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Comments on “The Equilibrium Real Funds Rate: Past, Present, and Future.”

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  • Loretta J. Mester

Abstract

It is a real pleasure for me to participate in this year?s Monetary Policy Forum. As an attendee of this event for the past several years, I have been very impressed with the organizers? ability to choose a year in advance the topic that turns out to be the issue policymakers are grappling with at the time the forum rolls around. Once again, the organizers have been able to do this, with the important paper by Jim Hamilton, Ethan Harris, Jan Hatzius, and Ken West. Another example of the value of being forward looking when it comes to monetary policy! In the time I have, I will discuss some of the highlights of the paper ? some of which the authors have laid out as ?lessons learned? from history. I?ll focus on measurement and implications for policy. Taking their lead, I?ll present five of my own lessons spurred by reading their interesting paper. Of course, the views I?ll present today are my own and not necessarily those of the Federal Reserve System or my colleagues on the Federal Open Market Committee.

Suggested Citation

  • Loretta J. Mester, 2015. "Comments on “The Equilibrium Real Funds Rate: Past, Present, and Future.”," Speech 52, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcsp:52
    as

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    References listed on IDEAS

    as
    1. Orphanides, Athanasios & Williams, John C., 2007. "Robust monetary policy with imperfect knowledge," Journal of Monetary Economics, Elsevier, vol. 54(5), pages 1406-1435, July.
    2. Robert Barsky & Alejandro Justiniano & Leonardo Melosi, 2014. "The Natural Rate of Interest and Its Usefulness for Monetary Policy," American Economic Review, American Economic Association, vol. 104(5), pages 37-43, May.
    3. David L. Reifschneider & John C. Williams, 2000. "Three lessons for monetary policy in a low-inflation era," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, pages 936-978.
    4. Clark, Todd E. & Kozicki, Sharon, 2005. "Estimating equilibrium real interest rates in real time," The North American Journal of Economics and Finance, Elsevier, vol. 16(3), pages 395-413, December.
    5. Marc P. Giannoni, 2007. "Robust optimal monetary policy in a forward-looking model with parameter and shock uncertainty," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(1), pages 179-213.
    6. John B. Taylor, 1999. "A Historical Analysis of Monetary Policy Rules," NBER Chapters, in: Monetary Policy Rules, pages 319-348, National Bureau of Economic Research, Inc.
    7. John B. Taylor, 1999. "Monetary Policy Rules," NBER Books, National Bureau of Economic Research, Inc, number tayl99-1, May.
    8. Athanasios Orphanides & John C. Williams, 2002. "Robust Monetary Policy Rules with Unknown Natural Rates," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(2), pages 63-146.
    9. Reifschneider, David & Willams, John C, 2000. "Three Lessons for Monetary Policy in a Low-Inflation Era," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 32(4), pages 936-966, November.
    10. Michael Woodford, 2012. "Methods of policy accommodation at the interest-rate lower bound," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 185-288.
    11. Thomas Laubach & John C. Williams, 2003. "Measuring the Natural Rate of Interest," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 1063-1070, November.
    12. Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
    13. Tao Wu, 2005. "Estimating the \\"neutral\\" real interest rate in real time," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue oct21.
    14. Giannoni, Marc P., 2002. "Does Model Uncertainty Justify Caution? Robust Optimal Monetary Policy In A Forward-Looking Model," Macroeconomic Dynamics, Cambridge University Press, vol. 6(1), pages 111-144, February.
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