Accessible Material
June 2010 Tealbook Book B Tables and Charts†
Monetary Policy Strategies
Equilibrium Real Federal Funds Rate
Figure: Short-Run Estimates with Confidence Intervals
Line chart, by percent, 1990 to 2010. There are five series, "The actual real funds rate based on lagged core inflation", "Tealbook-consistent measure (FRB/US)", "Range of four model-based estimates", "70 Percent confidence interval", and "90 Percent confidence interval". The actual real funds rate series starts at about 4.5 in 1990, decreases to about 0 by 1992, generally increases to about 4.5 by 2001, generally decreases to about -1 by 2004, generally increases to about 3 by 2007, generally decreases to about -1.5 by 2008, and then generally increases to about -1 by 2010. Tealbook-consistent measure starts at about 4 in 1997. It generally increases to about 5 by 2000, generally decreases to about 0 by 2003, generally increases to about 3 by 2007, decreases to about -4.3 by 2009 and generally increases to about -1.7 by 2010. The other three series closely track each other throughout the chart, with the 70 percent confidence interval being about 1 percent both lesser and greater than the Range of model-based estimates, and the 90 Percent confidence interval being about 2 percent both lesser and greater than the Range of model-based estimates at any given point. The Range of model-based estimates starts at between about 1 and 4, decreases to between about -0.5 and 2 by 1991, generally increases to between about 2 and 4.5 by 2000, generally decreases to between about -0.5 and 1 by 2003, increases to between about 1 and 2.25 by 2006, decreases to between about -6 and -2 by 2009 and then increases to about -2.5 and 1 by 2010.
Current Estimate | Previous Estimate | |
---|---|---|
Short-Run Measures | ||
Single-equation model | -1.4 | -1.5 |
Small structural model | -0.9 | -0.7 |
EDO model | 1.2 | 1.2 |
FRB/US model | -2.6 | -1.3 |
Confidence intervals for four model-based estimates | ||
70 percent confidence interval | -3.0 to 1.2 | |
90 percent confidence interval | -4.0 to 2.5 | |
Tealbook-consistent measures | ||
EDO model | -4.3 | -3.1 |
FRB/US model | -1.8 | -1.4 |
Medium-Run Measures | ||
Single-equation model | 1.2 | 1.1 |
Small structural model | 1.6 | 1.8 |
Confidence intervals for two model-based estimates | ||
70 percent confidence interval | 0.4 to 2.3 | |
90 percent confidence interval | -0.3 to 2.8 | |
TIPS-based factor model | 2.0 | 2.0 |
Memo | ||
Actual real federal funds rate | -1.0 | -1.2 |
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. Estimates of r* may change at the beginning of a quarter even when there is no shift in the staff outlook because the twelve quarter horizon covered by the calculation has rolled forward one quarter. Therefore, whenever the Tealbook is published early in the quarter, this table includes a third column labeled "Current Quarter Estimate as of Previous Tealbook."
Constrained vs. Unconstrained Monetary Policy (2 Percent Inflation Goal)
Figure: Nominal Federal Funds Rate
Line chart, by percent, 2009 to 2014. There are three series, "Current Tealbook: Constrained", "Current Tealbook: Unconstrained", and "Previous Tealbook: Unconstrained". Current Tealbook: Constrained begins in 2009:Q4 at about 0.1 and increases to about 0.25 by 2010:Q2. It remains constant at 0.25 until 2013:Q4. It then generally increases to about 2.25 by 2014:Q4. Current Tealbook: Unconstrained begins in 2009:Q4 at about 0.1 and decreases to about -4.75 by 2011:Q2. It then increases to about 4.2 by 2014:Q4. Previous Tealbook: Unconstrained begins in 2009:Q4 at about 0.1 and decreases to about -3.8 by 2011:Q2. It then increases to about 4.3 by 2014:Q4.
Figure: Real Federal Funds Rate
Line chart, by percent, 2009 to 2014. There are three series, "Current Tealbook: Constrained", "Current Tealbook: Unconstrained", and "Previous Tealbook: Unconstrained". Current Tealbook: Constrained begins in 2009:Q4 at about -1.4 and generally increases to about -0.8 by 2010:Q4. It then generally decreases to about -1.2 by 2013:Q4 and then generally increases to about 0.3 by 2014:Q4. Current Tealbook: Unconstrained begins in 2009:Q4 at about -1.4 and increases to about -1.2 by 2010:Q1. It then decreases to about -6 by 2011:Q2 and then increases to about 2 by 2014:Q2. Previous Tealbook: Unconstrained begins in 2009:Q4 at about -1.4 and increases to about -1.2 by 2010:Q1. It then decreases to about -5.1 by 2011:Q2 and then increases to about 2.2 by 2014:Q4.
Figure: Civilian Unemployment Rate
Line chart, by percent, 2009 to 2014. There are three series, "Current Tealbook: Constrained", "Current Tealbook: Unconstrained", and "Previous Tealbook: Unconstrained". Current Tealbook: Constrained begins in 2009:Q4 at about 10.05 and decreases to about 9.7 by 2010:Q1. It then increases to about 9.75 by 2010:Q2 and then decreases to about 4.2 by 2014:Q4. Current Tealbook: Unconstrained begins in 2009:Q4 at about 10.05 and decreases to about 9.7 by 2010:Q1. It then increases to about 9.75 by 2010:Q2 and then decreases to about 4.35 by 2013:Q4. By 2014:Q4 it has increased to about 4.7. Previous Tealbook: Unconstrained begins in 2009:Q4 at about 10.05 and decreases to about 4.35 by 2013:Q4. It then increases to about 4.8 by 2014:Q4.
Figure: Core PCE Inflation
Line chart, by percent (four-quarter average), 2009 to 2014. There are three series, "Current Tealbook: Constrained", "Current Tealbook: Unconstrained", and "Previous Tealbook: Unconstrained". Current Tealbook: Constrained begins in 2009:Q4 at about 1.5 and decreases to about 0.87 by 2010:Q4. It then generally increases to about 1.9 by 2014:Q4. Current Tealbook: Unconstrained begins in 2009:Q4 at about 1.5 and generally decreases to about 1.15 by 2010:Q4. It then generally increases to about 2.1 by 2014:Q4. Previous Tealbook: Unconstrained begins in 2009:Q4 at about 1.52 and generally decreases to about 1.15 by 2010:Q4. It then generally increases to about 2.1 by 2014:Q4.
The Policy Outlook in an Uncertain Environment
Figure: FRB/US Model Simulations of Estimated Outcome-Based Rule
Line chart, by percent, 2010 to 2014. There are five series, "Current Tealbook", "Previous Tealbook", "Staff assumption", "70 percent confidence interval" and "90 percent confidence interval". The Current Tealbook begins at about 0 in 2010:Q2 and remains relatively stable there until 2012:Q2. It then increases to about 3.9 by 2014:Q4. The Previous Tealbook begins at about 0 in 2010:Q2 and remains stable there until 2012:Q1. It then increases to about 3.9 by 2014:Q4. The staff assumption begins at about 0 and remains relatively stable there until 2012:Q2. It then generally increases to about 3.5 by 2014:Q4. The other two series closely track the Current Tealbook series throughout the chart, with the 70 percent confidence interval being about 2% both lesser and greater than the Current Tealbook series, and the 90 Percent confidence interval being about 3% both lesser and greater than the Current Tealbook series at any given point.
Figure: Information from Financial Markets
Line chart, by percent, 2010 to 2014. There are four series, "Current Tealbook", "Previous Tealbook", "70 percent confidence interval" and "90 percent confidence interval". The Current Tealbook begins at about 0 and then increases to about 3.0 by 2014:Q4. The Previous Tealbook begins at about 0 and then increases to about 3.65 by 2014:Q4. The other two series closely track the Current Tealbook series throughout the chart. The 70 percent confidence interval begins being about 0.1% both lesser and greater than the Current Tealbook series. It then generally increases to about 1.5% both lesser and greater than the Current Tealbook series by the end of 2014. The 90 percent confidence interval begins being about 0.2% both lesser and greater than the Current Tealbook series. It then generally increases to about 2.5% both lesser and greater than the Current Bluebook series by the end of 2014.
Note: In both panels, the dark and light shading represent the 70 and 90 percent confidence intervals respectively. Financial market quotes are as of June 16.
Near-Term Prescriptions of Simple Policy Rules
Constrained Policy | Unconstrained Policy | |||
---|---|---|---|---|
2010Q3 | 2010Q4 | 2010Q3 | 2010Q4 | |
Taylor (1993) rule | 0.13 | 0.13 | -0.80 | -1.07 |
Previous Tealbook | 0.13 | 0.13 | -0.71 | -0.83 |
Taylor (1999) rule | 0.13 | 0.13 | -4.16 | -4.32 |
Previous Tealbook | 0.13 | 0.13 | -4.01 | -3.96 |
Estimated outcome-based rule | 0.13 | 0.13 | -0.47 | -1.28 |
Previous Tealbook | 0.13 | 0.13 | -1.13 | -1.66 |
Estimated forecast-based rule | 0.13 | 0.13 | -0.46 | -1.18 |
Previous Tealbook | 0.13 | 0.13 | -1.04 | -1.42 |
First-difference rule | 0.13 | 0.13 | -0.02 | -0.13 |
Previous Tealbook | 0.43 | 0.69 | 0.43 | 0.69 |
2010Q3 | 2010Q4 | |
---|---|---|
Staff assumption | 0.13 | 0.13 |
Fed funds futures | 0.19 | 0.21 |
Median expectation of primary dealers | 0.13 | 0.13 |
Blue Chip forecast (June 1, 2010) | 0.20 | 0.30 |
Note: In calculating the near-term prescriptions of these simple policy rules, policymakers' long-run inflation objective is assumed to be 2 percent. Appendix B provides further background information.
† Note: Data values for figures are rounded and may not sum to totals. Return to text