Monetary Policy
Raising New Challenges: An analytical and empirical view of monetary policy based on the workhorse open-economy New Keynesian model laid out in Martínez-García and Wynne (2010).
Research Publications
Refereed Journals
"The Effect of Central Bank Credibility on Forward Guidance in an Estimated New Keynesian Model" (with Stephen J. Cole), Macroeconomic Dynamics, Vol. 27 (2), pp. 532-570, March 2023. A working paper version of this article appeared as Globalization and Monetary Policy Institute Working Paper no. 375, November 2019 (Revision: March 2021)
Video presentation of the paper 'The Effect of Central Bank Credibility on Forward Guidance in an Estimated New Keynesian Model', Ft. Lauderdale (FL), November 29, 2019
"Flexible Average Inflation Targeting: How Much Is U.S. Monetary Policy Changing?" (with Jarod Coulter and Roberto Duncan), Economía, Vol. 45 (89), pp. 102-149, August 2022. A working paper version of this article appeared as Globalization and Monetary Policy Institute Working Paper no. 417, July 2022
"Introduction to Special Issue 2022-1: Recent Developments in Inflation Dynamics" (with Roberto Duncan), Economía, Vol. 45(89), August 2022.
"Monetary Policy and Economic Performance since the Financial Crisis" (with Dario Caldara, Etienne Gagnon, and Christopher J. Neely), Federal Reserve Bank of St. Louis Review, 103(4), Fourth Quarter 2021, pp. 425-460. A working paper version of this article appeared as Globalization and Monetary Policy Institute Working Paper no. 397, August 2020
This paper also circulated as: "Monetary Policy and Economic Performance since the Financial Crisis" (with Dario Caldara, Etienne Gagnon, and Christopher J. Neely), Finance and Economics Discussion Series 2020-065. Washington: Board of Governors of the Federal Reserve
The analysis in this paper was presented to the Federal Open Market Committee as background for its discussion of the Federal Reserve’s review of monetary policy strategy, tools, and communication practices. The Committee discussed issues related to the review at five consecutive meetings from July 2019 to January 2020. References to the FOMC’s current framework for monetary policy refer to the framework articulated in the Statement on Longer-Run Goals and Monetary Policy Strategy first issued in January 2012 and reaffirmed each January, most recently in January 2019. The conclusions and revision to the Federal Reserve's Monetary Policy Framework were announced by Chair Powell at the Jackson Hole Symposium on August 26, 2020: https://www.federalreserve.gov/newsevents/speech/powell20200827a.htm
Related blog post: "Fed’s New Inflation Targeting Policy Seeks to Maintain Well-Anchored Expectations" (with Jarod Coulter and Valerie Grossman), Dallas Fed Economics Blog, April 6, 2021
"In No Uncertain Terms: The Effect of Uncertainty on Credit Frictions and Monetary Policy" (with Nathan S. Balke and Zheng Zeng), Economic Modelling, Vol. 100, July 2021. A working paper version of this article appeared as Globalization and Monetary Policy Institute Working Paper no. 317, June 2017 (Revised: February 2021)
A background paper with supplementary materials appeared as Globalization and Monetary Policy Institute Working Paper no. 317a, June 2017 (Revised: February 2021)
"Policymakers’ Response to COVID-19 Can Draw on Great Recession Lessons" (with Jarod Coulter), Dallas Fed Economics Blog, July 7, 2020
An article that covers this research: "Credit Market Frictions, Business Cycles, and Monetary Policy: The Research Contributions of Charles Carlstrom and Timothy Fuerst" (by Todd Clark, Matthias Paustian, and Eric Sims), Economic Commentary (Federal Reserve Bank of Cleveland), March 25, 2020
"Good Policies or Good Luck? New Insights on Globalization and the International Monetary Policy Transmission Mechanism," Computational Economics, Vol. 54(1), pp. 419-454, 2019. A longer working paper version of this article appeared as Globalization and Monetary Policy Institute Working Paper no. 321, July 2017
Read coverage of this work from the Wall Street Journal and the Dallas Morning News (September 6, 2017)
"Assessing Bayesian Model Comparison in Small Samples" (with Mark A. Wynne), Advances in Econometrics, Vol. 34 (Bayesian Model Comparison), pp. 71-115, edited by Ivan Jeliazkov and Dale Poirier. Emerald Group Publishing Limited, 2014. A working paper version of this article under the title "Assessing Bayesian Model Comparison in Small Samples" appeared as Globalization and Monetary Policy Institute Working Paper no. 189, August 2014
A background paper with the derivations of the model appeared as Globalization and Monetary Policy Institute Working Paper no. 190, August 2014
(For code and dataset files, contact the author.)
"Bayesian Estimation of NOEM Models: Identification and Inference in Small Samples" (with Diego Vilán and Mark A. Wynne), Advances in Econometrics, Vol. 28 (DSGE Models in Macroeconomics: Estimation, Evaluation, and New Developments), pp. 137-199, edited by Nathan S. Balke, Fabio Canova, Fabio Milani, and Mark A. Wynne. Emerald Group Publishing Limited, 2012. An extended working paper version of this article under the title "Bayesian Estimation of NOEM Models: Identification and Inference in Small Samples" appeared as Globalization and Monetary Policy Institute Working Paper no. 105, January 2012 (Revised March 2012)
(For code and dataset files, contact the author.)
Book Chapters
"U.S. Business Cycles, Monetary Policy and the External Finance Premium," in Advances in Non-Linear Economic Modeling: Theory and Applications, Vol. 17, pp. 41-114, edited by Frauke Schleer-van Gellecom, Series: Dynamic Modeling and Econometrics in Economics and Finance. Berlin Heidelberg: Springer, January 2014. A working paper version of this article appeared as Globalization and Monetary Policy Institute Working Paper no. 160, September 2013
(For code and dataset files, contact the author.)
"The Balance Sheet Channel" (with Ethan Cohen-Cole), in Financial Stability, Monetary Policy, and Central Banking, edited by Rodrigo A. Alfaro, Series: Central Banking, Analysis, and Economic Policies. Santiago, Chile: Central Bank of Chile, 2010. A working paper version of this article appeared as SSRN Working Paper Series No. 2365048, December 2013
Books
"Functional Doctrine of Money. Germán Bernácer" (translated with María Teresa Martínez-García), published by Caja de Ahorros del Mediterráneo and Universidad de Alicante Fundación General with the support of the Globalization and Monetary Policy Institute, June 2009. [This is an English translation of the revised second edition of "La Doctrina Funcional del Dinero," by Germán Bernácer Tormo, published by the Consejo Superior de Investigaciones Científicas, Instituto "Sancho de Moncada": Madrid, 1956.]
Working Papers
Business Cycle Dynamics and Monetary Policy
"Living Up to Expectations: Central Bank Credibility, the Effectiveness of Forward Guidance, and Inflation Dynamics Post-Global Financial Crisis" (with Stephen J. Cole and Eric R. Sims), Globalization and Monetary Policy Institute Working Paper no. 424, September 2023
A version of this paper appeared as NBER working paper no. 31777, October 2023
(For code and dataset files, contact the author.)
"On the Nexus of Monetary Policy and Financial Stability: Novel Asset Market Monitoring Tools for Building Economic Resilience and Mitigating Financial Risks" (with Valerie Grossman and Lauren Spits), Globalization and Monetary Policy Institute Working Paper no. 421, June 2023
"Monetary Policy Uncertainty and Economic Fluctuations at the Zero Lower Bound" (with Rachel Doehr), Globalization and Monetary Policy Institute Working Paper no. 412, November 2021
(For code and dataset files, contact the author.)
"Monetary Policy Expectations and Economic Fluctuations at the Zero Lower Bound" (with Rachel Doehr), Globalization and Monetary Policy Institute Working Paper no. 240, May 2015 (Revised: November 2021)
Read coverage of this work from The Atlantic magazine (June 14, 2016)
Videoblog (February 16, 2022)
(For code and dataset files, contact the author.)
Open-Economy Macroeconomics
"Globalization and Monetary Policy: An Introduction," Globalization and Monetary Policy Institute Working Paper no. 11, April 2008
Inflation Dynamics and Globalization
"Just Do IT? An Assessment of Inflation Targeting in a Global Comparative Case Study" (with Roberto Duncan and Patricia Toledo)
(For code and dataset files, contact the author.)
Federal Reserve System Publications
"Disparate Supply-Side Forces Gave U.S. Economy an Edge" (with Braden Strackman), Dallas Fed Economics Blog, March 26, 2024
Media and online coverage: Central Banking
"Gazing at R-star: Gauging U.S. Monetary Policy Via the Natural Rate of Interest," Dallas Fed Economics Blog, July 3, 2023
"Monetary Policy at a Crossroads: Donald Kohn on Controlling Inflation, Ukraine Effects, Volcker-Era Lessons," Dallas Fed Economics Blog, July 5, 2022
"Russia’s War on Ukraine Will Leave Scars on U.S., World Economies" (with Jarod Coulter), Dallas Fed Economics Blog, May 17, 2022
"Fed’s New Inflation Targeting Policy Seeks to Maintain Well-Anchored Expectations" (with Jarod Coulter and Valerie Grossman), Dallas Fed Economics Blog, April 6, 2021
"Policymakers’ Response to COVID-19 Can Draw on Great Recession Lessons" (with Jarod Coulter), Dallas Fed Economics Blog, July 7, 2020
"Consequences of the Euro: Monetary Union, Economic Disunion?" (with Valerie Grossman), Federal Reserve Bank of Dallas Economic Letter, Vol. 11, No. 2, April 2016
"Globalization: The Elephant in the Room That Is No More," Globalization and Monetary Policy Institute 2014 Annual Report, February 2015
"The Global Slack Hypothesis" (with Mark A. Wynne), Federal Reserve Bank of Dallas Staff Papers, No. 10, September 2010
Presentation 'Global Output Gaps: Wave of the Future?' (by James Bullard), March 28, 2012, with references to this article
Read coverage on the determinants of inflation in the Financial Times (March 30, 2015) with references to the meeting of the Federal Open Market Committee (FOMC) of December 15-16, 2009 (see FOMC documents here and here)
"The Euro and the Dollar in the Crisis and Beyond" (with Janet Koech), Globalization and Monetary Policy Institute 2010 Annual Report, May 2011
Other Research Publications
"Interest Rate Expectations Shape the Federal Reserve’s Path of Lift-off" (with Rachel Doehr), VoxEU, March 6, 2022
Policy Presentations
FOMC
Read a discussion of the monetary policy framework of the Federal Reserve, the ECB, the Bank of England and the Bank of Japan at "Monetary Policy and Economic Performance since the Financial Crisis" (with Dario Caldara, Etienne Gagnon, and Christopher J. Neely), Federal Reserve Bank of St. Louis Review, 103(4), Fourth Quarter 2021, pp. 425-460. A working paper version of this article appeared as Globalization and Monetary Policy Institute Working Paper no. 397, August 2020
This paper also circulated as: "Monetary Policy and Economic Performance since the Financial Crisis" (with Dario Caldara, Etienne Gagnon, and Christopher J. Neely), Finance and Economics Discussion Series 2020-065. Washington: Board of Governors of the Federal Reserve
The analysis in this paper was presented to the Federal Open Market Committee as background for its discussion of the Federal Reserve’s review of monetary policy strategy, tools, and communication practices. The Committee discussed issues related to the review at five consecutive meetings from July 2019 to January 2020. References to the FOMC’s current framework for monetary policy refer to the framework articulated in the Statement on Longer-Run Goals and Monetary Policy Strategy first issued in January 2012 and reaffirmed each January, most recently in January 2019. The conclusions and revision to the Federal Reserve's Monetary Policy Framework were announced by Chair Powell at the Jackson Hole Symposium on August 26, 2020: https://www.federalreserve.gov/newsevents/speech/powell20200827a.htm
Related blog post: "Fed’s New Inflation Targeting Policy Seeks to Maintain Well-Anchored Expectations" (with Jarod Coulter and Valerie Grossman), Dallas Fed Economics Blog, April 6, 2021
Read a discussion of the global slack hypothesis in the minutes of the meeting of the Federal Open Market Committee (FOMC) of December 15-16, 2009 (see FOMC documents here and here)
Some Historical References
Learning from Lucas (article by Thomas J. Sargent, 2021): here.