Learning-through-Survey in Inflation Expectations

By Gwangmin Kim and Carola Binder

American Economic Journal: Macroeconomics, April 2023

When surveys rely on repeat participants, this raises the possibility that survey participation may affect future responses, perhaps by prompting information acquisition between survey waves. We show that these "learning-through-survey" effects are large ...

Measuring Monetary Policy in the Euro Area Using SVARs with Residual Restrictions

By Harald Badinger and Stefan Schiman

American Economic Journal: Macroeconomics, April 2023

This study measures the effects of monetary policy in the euro area using a small number of sign and magnitude restrictions on the residuals of a structural vector autoregression. We derive the dates and directions of these shocks from high-frequency fina...

A Review of Interest and Prices: Foundations of a Theory of Monetary Policy by Michael Woodford

By Edward J. Green

Journal of Economic Literature, March 2005

This is a review article of Interests and Prices: Foundations of a Theory of Monetary Policy (Princeton University Press 2003) by Michael Woodford.

Technologies That Replace a "Central Planner"

By Robert M. Townsend and Nicolas X. Zhang

AEA Papers and Proceedings, May 2023

Contracting possibilities are endogenous to the technologies on which the negotiation and the trading environments are built. Here we review how different technologies allow different implementations of the "central planner" and gradually abstract this ce...

The Importance of Fed Chair Speeches as a Monetary Policy Tool

By Eric T. Swanson

AEA Papers and Proceedings, May 2023

I estimate the effects of Federal Open Market Committee (FOMC) announcements, post-FOMC press conferences, and speeches and Congressional testimony by the Fed chair on stock prices, Treasury yields, and interest rate futures from 1988 to 2019. I show that...

Presidential Address: Does Monetary Policy Matter? The Narrative Approach after 35 Years

By Christina D. Romer and David H. Romer

American Economic Review, June 2023

The narrative approach to macroeconomic identification uses qualitative sources, such as newspapers or government records, to provide information that can help establish causal relationships. This paper discusses the requirements for rigorous narrative ...

Sovereign Debt in the Twenty-first Century

By Kris James Mitchener and Christoph Trebesch

Journal of Economic Literature, June 2023

How will sovereign debt markets evolve in the twenty-first century? We survey how the literature has responded to the eurozone debt crisis, placing "lessons learned" in historical perspective. The crisis featured: (i) the return of debt problems to adva...

Has the Information Channel of Monetary Policy Disappeared? Revisiting the Empirical Evidence

By Lukas Hoesch, Barbara Rossi, and Tatevik Sekhposyan

American Economic Journal: Macroeconomics, July 2023

Does the Federal Reserve have an "information advantage" in forecasting macroeconomic variables beyond what is known to private sector forecasters? And are market participants reacting only to monetary policy shocks or also to information on the future st...

A Sufficient Statistics Approach for Macro Policy

By Régis Barnichon and Geert Mesters

American Economic Review, November 2023

The evaluation of macroeconomic policy decisions has traditionally relied on the formulation of a specific economic model. In this work, we show that two statistics are sufficient to detect, often even correct, nonoptimal policies, i.e., policies that do ...

A Fed for Our Times: A Review Essay on 21st Century Monetary Policy by Ben Bernanke

By Lucrezia Reichlin

Journal of Economic Literature, December 2023

This essay reviews 21st Century Monetary Policy: The Federal Reserve from the Great Inflation to COVID-19 by Ben Bernanke, a fascinating account of the evolution of the Fed since the 1950s, and a stalwart defense of the status quo: of the Fed's r...

The Fed and Interest Rates - A High-Frequency Identification

By John H. Cochrane and Monika Piazzesi

American Economic Review, May 2002

The Fed and the New Economy

By Laurence Ball and Robert R. Tchaidze

American Economic Review, May 2002

Monetary-Policy Rules and the Great Inflation

By Athanasios Orphanides

American Economic Review, May 2002

A Rehabilitation of Monetary Policy in the 1950's

By Christina D. Romer and David H. Romer

American Economic Review, May 2002

Testing the Effectiveness of Unconventional Monetary Policy in Japan and the United States

By Daisuke Ikeda, Shangshang Li, Sophocles Mavroeidis, and Francesco Zanetti

American Economic Journal: Macroeconomics, April 2024

Unconventional monetary policy (UMP) may make the effective lower bound (ELB) on the short-term interest rate irrelevant. We develop a theoretical model that underpins our empirical test of this "irrelevance hypothesis," based on the simple idea that unde...

The NY Fed DSGE Model: A Post-COVID Assessment

By Marco Del Negro, Keshav Dogra, Aidan Gleich, Pranay Gundam, Donggyu Lee, Ramya Nallamotu, and Brian Pacula

AEA Papers and Proceedings, May 2024

We document the real-time forecasting performance for output and inflation of the New York Fed dynamic stochastic general equilibrium (DSGE) model since 2011. We find the DSGE's accuracy to be comparable to that of private forecasters before COVID but som...

Global Spillovers from Fed Hikes and a Strong Dollar: The Risk Channel

By José Cristi, Şebnem Kalemli-Özcan, Mariana Sans, and Filiz Unsal

AEA Papers and Proceedings, May 2024

We study the international transmission of US monetary policy shocks and a strong US dollar. We show that monetary tightening is linked to a higher risk premium, only in emerging markets, measured by deviations from uncovered interest parity. An appreciat...

Central Bank Communication with the General Public: Promise or False Hope?

By Alan S. Blinder, Michael Ehrmann, Jakob de Haan, and David-Jan Jansen

Journal of Economic Literature, June 2024

Central banks are increasingly reaching out to the general public to motivate and explain their monetary policy actions. One major aim of this outreach is to ensure accountability and create trust; another is to guide inflation expectations. This article ...

Bank Runs, Fragility, and Credit Easing

By Manuel Amador and Javier Bianchi

American Economic Review, July 2024

We present a tractable dynamic general equilibrium model of self-fulfilling bank runs, where banks trade capital in competitive and liquid markets but remain vulnerable to runs due to a loss of creditor confidence. We characterize how the vulnerability of...

Optimal Foreign Reserves and Central Bank Policy under Financial Stress

By Luis Felipe Céspedes and Roberto Chang

American Economic Journal: Macroeconomics, July 2024

We study foreign reserves accumulation and liquidity policy in an open economy under financial stress. Firms and households finance investment and consumption by borrowing from banks, which borrow from abroad. Binding financial constraints cause the domes...