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The economy and Fed policy: follow the demand

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Abstract

The primary reason unemployment remains high is a lack of demand. An aggregate demand shortfall is exactly the kind of problem monetary policy can address. Thus, we need powerful and continuing monetary stimulus to move toward maximum employment and price stability. ; This letter is adapted from a presentation by the president and CEO of the Federal Reserve Bank of San Francisco to The Forecasters Club in New York, New York, on February 21, 2013.

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  • John C. Williams, 2013. "The economy and Fed policy: follow the demand," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue feb25.
    • Handle: RePEc:fip:fedfel:y:2013:i:feb25:n:2013-05
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    References listed on IDEAS

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    1. Ay?egül ?ahin & Joseph Song & Giorgio Topa & Giovanni L. Violante, 2014. "Mismatch Unemployment," American Economic Review, American Economic Association, vol. 104(11), pages 3529-3564, November.
    2. Congressional Budget Office, 2013. "The Budget and Economic Outlook: Fiscal Years 2013 to 2023," Reports 43907, Congressional Budget Office.
    3. Congressional Budget Office, 2012. "An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022," Reports 43539, Congressional Budget Office.
    4. Reifschneider, David L. & Roberts, John M., 2006. "Expectations formation and the effectiveness of strategies for limiting the consequences of the zero bound," Journal of the Japanese and International Economies, Elsevier, vol. 20(3), pages 314-337, September.
    5. 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.
    6. Eric T. Swanson & John C. Williams, 2014. "Measuring the Effect of the Zero Lower Bound on Medium- and Longer-Term Interest Rates," American Economic Review, American Economic Association, vol. 104(10), pages 3154-3185, October.
    7. Bordo, Michael D. & Orphanides, Athanasios (ed.), 2013. "The Great Inflation," National Bureau of Economic Research Books, University of Chicago Press, number 9780226066950.
    8. Congressional Budget Office, 2012. "The Budget and Economic Outlook: Fiscal Years 2012 to 2022," Reports 42905, Congressional Budget Office.
    9. Richard H. Clarida & Jeffrey Frankel & Francesco Giavazzi & Kenneth D. West, 2006. "NBER International Seminar on Macroeconomics 2004," NBER Books, National Bureau of Economic Research, Inc, number clar06-1.
    10. Congressional Budget Office, 2013. "The Budget and Economic Outlook: Fiscal Years 2013 to 2023," Reports 43907, Congressional Budget Office.
    11. Congressional Budget Office, 2013. "The Budget and Economic Outlook: Fiscal Years 2013 to 2023," Reports 43907, Congressional Budget Office.
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    Cited by:

    1. Leduc, Sylvain & Liu, Zheng, 2016. "Uncertainty shocks are aggregate demand shocks," Journal of Monetary Economics, Elsevier, vol. 82(C), pages 20-35.

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    Keywords

    Monetary policy; Employment;

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