Achieving price stability: a summary of the Bank's 1996 symposium

Central banks throughout the world are moving to adopt long-run price stability as their primary goal. Whether operating with multiple short-run goals or legislative mandates for price stability, virtually all central banks have recognized the desirability of achieving price stability over time. Countries with moderate to high inflation are adopting policies to reduce inflation, and countries with low inflation are adopting policies to achieve and maintain price stability.> To better understand how central banks can best reduce inflation and what policies and operating procedures should be implemented to maintain price stability, the Federal Reserve Bank of Kansas City sponsored a symposium entitled Achieving Price Stability, held at Jackson Hole, Wyoming, on August 29-31, 1996. The symposium brought together a distinguished group of central bankers, academics, and financial market representatives.> Kahn summarizes the papers and commentary presented at the symposium. Participants agreed that low or zero inflation is the appropriate long-run goal for monetary policy. They disagreed, however, about whether a little inflation should be tolerated and what strategies should be adopted to achieve and maintain price stability.Banks and banking, Central ; Prices

Achieving price stability: a 1993 report card

The primary goal of Federal Reserve monetary policy is to foster maximum sustainable growth in the U.S. economy by achieving price stability over time. Although considerable progress toward price stability has been made since the early 1980s, inflation remains above the level most analysts would associate with price stability. Because price stability is the key contribution the Federal Reserve can make toward maximizing long-run growth and living standards in the United States, it is important for the Federal Reserve to remain vigilant in its efforts to keep inflation in check.> Kahn examines the behavior of inflation over the past year in relation to the Federal Reserve's goal of achieving price stability over time. First, he discusses why price stability is important and how the Federal Reserve has made significant progress toward price stability since the early 1980s. Second, he describes the behavior of inflation in 1993, showing that inflation declined for the year as a whole. Third, he shows that inflation expectations also declined in 1993, suggesting the public believes the inflation outlook has improved. Together, these findings suggest the Federal Reserve made progress in 1993 toward achieving price stability.Prices ; Inflation (Finance) ; Monetary policy - United States

Communicating a policy path: the next frontier in central bank transparency?

In the last two decades, central banks have taken a variety of steps to increase the transparency of monetary policy. Today, many economists are suggesting ways to further increase transparency. One area of considerable interest is the outlook for the future path of the policy rate. The policy rate is the short-term, typically overnight, interest rate that central bankers use to adjust the stance of monetary policy. While central banks typically announce changes in the policy rate when they occur, very few central banks provide an explicit description of where the policy rate is likely to be set in the future. ; Yet, this information is clearly of value to financial markets. Financial market participants want to know the policy path so they can properly price long-term assets, such as government notes and bonds, which depend in part on future short rates. In addition, speculation about the outlook for the policy rate is a staple of the financial press, and futures markets have developed to allow investors to hedge risk or speculate about future policy moves. More information about the policy path might make these markets more efficient and reduce asset price volatility. ; Kahn surveys current central bank practices relating to transparency and the future path of the policy rate. He identifies some of the conceptual and practical issues that may limit central banks' ability and willingness to provide more information about the policy path to financial markets.Banks and banking, Central

Polarons in Anisotropic Energy Bands

Calculation of polaron properties in anisotropic energy bands, and results for electron on spheroidal energy surface interacting with optical phonon

Productivity swings and housing prices

The housing boom and bust of the last decade, often attributed to "bubbles" and credit market irregularities, may owe much to shifts in economic fundamentals. A resurgence in productivity that began in the mid-1990s contributed to a sense of optimism about future income that likely encouraged many consumers to pay high prices for housing. The optimism continued until 2007, when accumulating evidence of a slowdown in productivity helped dash expectations of further income growth and stifle the boom in residential real estate.>Consumer behavior ; Housing - Prices ; Productivity

Monetary policy under a corridor operating framework

The Federal Reserve aggressively eased monetary policy during the 2008-09 global financial crisis. The Federal Open Market Committee (FOMC) cut the federal funds rate target to near zero, and the Board of Governors introduced a number of novel liquidity facilities. In addition, the FOMC purchased long-term Treasuries and agency mortgage-backed securities on a large scale. These actions caused the Fed’s balance sheet to balloon. ; As the balance sheet grew to unprecedented size, the Open Market Desk at the New York Fed found it increasingly difficult to achieve FOMC’s target funds rate. In response, in October 2008, as authorized under the Financial Services Regulatory Act of 2006 and the Emergency Economic Stabilization Act of 2008, the Federal Reserve began paying interest on excess reserves. This interest rate expected to establish a floor under the federal funds rate. The discount rate—which since January 2003 has been set as a penalty rate the funds rate target—was expected to limit upward pressure on the funds rate ; With these moves, the Federal Reserve’s operating framework now incorporates the essential elements of a “channel” or “corridor” system. In such a system, the target for the federal funds rate would typically be set within the corridor established by the discount rate at the ceiling and interest rate on excess reserves at the floor. Although the Federal Reserve has not formally adopted a channel system, establishing a under the federal funds rate target will be especially important as the Federal Reserve begins to exit its highly accommodative policy stance. ; Kahn examines how a corridor system works in theory and practice. While such a framework may offer a number of advantages as an operating system, it may also create new challenges. The key advantages are that it could help the Federal Reserve achieve its target for the federal funds rate while allowing the balance sheet to act as an independent tool of policy. A key question is whether the discount rate will be an effective ceiling and the interest rate on excess reserves an effective floor. In addition, how changes in the funds rate target, the discount rate and the rate on excess reserves will be sequenced is unclear. In particular, the roles of the FOMC, Board of Governors, and Reserve Bank Boards of Directors in such a system may need to be clarified.

Explaining the gap between new home sales and inventories

For much of the last four decades, the stock of unsold new homes has tracked sales very closely. Since 1995, however, inventories have fallen far behind rapidly advancing sales. What accounts for the change? Market trends have both reduced the need for inventories and slowed the response of inventories to shifts in demand. At the same time, the long current expansion has strained the resources of the building industry, creating supply shortages and raising costs.Housing - Finance ; Inventories ; Business cycles

Nominal GNP: an anchor for monetary policy?

Nominal GNP has some theoretical appeal as a guide for monetary policy. Its principal strength is that it would prevent policy from drifting away from the long-run goal of price stability. However, whether policymakers can translate this theoretical appeal into an actual policy that improves economic performance is an open question.Gross national product ; Monetary policy

The role of money in monetary policy: why do the Fed and ECB see it so differently?

Monetary policymakers and central banks universally recognize that, in the long run, inflation is strictly determined by monetary policy. However, they disagree sharply about the role of monetary aggregates in the conduct of monetary policy. ; These differences in views are reflected in the way the Federal Reserve and the ECB conduct monetary policy and communicate with the public. At the Federal Reserve, the Federal Open Market Committee no longer specifies targets or monitoring ranges for the monetary aggregates, and committee members seldom mention the aggregates in their deliberations. In contrast, the ECB regularly examines the implications of money growth for the inflation outlook over the medium term to long term. What accounts for these differences of views, and why do the Federal Reserve and ECB see things so differently? ; Kahn and Benolkin examine why the Federal Reserve and ECB differ in their approach to the monetary aggregates and find two main reasons. First, their institutional histories are different. And, second, in the United States and the Euro area, there are differences in the usefulness of monetary aggregates as indicators of future economic conditions over the medium to long run.Money ; Monetary policy ; European Central Bank ; Federal Reserve System

The goldstone and goldstino of supersymmetric inflation

We construct the minimal effective field theory (EFT) of supersymmetric inflation, whose field content is a real scalar, the goldstone for time-translation breaking, and a Weyl fermion, the goldstino for supersymmetry (SUSY) breaking. The inflating background can be viewed as a single SUSY-breaking sector, and the degrees of freedom can be efficiently parameterized using constrained superfields. Our EFT is comprised of a chiral superfield X_NL containing the goldstino and satisfying X_NL^2 = 0, and a real superfield B_NL containing both the goldstino and the goldstone, satisfying X_NL B_NL = B_NL^3 = 0. We match results from our EFT formalism to existing results for SUSY broken by a fluid background, showing that the goldstino propagates with subluminal velocities. The same effect can also be derived from the unitary gauge gravitino action after embedding our EFT in supergravity. If the gravitino mass is comparable to the Hubble scale during inflation, we identify a new parameter in the EFT related to a time-dependent phase of the gravitino mass parameter. We briefly comment on the leading contributions of goldstino loops to inflationary observables.Comment: 32 pages, 2 figures. v3: clarifications and references added. Matches JHEP version. v2: typos fixed, footnote and references adde