The FED’s Strategy on a Targets-based Monetary Policy Framework
DOI:
https://doi.org/10.58567/fel02010003Keywords:
Monetary Policy; Inflation Targeting; Zero Lower Bound; Alternative Monetary Policy FrameworksAbstract
Major economic and financial contractions usually go hand-in-hand with muted inflation. This has been true for the Great Depression, the Global Financial Crisis, as well as the Covid-19 crisis. In this paper, we theoretically highlight and discuss the evolution of instruments and approaches monetary-policy decision makers at the Federal Reserve have in lifting inflation to desired levels in times of the zero-lower bound, paying particular focus on more rigorous developments like asymmetric average inflation and temporary price-level targeting.
References
Bernanke, B. (2017). "Temporary price-level targeting: An alternative framework for monetary policy", Brooking Institute,(https://www.brookings.edu/blog/ben-bernanke/2017/10/12/temporary-price-level-targeting-an-alternative-framework-for-monetary-policy/)
Coenen, G. and Montes-Galdon, C. and Schmidt, S. (2021) "Macroeconomic stabilisation and monetary policy effectiveness in a low-interest rate environment", Journal of Economic Dynamics and Control, Vol. 132. https://doi.org/10.1016/j.jedc.2021.104205
Coenen, G. and Montes-Galdon, C. and Smets, F. (2022) "Effects of State-Dependent Forward Guidance, Large-Scale Asset Purchases, and Fiscal Stimulus in a Low-Interest-Rate Environment", Journal of Money, Credit and Banking, https://doi.org/10.1111/jmcb.12978. https://doi.org/10.1111/jmcb.12978
Coenen, G. and Warne, A. (2014) "Risks to price stability, the zero lower bound, and forward guidance: a real-time assessment", International Journal of Central Banking, Vol. 10, Issue 2, pages 7-54. http://dx.doi.org/10.2139/ssrn.2311263
Del Negro, M. and Giannoni, M. P. and Patterson, C. (2023) "The Forward Guidance Puzzle", Journal of Political Economy, Vol. 1, Issue 1, pages 43-79. https://doi.org/10.1086/724214
Gerth, F. and Otsu, K. (2015) "A neoclassical analysis of the Great Recession: a historical comparison" Economics Bulletin, Vol. 35 No. 4, pages 2363-2373. https://doi.org/EB-15-V35-I4-P237
Gerth, F. and Otsu, K. (2018) "The Post-Crisis Slump in Europe: A Business Cycle Accounting Analysis", The B.E. Journal of Macroeconomics, De Gruyter, Vol. 18, Issue 1, pages 1-25. https://doi.org/10.1515/bejm-2016-0189
Gerth, F. and Ramiah, V. and Toufaily, E. and Muschert, G. (2021) "Assessing the effectiveness of Covid-19 financial product innovations in supporting financially distressed firms and households in the UAE", Journal of Financial Services Marketing, Vol. 26, pages 215-225. https://doi.org/10.1057/s41264-021-00098-w
Krugman, P. R. (1998) "It’s Baaack: Japan’s Slump and the Return of the Liquidity Trap", Brookings Papers on Economic Activity, Vol. 29, pages 137–206. https://doi.org/10.2307/2534694
Madhou, A. and Sewak, T. and Moosa, I. and Ramiah, V. and Gerth, F. (2021) "Towards Full-Fledged Inflation Targeting Monetary Policy Regime in Mauritius", Journal of Risk and Financial Management, Vol. 14, Issue 3, pages 1-18. https://doi.org/10.3390/jrfm14030126
Powell, T. and Wessel, D. (2020). "What do changes in the Feds longer-run goals and monetary strategy statement mean?", Brookings Institute, (https://www.brookings.edu/blog/up-front/2020/09/02/what-do-changes-in-the-feds-longer-run-goals-and-monetary-strategy-statement-mean/)
Schumpeter, J. A. (1947) "The Creative Response in Economic History", The Journal of Economic History, Vol. 7, Issue 2, pages 149-159. https://doi.org/10.1017/S0022050700054279
Wessel, D. (2019). "What is "average inflation targeting?", Brooking Institute, (https://www.brookings.edu/blog/up-front/2019/05/30/what-is-average-inflation-targeting/)
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Florian Gerth, Yiyang Bian
This work is licensed under a Creative Commons Attribution 4.0 International License.