Post on 16-Jun-2015
description
The Role of Policy in the Great Recession and the Weak Recovery
John B TaylorStanford University
EconomicsOne.com@EconomicsOne
AEA MeetingsJanuary 3, 2014
2
0
2
4
6
8
10
12
0
2
4
6
8
10
12
55 60 65 70 75 80 85 90 95 00 05 10
U.S. InflationPercent
Q1 1997 Fed funds rate = 5.5%
Q3 2003 Fed funds rate = 1.0%
4-quarter average
Q1 1968 Fed funds rate = 4.8%
Q2 1989 Fed fundsrate = 9.7%
Inflation Rate
3
0
2
4
6
8
10
12
0
2
4
6
8
10
12
55 60 65 70 75 80 85 90 95 00 05 10
U.S. InflationPercent
4-quarter average
4
0
2
4
6
8
10
12
0
2
4
6
8
10
12
55 60 65 70 75 80 85 90 95 00 05 10
U.S. InflationPercent
4-quarter average
Q1 1968 Fed funds rate = 4.8%
Q2 1989 Fed fundsrate = 9.7%
Inflation Rate
5
0
2
4
6
8
10
12
0
2
4
6
8
10
12
55 60 65 70 75 80 85 90 95 00 05 10
U.S. InflationPercent
Q1 1997 Fed funds rate = 5.5%
Q3 2003 Fed funds rate = 1.0%
4-quarter average
Q1 1968 Fed funds rate = 4.8%
Q2 1989 Fed fundsrate = 9.7%
Inflation Rate
6
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2000 2002 2004 2006 2008 2010 2012 2014
Billions of dollars
Liquidity operations / \9/11 2008 Panic
QE1
QE2
Original QE3
Reserve Balances
7
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2000 2002 2004 2006 2008 2010 2012 2014
Billions of dollars
Liquidity operations / \9/11 2008 Panic
QE1
QE2
Original QE3
Reserve Balances
8
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2000 2002 2004 2006 2008 2010 2012 2014
Billions of dollars
Liquidity operations / \9/11 2008 Panic
QE1
QE2
Original QE3
Reserve Balances
9
October 1
9/15Lehman
10/13 New TARP announced
10
120,000
140,000
160,000
180,000
200,000
220,000
240,000
20062007
2008
20092010
2011
2012
1980 1981
19821983 1984 1985
1979
Number of federal workersemployed in regulatory activites(exlcuding TSA employees)
11
12
13
0
2
4
6
8
10
12
1882 1893 1907 1913 1929 1973 1981 1990
Growth rate in first 8 quarters of a recoveryfrom previous recessions with a financial crisis
(identified by year recession began)
Average of previous8 recessions withfinancial crises
Recovery from2007-2009 recession