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Monetary tightening cycles and the predictability of economic activity

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  • Tobias Adrian
  • Arturo Estrella

Abstract

Eleven of fourteen monetary tightening cycles since 1955 were followed by increases in unemployment; three were not. The term spread at the end of these cycles discriminates almost perfectly between subsequent outcomes, but levels of nominal or real interest rates, as well as other interest rate spreads, generally do not.

Suggested Citation

  • Tobias Adrian & Arturo Estrella, 2009. "Monetary tightening cycles and the predictability of economic activity," Staff Reports 397, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednsr:397
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    References listed on IDEAS

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    1. Bernanke, Ben S & Blinder, Alan S, 1992. "The Federal Funds Rate and the Channels of Monetary Transmission," American Economic Review, American Economic Association, vol. 82(4), pages 901-921, September.
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    More about this item

    Keywords

    Unemployment; Interest rates; Business cycles; Monetary policy;
    All these keywords.

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