Most of my work on policy analysis at the Federal Reserve is confidential. Below are some exceptions.
How Robust Are Makeup Strategies to Key Alternative Assumptions?
with James Hebden, Edward Herbst, Jenny Tang, and Giorgio Topa
We analyze the robustness of makeup strategies—policies that aim to offset, at least in part, past misses of inflation from its objective—to alternative modeling assumptions, with an emphasis on the role of inflation expectations. We survey empirical evidence on the behavior of shorter-run and long-run inflation expectations. Using simulations from the FRB/US macroeconomic model, we find that makeup strategies can moderately offset the real effects of adverse economic shocks, even when much of the public is uninformed about the monetary strategy. We also discuss the robustness of makeup strategies to alternative assumptions about the slope of the Phillips curve and the (mis)perception of economic slack.
Presented to the FOMC in 2019 as background for its discussion of the Federal Reserve's review of monetary policy strategy, tools and communication practices.
Principles for the Conduct of Monetary Policy
with Martin Bodenstein and Ben Johannsen
Part of a series on monetary policy principles and practice on the Board's public website, this note explains three key principles of good monetary policy. First, monetary policy should be well understood and systematic. Second, the central bank should provide monetary policy stimulus when economic activity is below the level associated with full resource utilization and inflation is below its stated goal. Conversely, the central bank should implement restrictive monetary policy when the economy is overheated and inflation is above its stated goal. Third, the central bank should raise the policy interest rate, over time, by more than one-for-one in response to a persistent increase in inflation and lower the policy rate more than one-for-one in response to a persistent decrease in inflation. The Taylor rule is discussed as an example for these principles.
Timelines of Policy Actions
with Sarah Baker and Etienne Gagnon
A series of timelines available on the Board's public website compile the of the Federal Reserve's key monetary policy actions and communications from the eve of the Global Financial Crisis and Great Recession until the start of the 2019-2020 framework review.