Accessible Material
December 2008 Bluebook Tables and Charts†
Monetary Policy Strategies
Chart 7
Equilibrium Real Federal Funds Rate
Figure: Short-Run Estimates with Confidence Intervals
A line chart shows five series, "The actual real funds rate based on lagged core inflation", "Range of model-based estimates", "70 Percent confidence interval", "90 Percent confidence interval", and "Greenbook-consistent measure". The x-axis plots shows 1990 through 2008. Unit is percent. The five series follow a similar trend. The "actual real funds rate based on lagged core inflation" series begins at about 4.5 percent in 1990:Q1, it generally decreases to about 0 in 1992:Q3, and generally increases to about 5 in 2000:Q4.The series generally decreases to about 2004:Q2, generally increases to about 3 in 2007:Q2, and generally decreases to end at about -1 in 2008:Q4. The "Range of model-based estimates" series begins between about 1.8 and 4.4 percent in 1990:Q1, it generally decreases to between about 0 and 2.5 in 1991:Q1, and generally increases between about 2.5 and 5 by 1991:Q1. It then generally decreases between about -1 and 1 in 2002:Q4, then generally increases to between about 1 and 3 in 2007:Q4, and generally decreases to end between about 0 and -7 in 2008:Q4. The upper "70 Percent confidence interval" begins at about 4.5 percent in 1990:Q1, it fluctuates between about 1 and 5.5 throughout the period and ends at about 0.1 in 2008:Q4. The lower "70 Percent confidence interval" begins at about 1 percent in 1990:Q1, it fluctuates between about -1 and 3 throughout the period and ends at about -2 in 2008:Q4. The upper "90 Percent confidence interval" begins at about 0.5 percent in 1990:Q1, it fluctuates between about 2 and 7 throughout the period and ends at about 0.5 in 2008:Q4. The lower "90 Percent confidence interval" begins at about 5 percent in 1990:Q1, it fluctuates between about -2 and 2 throughout the period and ends at about -8 in 2008:Q4.
Current Estimate | Previous Bluebook | |
---|---|---|
Short-Run Measures | ||
Single-equation model | 0.0 | 1.6 |
Small structural model | -6.7 | -2.9 |
Large model (FRB/US) | -6.3 | -5.4 |
Confidence intervals for three model-based estimates | ||
70 percent confidence interval | -7.5 - 0.2 | |
90 percent confidence interval | -8.4 - 1.6 | |
Greenbook-consistent measure | -3.4 | -3.1 |
Medium-Run Measures | ||
Single-equation model | 1.7 | 2.0 |
Small structural model | 1.2 | 1.0 |
Confidence intervals for two model-based estimates | ||
70 percent confidence interval | 0.5 - 2.4 | |
90 percent confidence interval | 0.0 - 3.2 | |
TIPS-based factor model | 2.0 | 2.0 |
Memo | ||
Actual real federal funds rate | -1.0 | -1.0 |
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.
[Box:] Implications of Unconventional Policies for Optimal Monetary Policy
Figure: Federal funds rate
A line chart shows two series, "Baseline Policy", and "Unconventional Policy", from 2008:Q3 through 2013:Q4. Unit is percent. The "Baseline Policy" series begins at about 0.8 in 2008:Q4, it decreases to about 0.3 in 2009:Q1, and stays about the same to end at about 0.3 in 2013:Q4. The "Unconventional Policy" series begins at about 0.8 in 2008:Q4, it decreases to about 0.3 in 2009:Q1, it stays about the same through 2012:Q4, and generally increases to end at about 2.5 in 2013:Q4.
Figure: Civilian unemployment rate
A line chart shows two series, "Baseline Policy", and "Unconventional Policy", from 2008:Q3 through 2013:Q4. Unit is percent. The two series begin at about 6.8 percent in 2008:Q4, they generally increase to about 8.4 by late 2009, and then generally decrease to end at about 3.5 percent for unconventional policy series and about 4 percent for baseline policy series.
Figure: Core PCE inflation
A line chart shows two series, "Baseline Policy", and "Unconventional Policy", from 2008:Q3 through 2013:Q4. Unit is percent. The two series begin at about 2.1 percent in 2008:Q4, they generally decrease to end at about 1.0 percent for unconventional policy series and 0.75 percent for baseline policy series.
Chart 8
Optimal Policy Under Alternative Inflation Goals
1½ Percent Inflation Goal
Figure: Federal funds rate
A line chart shows two series, "Current Bluebook", and "Previous Bluebook", from 2008:Q3 through 2013:Q4. Unit is percent. The "Current Bluebook" series begins at about 1.1 in 2008:Q4, it generally decreases to about 0.3 in 2009:Q2, and ends at about 0.4 in 2013:Q4. The "Previous Bluebook" series begins at about 1.2 percent in 2008:Q4, it generally decreases to about 0.05 in 2009:Q3, it stays about the same through 2012:Q1, and then increases to end at about 3.5 percent in 2013:Q4.
Figure: Civilian unemployment rate
A line chart shows two series, "Current Bluebook", and "Previous Bluebook", from 2008:Q3 through 2013:Q4. Unit is percent. The "Current Bluebook" series begins at about 6.75 percent in 2008:Q4, it generally increases to about 8.3 in 2010:Q1, and generally decreases to end at about 4.1 in 2013:Q4. The "Previous Bluebook" series begins at about 6.3 percent in 2008:Q4, it generally increases to about 7.2 in 2010:Q1, and generally decreases to end at about 4.3 in 2013:Q4.
Figure: Core PCE inflation
A line chart shows two series, "Current bluebook" and "Previous bluebook", from 2008:Q3 through 2013:Q4. Unit is percent. The "Current bluebook" series begins at about 2.05 percent in 2008:Q4, it generally decreases to about 0.6 by mid-2012, and increases to end at about 0.75 in 2013:Q4. The "Previous bluebook" series begins at about 2.5 percent in 2008:Q4, it generally decreases to about 1.25 by mid-2012, and generally increases to end at about 1.49 in 2013:Q4.
2 Percent Inflation Goal
Figure: Federal funds rate
A line chart shows two series, "Current bluebook" and "Previous bluebook", from 2008:Q3 through 2013:Q4. Unit is percent. The "Current Bluebook" series begins at about 1.1 in 2008:Q4, it generally decreases to about 0.3 in 2009:Q2, and ends at about 0.4 in 2013:Q4. The "Previous Bluebook" series begins at about 1.0 percent in 2008:Q4, it generally decreases to about 0.05 in 2009:Q3, it stays about the same through 2012:Q1, and then increases to end at about 3.1 percent in 2013:Q4.
Figure: Civilian unemployment rate
A line chart shows two series, "Current Bluebook", and "Previous Bluebook", from 2008:Q3 through 2013:Q4. Unit is percent. The "Current Bluebook" series begins at about 6.75 percent in 2008:Q4, it generally increases to about 8.3 in 2010:Q1, and generally decreases to end at about 3.8 in 2013:Q4. The "Previous Bluebook" series begins at about 6.3 percent in 2008:Q4, it generally increases to about 7.1 in 2010:Q1, and generally decreases to end at about 4.1 in 2013:Q4.
Figure: Core PCE inflation
A line chart shows two series, "Current Bluebook", and "Previous Bluebook", from 2008:Q3 through 2013:Q4. Unit is percent. The "The "Current bluebook" series begins at about 2.05 percent in 2008:Q4, it generally decreases to about 0.7 by mid-2012, and increases to end at about 0.8 in 2013:Q4. The "Previous bluebook" series begins at about 2.5 percent in 2008:Q4, it generally decreases to about 1.3 by mid-2012, and generally increases to end at about 1.6 in 2013:Q4.
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:Q4. Unit is percent. The "Current Bluebook" series begins at about 1 percent in 2008:Q4, decreases to about 0.25 in 2009:Q1, stays about the same through mid-2011, and generally increases to end at about 3.4 in 2013:Q4. The "Previous Bluebook" series begins at about 1.5 percent in 2008:Q4, it decreases to about 0 in 2009:Q3 and stays about the same through 2010:Q4. The series generally increases to end at about 4.75 in 2013:Q4. The "Greenbook assumption" series begins at about 1 percent in 2008:Q4, it decreases to about 0.25 in 2009:Q1, and stays about the same through 2012:Q4. The series then generally increases to end at about 1.2 in 2013:Q4. The dark shading (70 percent confidence interval) begins at about 1 in 2008:Q4, decreases to about 1 percent in 2008:Q4, decreases to between about 0.3 and 0.6 in 2009:Q1, and then generally increases to end between about 1.5 and 4.8 in 2013:Q4. The light shading (upper 90 percent confidence interval) begins at about 1percent in 2008:Q4, it decreases to about 0.6 in 2009:Q1, and then generally increases to end between about 4.9 and 5.6 in 2013:Q4. The light shading (lower 90 percent confidence interval) begins at about 0.3 in 2012:Q2, and generally increases to end between about 0.6 and 1.5 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", "Previous Bluebook", and "Greenbook assumption", from 2008:Q3 through 2013:Q4. Unit is percent. The "Current Bluebook" series begins at about 0.7 percent in 2008:Q4, it generally decreases to about 0.1 in 2009:Q2, and generally increases to end at about 2.3 in 2013:Q4. The "Previous Bluebook" series begins at about 1.1 percent in 2008:Q4, it decreases to about 0.7 in 2009:Q1 and generally increases to end at about 3.5 in 2013:Q4. The dark shading (70 percent confidence interval) begins at about 0.3 in 2009:Q1, and then generally increases to end between about 0.9 and 3.7 in 2013:Q4. The light shading (upper 90 percent confidence interval) begins at about 0.3 percent in 2009:Q1, and generally increases to end between about 3.7 and 5 in 2013:Q4. The light shading (lower 90 percent confidence interval) begins at about 0.3 in 2009:Q1, and generally increases to end between about 0.5 and 0.8 in 2013:Q4. The thin dotted line (upper 90 percent confidence interval shown in the previous Bluebook) begins at about 1.4 in 2008:Q4, and generally increases to end between about 5.1 and 6.2 in 2013:Q4. The thin dotted line (lower 90 percent confidence interval shown in the previous Bluebook) begins at about 1 in 2008:Q4, and generally increases to end between about 0.9 and 1.5 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 | |||
---|---|---|---|---|
2009Q1 | 2009Q2 | 2009Q1 | 2009Q2 | |
Taylor (1993) rule | 1.65 | 0.90 | 1.40 | 0.65 |
Previous Bluebook | 3.17 | 2.60 | 2.92 | 2.35 |
Taylor (1999) rule | 0.25 | 0.25 | 0.25 | 0.25 |
Previous Bluebook | 1.56 | 0.66 | 1.31 | 0.41 |
First-difference rule | 0.25 | 0.25 | 0.25 | 0.25 |
Previous Bluebook | 0.00 | 0.00 | 0.00 | 0.00 |
2009Q1 | 2009Q2 | |
---|---|---|
Estimated outcome-based rule | 0.25 | 0.25 |
Estimated forecast-based rule | 0.25 | 0.25 |
Greenbook assumption | 0.35 | 0.25 |
Fed funds futures | 0.26 | 0.38 |
Median expectation of primary dealers | 0.50 | 0.50 |
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