Roundup: Monetary Policy, High-Frequency Data and Expanded Unemployment Programs

Today, we are highlighting some research the St. Louis Fed has recently produced that you may have missed.

Review

Monetary Policy and Economic Performance Since the Financial Crisis

The authors review the macroeconomic performance during the Global Financial Crisis and subsequent economic expansion, as well as the challenges in the pursuit of the Federal Reserve's dual mandate. They also review the evidence on the efficacy of the Fed’s monetary policy tools and consider whether policymakers might have used them more forcefully. Finally, the authors examine the post-crisis experience of other major central banks with these policy tools.

Assessing Labor Market Conditions Using High-Frequency Data

When the COVID-19 pandemic struck in March 2020, the U.S. economy experienced a sharp, unexpected recession with large employment losses. The information on employment available from traditional data sources arrives with a lag and does not promptly reflect sudden changes in labor market conditions. In this article, the authors discuss how new high-frequency data from Homebase and Ultimate Kronos Group can offer critical information on the state of labor markets in real time.

Stability and Equilibrium Selection in Learning Models: A Note of Caution

Relative to rational expectations models, learning models provide a theory of expectation formation where agents use observed data and a learning rule. Given the possibility of multiple equilibria under rational expectations, the learning literature often uses stability as a criterion to select an equilibrium. This article uses a monetary economy to illustrate that equilibrium selection based on stability is sensitive to specifications of the learning rule. The stability criterion selects qualitatively different equilibria even when the differences in learning specifications are small. 

Economic Synopses

Expanded Unemployment Programs Likely Slowed the Decline in Unemployment Claims During the Pandemic Recovery

The typical Pandemic Unemployment Assistance claimant claimed 9.5 to 11.5 more weeks of benefit payments than an individual claiming through regular state programs.

Technical adjustments to the Fed’s administered rates help to implement existing monetary policy in changing market conditions.

Overshooting the Inflation Target

Although transitory factors have largely driven the recent rise in inflation, expansionary policy to relieve unusual economic conditions also played a role.