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Insights / Research BriefOct 29, 2020

Effective Policy Communication: Targets versus Instruments

In recent decades, and especially since the Great Recession, interest rates have remained very low, meaning that central banks have had to devise new ways to invigorate the economy in times of recession. In some cases, like quantitative easing, whereby central banks purchase long-term securities in the open market to increase the money supply and encourage lending and investment, these new tools are deemed unconventional.
Topics:  Monetary Policy
Insights / CommentaryAug 06, 2020

Why banks’ declining reserves matter for the dollar

Financial Times; Wenxin Du
Topics:  Monetary Policy
Insights / Podcast episodeJun 11, 2020

Episode 9: Could the Fed’s Rescue Go Awry?

Eduardo Porter, Tess Vigeland, Raghuram Rajan
Central banks are playing a critical, yet little discussed, role in limiting the economic damage...
Topics:  COVID-19, Monetary Policy
Insights / Research BriefApr 03, 2020

Forward Guidance and Household Expectations • Gender Roles and the Gender Expectations Gap

Policymakers make economic policies based, in part, on their assumptions about how households and businesses will react to a given change in policy. This is especially true of monetary policy, where central banks work to set interest rates that both encourage or discourage economic activity, while keeping inflation at bay.
Topics:  Monetary Policy
Insights / Research BriefOct 15, 2019

Policy Uncertainty in Japan

In the aftermath of the Financial Crisis (2007-08) and the Great Recession (2007-09), households and firms faced lots of uncertainty, not only about when and how the economy would recover, but also confusion on whether and how the administration, Congress, and the Federal Reserve would react. For families considering the purchase of a new car or a move to another city for a job, and for businesses considering new hires or a plant expansion, this policy uncertainty meant that the prudent choice was often wait-and-see.
Topics:  Financial Markets, Monetary Policy
Insights / Chart

Empirical Trends That Inform Decreasing US Business Dynamism

Panel 1a is taken from Andrews et al. (2016), Panel 1b from Decker et al....
Topics:  Financial Markets, Technology & Innovation
Insights / Research BriefMay 14, 2019

Low Interest Rates, Market Power, and Productivity Growth

In the aftermath of the Financial Crisis and Great Recession of 2007-09, one explanation for the US economy’s low-level growth rate was a depression-era idea known as “secular stagnation,” which posits that such factors as persistent and very low interest rates, and/or wages and prices that remain at consistent levels, weigh down the economy’s growth rate. Interest rates near zero cannot be lowered further to incent borrowing and spending, and without such fuel for the economy, wages and prices become stagnant, or “sticky.” Growth remains sluggish.
Topics:  Financial Markets
Insights / Chart

How Lower Interest Rates Can Stall Growth

A decrease in consumer demand reduces interest rates and leads to a decrease in productivity...
Topics:  Financial Markets