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Fed’s Effective Lower Bound Constraint on Monetary Policy Created Uncertainty
Plante, Michael Richter, Alexander W. Throckmorton, Nathaniel
Plante, Michael
Richter, Alexander W.
Throckmorton, Nathaniel
Abstract
Uncertainty about the economy increased when the Fed reduced the federal funds rate to its effective lower bound because the constraint restricted the Fed’s ability to stabilize the economy. As a result, a much stronger negative relationship between uncertainty and economic activity emerged during and shortly after the Great Recession.
Description
Date
2017
Journal Title
Journal ISSN
Volume Title
Publisher
Economic Letter: Insights from the Federal Reserve Bank of Dallas