Dr. Econ
Dr. Econ answers many questions with a focus on monetary policy and Federal Reserve related issues. The Doctor does not do homework, give financial advice or provide research support.
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What labor market indicators do the FOMC members look at when making their decision?
Dr. Econ, in your May 2013 answer, you mentioned that the unemployment rate alone may not fully capture the overall picture of labor market conditions and that policymakers look at a range of labor market indicators to make monetary policy decisions. Could you tell me about those other indicators?
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Recently the Federal Open Market Committee adopted numerical thresholds for the unemployment rate and inflation to communicate the likely future policy direction to the public. Do these apply to both large-scale asset purchases and federal funds rate? What are the benefits of this approach?
Indeed, in December 2012, The Federal Open Market Committee (FOMC) announced numerical thresholds for the unemployment rate and inflation that will guide future policy decisions about the federal funds rate.
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Why did the Federal Reserve start paying interest on reserve balances held on deposit at the Fed? Does the Fed pay interest on required reserves, excess reserves, or both? What interest rate does the Fed pay?
Dr. Econ explores the history of interest on reserves held at the Fed, its significance during the financial crisis, and its role in the Fed’s exit strategy.
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Dr. Econ: How severe was the contraction in bank lending that followed the 2008 financial crisis and recession?
The total decline in bank loans after their 2008:Q3 peak was the largest contraction in percentage terms during the post-World War II period. In this reply, we’ll compare bank lending trends during and after the two largest credit contractions over the past 100 years.
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How did the contraction in bank lending that followed the 2008 financial crisis and recession compare with the decline in bank loans after the stock market crash in 1929 and the Great Depression of the 1930s?
Federal Reserve Bank of San Francisco
The decline in bank loans after their peak in the third quarter of 2008 was the largest contraction in percentage terms during the post-World War II period. Yet the decline during the Great Recession was not nearly as dramatic as the downturn that occurred during the Great Depression of the 1930s.
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You have written about Fed transparency before, but I wonder if the Federal Reserve has learned any new lessons in the aftermath of the financial crisis?
Federal Reserve Bank of San Francisco
Dr. Econ explains how the financial crisis of 2007 and the global recession that followed have brought the issue of central bank transparency front and center.
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Is the Fed still in the business of processing checks?
Federal Reserve Bank of San Francisco
Dr. Econ discusses the Fed’s role in processing checks.
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With the soaring commodity prices, are you worried about higher headline inflation?
Federal Reserve Bank of San Francisco
Dr. Econ explains that while commodity prices rose noticeably in the late 2008 to early 2011 period, several factors mitigate their impact on headline inflation.
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How have state governments fared during the recent recession?
Dr. Econ found that 48 states faced budget shortfalls in fiscal years 2009 and 2010, while 46 states continued to face budget shortfalls for the current fiscal year 2011.
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Is the dramatic increase in the national unemployment rate spread equally across demographic groups or have some been hit harder than others?
Dr. Econ examines whether the increase in national unemployment spread equally across demographic groups.