, 2009 |
|
John Lindner; |
Economic Trends |
| Abstract: GDP rose at an annualized rate of 3.5 percent in the third quarter, somewhat higher than consensus expectations and pulling the four-quarter GDP growth rate up from −3.8 percent to −2.3 percent. The third quarter’s increase was driven in large part by a 3.4 percent jump in personal consumption expenditures, the largest quarterly gain in this component since the first quarter of 2007. One of the most noticeable pieces of this third-quarter advanced estimate is the return to growth of both imports and exports. Exports grew to over $128 billion, reaching their highest mark of this year, likely influenced by a modest dollar depreciation during the third quarter.
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| Real GDP: Second-Quarter 2009 Final Estimate
|
October, 2009 |
|
John Lindner; |
Economic Trends |
| Abstract: Instead of falling at an annualized rate of −1.0 percent as reported in the second estimate, GDP now is estimated to have fallen only − 0.7 percent. Over 80 percent of respondents to the Blue Chip survey predict that the unemployment rate will not fall back below 7 percent until the second half of 2012. A historical pattern, referred to as Okun?s law, posits that there is an inverse relationship between changes in the unemployment rate and GDP growth, with year-over-year GDP growth moving twice as fast as the change in the unemployment rate.
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| The Supplemental Financing Program
|
September, 2009 |
|
John Lindner; Joseph G Haubrich; |
Economic Trends |
| Abstract: The winding down of the Treasury’s Supplemental Financing Program has some worried about the consequences for excess reserves on the Fed’s balance sheet and, by extension, inflation down the road. While the reduction in the SFP will increase reserves, the growth in the monetary base that results is just a shifting of funds between Federal Reserve accounts. Based upon the current state of the economy, the growth will likely go unrealized.
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| The Policy Statement: A Slowdown of Asset Purchases
|
September, 2009 |
|
John Lindner; John B Carlson; |
Economic Trends |
| Abstract: Today, the Fed announced that it would change the timing but not the quantity limit of agency mortgage-backed securities and agency debt.
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| The Changing Composition of the Fed?s Balance Sheet
|
August, 2009 |
|
John Lindner; John B Carlson; |
Economic Trends |
| Abstract: Since the onset of the crisis, the Fed has created and employed a new set of tools that involve the acquisition of financial assets and thus expand the asset side of the balance sheet. Lending to financial institutions predominated in the early months after the crisis began, but large-scale asset purchases will be the bigger story going forward.
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| Real GDP: Second-Quarter 2009 Revised Estimate
|
August, 2009 |
|
John Lindner; Brent Meyer; |
Economic Trends |
| Abstract: Real GDP was virtually unchanged in the latest revision of the second-quarter estimate, falling at an annualized rate of −1.0 percent. While the headline number was unchanged, there were some interesting moves in the components. In related news, results from two special questions on the Blue Chip survey of professional economists lend support to the view that this recovery will be slower than postwar trends would suggest.
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| Implementing Long-Term Security Purchases
|
July, 2009 |
|
John Lindner; Timothy Bianco; Andrea Pescatori; |
Economic Trends |
| Abstract: During slowdowns in economic activity and periods of inflation, the optimal response is to lower the real rate. Traditionally, the Federal Reserve achieved this by reducing the target fed funds rate. In general (but with notable exceptions), this reduction has an effect also on yields of longer maturity, which can be thought of as a combination of current and future expected short-term rates, thus stimulating the economy. However, when short-term rates are close to zero the traditional tool is no longer feasible.
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