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October 2008 Bluebook Tables and Charts


Monetary Policy Strategies

Chart 7
Equilibrium Real Federal Funds Rate

Figure: Short-Run Estimates with Confidence Intervals
Percent
Period Lower bound of 90% confidence interval Lower bound of 70% confidence interval Lower bound of range of model-based estimates Actual real funds rate based on lagged core inflation Greenbook-consistent measure Upper bound of range of model-based estimates Upper bound of 70% confidence interval Upper bound of 90% confidence interval
1990:Q1 -0.27 0.72 1.78 4.55 ND 4.54 4.82 5.94
1990:Q2 -0.11 0.86 1.87 4.50 ND 4.07 4.51 5.52
1990:Q3 -0.11 0.86 1.81 3.96 ND 3.45 4.10 5.02
1990:Q4 -1.00 -0.05 0.72 3.31 ND 2.89 3.44 4.41
1991:Q1 -1.29 -0.35 0.69 2.13 ND 2.42 2.99 3.97
1991:Q2 -1.42 -0.43 0.55 1.61 ND 2.50 3.01 3.98
1991:Q3 -1.16 -0.19 0.94 1.94 ND 2.64 3.19 4.17
1991:Q4 -1.07 -0.11 0.88 1.17 ND 2.62 3.20 4.16
1992:Q1 -0.99 0.01 0.86 0.28 ND 2.96 3.45 4.42
1992:Q2 -0.68 0.29 1.20 0.19 ND 3.04 3.63 4.56
1992:Q3 -0.53 0.42 1.33 -0.26 ND 3.03 3.67 4.61
1992:Q4 -0.69 0.26 1.35 -0.24 ND 2.78 3.45 4.38
1993:Q1 -0.46 0.47 1.60 0.01 ND 2.96 3.66 4.57
1993:Q2 -0.70 0.27 1.16 0.34 ND 2.55 3.42 4.30
1993:Q3 -0.88 0.09 1.08 0.35 ND 2.30 3.16 4.04
1993:Q4 -0.83 0.12 1.13 0.52 ND 2.40 3.22 4.11
1994:Q1 -0.48 0.45 1.52 0.94 ND 3.00 3.68 4.60
1994:Q2 -0.49 0.42 1.67 1.76 ND 2.38 3.41 4.28
1994:Q3 -0.30 0.57 1.83 2.39 ND 2.20 3.49 4.33
1994:Q4 -0.44 0.47 1.62 2.74 ND 2.18 3.40 4.25
1995:Q1 -0.08 0.83 1.86 3.37 ND 2.70 3.80 4.65
1995:Q2 -0.21 0.76 1.56 3.58 ND 2.73 3.86 4.70
1995:Q3 -0.43 0.64 1.29 3.47 ND 3.47 4.11 5.05
1995:Q4 -0.30 0.73 1.50 3.69 ND 3.55 4.13 5.07
1996:Q1 -0.26 0.75 1.60 3.34 ND 3.55 4.12 5.08
1996:Q2 -0.33 0.67 1.60 3.25 ND 3.64 4.13 5.16
1996:Q3 0.23 1.21 2.12 3.45 ND 4.19 4.70 5.67
1996:Q4 0.17 1.20 2.03 3.51 ND 4.13 4.66 5.60
1997:Q1 0.28 1.31 2.14 3.45 ND 4.31 4.83 5.84
1997:Q2 0.20 1.20 2.09 3.79 ND 4.07 4.60 5.58
1997:Q3 0.61 1.67 2.42 3.78 4.11 4.72 5.23 6.22
1997:Q4 0.81 1.83 2.58 3.94 4.30 5.36 5.72 6.76
1998:Q1 0.60 1.65 2.41 4.17 4.33 4.46 5.07 6.02
1998:Q2 0.74 1.77 2.51 4.18 4.16 4.81 5.30 6.30
1998:Q3 0.59 1.65 2.38 4.38 4.30 5.13 5.51 6.53
1998:Q4 0.42 1.41 2.46 3.56 3.47 4.78 5.17 6.23
1999:Q1 0.51 1.48 2.27 3.31 3.90 5.58 5.85 6.97
1999:Q2 0.68 1.69 2.74 3.37 4.08 5.36 5.70 6.74
1999:Q3 0.83 1.85 2.65 3.58 4.29 5.27 5.66 6.71
1999:Q4 0.92 1.93 2.79 3.80 4.37 4.65 5.23 6.15
2000:Q1 1.38 2.40 3.19 4.14 5.26 4.53 5.54 6.39
2000:Q2 0.96 2.00 2.73 4.44 5.63 4.28 5.17 6.06
2000:Q3 1.17 2.16 3.05 4.79 5.24 4.25 5.22 6.06
2000:Q4 0.60 1.61 2.44 4.87 4.55 3.55 4.65 5.50
2001:Q1 0.36 1.32 2.31 4.08 3.10 3.41 4.35 5.20
2001:Q2 -0.25 0.66 1.75 2.72 1.94 2.70 3.69 4.57
2001:Q3 -0.34 0.54 1.85 1.70 1.72 2.08 3.45 4.31
2001:Q4 -1.03 -0.17 0.91 0.20 0.51 1.62 2.80 3.70
2002:Q1 -1.09 -0.22 0.74 -0.47 0.66 1.61 2.80 3.68
2002:Q2 -0.93 -0.09 1.17 -0.07 0.54 1.80 2.87 3.78
2002:Q3 -1.29 -0.44 0.66 -0.03 0.29 1.58 2.55 3.46
2002:Q4 -2.28 -1.29 -0.86 -0.43 -0.01 1.53 2.32 3.35
2003:Q1 -2.47 -1.38 -1.00 -0.29 0.33 2.61 3.12 4.12
2003:Q2 -2.24 -1.19 -0.78 -0.25 0.44 2.61 3.11 4.15
2003:Q3 -1.42 -0.44 0.19 -0.34 0.03 2.61 3.20 4.18
2003:Q4 -0.72 0.22 0.99 -0.34 0.18 2.61 3.45 4.37
2004:Q1 -0.40 0.50 1.62 -0.43 0.48 2.59 3.51 4.38
2004:Q2 -0.68 0.16 1.41 -0.74 0.67 1.75 3.06 3.95
2004:Q3 -0.72 0.13 1.38 -0.66 0.90 1.94 3.06 3.97
2004:Q4 -0.93 -0.07 0.98 -0.13 1.29 2.03 2.97 3.88
2005:Q1 -0.67 0.20 1.27 0.26 1.88 1.92 3.12 4.03
2005:Q2 -0.53 0.31 1.41 0.72 1.44 2.03 3.26 4.14
2005:Q3 -0.64 0.23 1.23 1.37 1.78 1.98 3.21 4.11
2005:Q4 -0.44 0.44 1.52 1.92 2.16 2.13 3.37 4.25
2006:Q1 -0.65 0.22 1.28 2.33 2.61 1.95 3.18 4.07
2006:Q2 -0.26 0.64 1.54 2.87 2.57 2.80 3.76 4.64
2006:Q3 -0.38 0.53 1.37 3.00 2.61 2.63 3.63 4.55
2006:Q4 -0.60 0.29 1.25 2.82 2.80 2.14 3.28 4.17
2007:Q1 -0.57 0.30 1.28 2.99 2.96 2.19 3.30 4.19
2007:Q2 -0.79 0.09 1.10 2.93 3.22 1.91 3.06 3.92
2007:Q3 -0.38 0.54 1.42 3.03 3.08 2.77 3.67 4.60
2007:Q4 -0.35 0.60 1.29 2.50 2.52 3.31 4.03 5.01
2008:Q1 -1.20 -0.22 0.31 1.00 0.17 2.34 3.24 4.20
2008:Q2 -2.90 -1.75 -1.47 -0.07 -0.13 1.81 2.59 3.65
2008:Q3 -2.91 -1.87 -1.45 -0.29 -0.10 2.05 2.42 3.69
2008:Q4 -6.74 -5.59 -5.36 -0.97 -3.11 1.58 1.81 3.16

Short-Run and Medium-Run Measures
Current Estimate Previous Bluebook
Short-Run Measures
Single-equation model 1.6 2.0
Small structural model -2.9 -1.8
Large model (FRB/US) -5.4 -1.7
Confidence intervals for three model-based estimates
70 percent confidence interval -5.6 - 1.8
90 percent confidence interval -6.7 - 3.2
Greenbook-consistent measure -3.1 -0.3
Medium-Run Measures
Single-equation model 2.0 2.1
Small structural model 1.0 1.7
Confidence intervals for two model-based estimates
70 percent confidence interval 0.5 - 2.6
90 percent confidence interval 0.0 - 3.5
TIPS-based factor model 2.0 2.0
Memo
Actual real federal funds rate -1.0 -0.4

Note: Appendix A provides background information regarding the construction of these measures and confidence intervals. The actual real federal funds rate shown is based on lagged core inflation as a proxy for inflation expectation. For information regarding alternative measures, see Appendix A.


Chart 8
Optimal Policy Under Alternative Inflation Goals

1½ Percent Inflation Goal

Figure: Federal funds rate
Percent
Period Current Bluebook Previous Bluebook
2008:Q4 1.23 2.24
2009:Q1 0.60 2.24
2009:Q2 0.20 2.22
2009:Q3 0.07 2.20
2009:Q4 0.06 2.19
2010:Q1 0.06 2.20
2010:Q2 0.06 2.24
2010:Q3 0.06 2.32
2010:Q4 0.06 2.42
2011:Q1 0.06 2.55
2011:Q2 0.06 2.71
2011:Q3 0.07 2.88
2011:Q4 0.07 3.06
2012:Q1 0.08 3.25
2012:Q2 0.20 3.45
2012:Q3 0.50 3.63
2012:Q4 0.96 3.81
2013:Q1 1.55 3.98
2013:Q2 2.21 4.12
2013:Q3 2.90 4.23
2013:Q4 3.57 4.32

Figure: Civilian unemployment rate
Percent
Period Current Bluebook Previous Bluebook
2008:Q4 6.29 6.17
2009:Q1 6.60 6.16
2009:Q2 6.88 6.16
2009:Q3 7.07 6.16
2009:Q4 7.12 6.15
2010:Q1 7.16 6.04
2010:Q2 7.13 5.92
2010:Q3 7.06 5.86
2010:Q4 6.97 5.81
2011:Q1 6.78 5.66
2011:Q2 6.54 5.49
2011:Q3 6.29 5.34
2011:Q4 6.05 5.24
2012:Q1 5.80 5.14
2012:Q2 5.56 5.06
2012:Q3 5.32 4.99
2012:Q4 5.08 4.93
2013:Q1 4.85 4.88
2013:Q2 4.65 4.84
2013:Q3 4.48 4.82
2013:Q4 4.34 4.80

Figure: Core PCE inflation
Percent
Period Current Bluebook Previous Bluebook
2008:Q4 2.478 2.448
2009:Q1 2.396 2.471
2009:Q2 2.258 2.488
2009:Q3 1.850 2.284
2009:Q4 1.605 2.135
2010:Q1 1.482 2.038
2010:Q2 1.442 1.980
2010:Q3 1.430 1.953
2010:Q4 1.420 1.948
2011:Q1 1.396 1.935
2011:Q2 1.359 1.914
2011:Q3 1.333 1.885
2011:Q4 1.299 1.847
2012:Q1 1.282 1.815
2012:Q2 1.281 1.788
2012:Q3 1.294 1.766
2012:Q4 1.320 1.749
2013:Q1 1.353 1.735
2013:Q2 1.390 1.725
2013:Q3 1.430 1.717
2013:Q4 1.470 1.711

2 Percent Inflation Goal

Figure: Federal funds rate
Percent
Period Current Bluebook Previous Bluebook
2008:Q4 1.04 1.59
2009:Q1 0.37 1.38
2009:Q2 0.08 1.23
2009:Q3 0.05 1.13
2009:Q4 0.04 1.10
2010:Q1 0.04 1.14
2010:Q2 0.04 1.25
2010:Q3 0.04 1.41
2010:Q4 0.04 1.63
2011:Q1 0.04 1.88
2011:Q2 0.05 2.17
2011:Q3 0.05 2.49
2011:Q4 0.06 2.81
2012:Q1 0.06 3.13
2012:Q2 0.08 3.44
2012:Q3 0.17 3.74
2012:Q4 0.51 4.01
2013:Q1 1.04 4.26
2013:Q2 1.70 4.48
2013:Q3 2.43 4.66
2013:Q4 3.16 4.80

Figure: Civilian unemployment rate
Percent
Period Current Bluebook Previous Bluebook
2008:Q4 6.29 6.15
2009:Q1 6.59 6.11
2009:Q2 6.86 6.07
2009:Q3 7.03 6.02
2009:Q4 7.07 5.96
2010:Q1 7.08 5.81
2010:Q2 7.04 5.65
2010:Q3 6.96 5.57
2010:Q4 6.84 5.49
2011:Q1 6.64 5.32
2011:Q2 6.38 5.15
2011:Q3 6.11 4.99
2011:Q4 5.86 4.89
2012:Q1 5.60 4.80
2012:Q2 5.34 4.74
2012:Q3 5.09 4.69
2012:Q4 4.83 4.65
2013:Q1 4.59 4.63
2013:Q2 4.38 4.62
2013:Q3 4.20 4.62
2013:Q4 4.05 4.62

Figure: Core PCE inflation
Percent
Period Current Bluebook Previous Bluebook
2008:Q4 2.502 2.518
2009:Q1 2.433 2.564
2009:Q2 2.307 2.605
2009:Q3 1.907 2.388
2009:Q4 1.651 2.249
2010:Q1 1.528 2.167
2010:Q2 1.488 2.130
2010:Q3 1.480 2.119
2010:Q4 1.472 2.136
2011:Q1 1.453 2.143
2011:Q2 1.422 2.143
2011:Q3 1.404 2.134
2011:Q4 1.378 2.115
2012:Q1 1.370 2.100
2012:Q2 1.380 2.088
2012:Q3 1.405 2.080
2012:Q4 1.445 2.076
2013:Q1 1.494 2.074
2013:Q2 1.550 2.073
2013:Q3 1.609 2.074
2013:Q4 1.670 2.075


Chart 9

The Policy Outlook in an Uncertain Environment

Figure: FRB/US Model Simulations of Estimated Outcome-Based Rule

A line chart shows three series, "Current Bluebook", "Previous Bluebook", and "Greenbook assumption", from 2008:Q3 through 2013. Unit is percent. The dark shading represents the 70 percent confidence interval. It begins between the values of about 1.3 and 1.7 in 2008:Q4, it decreases to between about 0 and 1.1 by 2009:Q2 and generally increases to end between about 3.1 and 6.4 in 2013:Q4. The light shading represents the 90 percent confidence intervals. The upper interval begins between the values of about 1 and 2 in 2008:Q4, it then generally increases and ends between about 6.4 and 7.3 in 2013:Q4. The lower interval begins between about 0 and 1.2 in 2008:Q4, it generally increases and ends between about 2 and 3 in 2013:Q4. The "Current Bluebook" series begins at about 1.5 percent in 2008:Q4 decreases to about 0 in 2009:Q3 and stays about the same through 2010:Q4. It then generally increases to end at about 4.75 in 2013:Q4. The "Previous Bluebook" series begins at about 2.2 in 2008:Q4, and generally increases to end at about 3.9 in 2013:Q4. The "Greenbook assumption" series begins at about 1.2 in 2008:Q4, generally decreases to about 0.5 in 2009 and stays about the same through 2010:Q2. The series then generally increases and ends at about 3.4 in 2013:Q4.

Note: In both panels, the dark and light shading represent the 70 and 90 percent confidence intervals respectively. In the right hand panel, the thin dotted lines represent the confidence intervals shown in the previous Bluebook.

Figure: Information from Financial Markets

A line chart shows two series, "Current Bluebook", and "Previous Bluebook", from 2008: Q3 through 2013. Unit is percent. The dark shading represents the 70 percent confidence interval. It begins between the values of about 1 and 1.3 in 2008:Q4, it decreases to between about 0.5 and 1.1 by 2009:Q1 and generally increases to end between about 1.5 and 5.2 in 2013:Q4. The light shading represents the 90 percent confidence intervals. The upper interval begins between the values of about 1.2 and 1.3 in 2008:Q4, it then generally increases and ends between about 5.2 and 6.2 in 2013:Q4. The lower interval begins between about 1 and 1.1 in 2008:Q4, it generally decreases between about 0.4 and 0.6 in 2009, and generally increases between about 1.3 and 1.9 by 2011:Q4,and decreases to end between about 1 and 1.5 in 2013:Q4. The "Current Bluebook" series begins at about 1.2 in 2008:Q4, decreases to about 0.75 in 2009:Q1, generally increases to about 3.75 in 2011, and generally decreases to end at about 3.5 in 2013:Q4. The "Previous Bluebook" series begins at about 2 in 2008:Q4, and generally increases to end at about 3.75 in 2013:Q4.

Note: In both panels, the dark and light shading represent the 70 and 90 percent confidence intervals respectively. In the right hand panel, the thin dotted lines represent the confidence intervals shown in the previous Bluebook.


Near-Term Prescriptions of Simple Policy Rules

1½ Percent Inflation Objective 2 Percent Inflation Objective
2008Q4 2009Q1 2008Q4 2009Q1
Taylor (1993) rule 3.8 3.2 3.5 2.9
Previous Bluebook 4.3 4.2 4.1 4.0
Taylor (1999) rule 2.6 1.6 2.4 1.3
Previous Bluebook 3.7 3.5 3.5 3.3
First-difference rule 0.6 0.0 0.3 0.0
Previous Bluebook 2.0 2.2 1.8 1.7

Memo
2008Q4 2009Q1
Estimated outcome-based rule 1.7 1.3
Estimated forecast-based rule 1.3 0.5
Greenbook assumption 1.2 0.6
Fed funds futures 1.0 1.0
Median expectation of primary dealers 1.0 1.0

Note: Appendix B provides background information regarding the specification of each rule and the methodology used in constructing confidence intervals and near-term prescriptions.


† Note: Data values for figures are rounded and may not sum to totals.  Return to text

Last update: March 7, 2014