2019-08-03 09:28:00 Sat ET
federal reserve monetary policy treasury dollar employment inflation interest rate exchange rate macrofinance recession systemic risk economic growth central bank fomc greenback forward guidance euro capital global financial cycle credit cycle yield curve
U.S. inflation has become sustainably less than the 2% policy target in recent years. As Harvard macro economist Robert Barro indicates, U.S. inflation has remained low and stable since the federal funds rate peaked at 22% in the early-1980s. The Federal Reserve upholds the Taylor interest rate rule that the federal funds rate should increase by more than the next likely rise in inflation. This monetary policy rule accords with the U.S. dual mandate of price stability and maximum sustainable employment. In New Keynesian macroeconomic models, interest rate adjustments can cause real movements in inflation, employment, and the economic output gap due to monopolistic competition and sticky-price persistence.
Former IMF chief economist Olivier Blanchard and his MIT PhD student Jordi Gali show that solo price stabilization would be equivalent to attempting to stabilize both deviations of general prices and economic output gaps from the respective targets. Blanchard and Gali refer to this macroeconomic stabilization principle as the divine coincidence. Nevertheless, the divine coincidence may disappear due to real wage rigidities and financial market frictions. On balance, mainstream macroeconomic models cannot plausibly explain the recent great moderation of low inflation near 1.5%-2% despite gradual and consistent interest rate cycles.
If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.
2020-03-12 09:32:00 Thursday ET

Google CEO Eric Schmidt and his co-authors show the innovative corporate culture and mission of the Internet search tech titan. Eric Schmidt, Jonathan Ro
2019-07-01 12:35:00 Monday ET

Apple releases the new iOS 13 smartphone features. These features include Dark Mode, Audio Share, Memoji, better privacy protection, smart photo collection,
2022-03-05 09:27:00 Saturday ET

Addendum on empirical tests of multi-factor models for asset return prediction Fama and French (2015) propose an empirical five-factor asset pricing mode
2025-09-21 12:32:00 Sunday ET

Stock Synopsis: With a new Python program, we use, adapt, apply, and leverage each of the mainstream Gemini Gen AI models to conduct this comprehensive fund
2017-05-31 06:36:00 Wednesday ET

The Federal Reserve rubber-stamps the positive conclusion that all of the 34 major banks pass their annual CCAR macro stress tests for the first time since
2017-11-25 06:34:00 Saturday ET

Mario Draghi, President of the European Central Bank, heads the international committee of financial supervisors and has declared their landmark agreement o