The Federal Reserve’s monetary policy actions in 1994 might appear to represent an abrupt departure from those of the previous year. Six highly publicized increases in short-term interest rates followed a period of relative stability in short-term rates in 1993.
The bank and S&L debacle of the 1980s focused attention on the possibility that government regulation and deposit insurance can make depository institutions more prone to failure. Branch banking restrictions, for example, limit geographic diversification, leaving banks more vulnerable to localized economic distress.
Decisions concerning monetary and fiscal policy often depend in part on forecasts of the future course of real activity. But how accurate are those forecasts? The authors examine the relative accuracy of forecasts for inflation and economic growth made by the U.S. government for G-7 economies from 1976 to 1990.
During the past decade, real business cycle (RBC) modeling has won a large market share in macroeconomic research. Though the economics are familiar, the computational techniques still appear inaccessible to many economists.
follow @stlouisfed