Matching Items (3)
Filtering by
- Creators: Department of Finance
Description
Is there a rules-based explanation for the low interest rates and quantitative easing undertaken by the Federal Reserve following the Global Financial Crisis? The question is important as it pertains to the ongoing debate between rules-based and discretionary monetary policy. It is also important in the search for a Taylor Rule modification that can fill in the gap left by the breakdown of the original rule following the GFC. This paper examines a recent Taylor Rule modification proposed from James Bullard, President of the St. Louis Federal Reserve, to see if this modification can explain Fed actions following the GFC. The modification is analyzed in the same two ways that the original Taylor Rule was evaluated. Namely, this paper tests the economic logic of the modification as well as examines how well the rule's policy rate prescription has fit the actual federal funds rate over time. The economic logic of the modification is examined during recessions. The fit between the rule's policy rate prescription and the actual federal funds rate is examined using r-squared. I conclude that by changing the neutral rate in a Taylor-type rule, Bullard provides a credible policy rule that helps explain Fed behavior following the GFC.
ContributorsCowan, Daniel Jonathan (Author) / McDowell, John (Thesis director) / Templeton, Len (Committee member) / McDaniel, Cara (Committee member) / Department of Finance (Contributor) / Department of Economics (Contributor) / Barrett, The Honors College (Contributor)
Created2018-05
Description
Abstract: Handling the multiple functions of monetary policy that protect the U.S. economy not only on a short term, but also long-term scale is a complicated responsibility assigned to Federal Reserve, in which their actions present a profound impact on consumer confidence towards financial markets and global economies. Specifically, one of the most important goals of the Federal Reserve is to mitigate the risk of the United States to enter a recession, while maintaining a balanced approach when making those policy decisions. In this thesis, we focus on the monetary policy of the Federal Reserve, particularly, their role in controlling interest rates to prevent recessionary sentiment in the current state of the economy. Since 2008, markets have been stronger and previous policies like Dodd-Frank have ensured that market collapses during the Great Recession do not repeat itself. Yet, fluctuations in the yield curve, polarizing investment views, and unsettled consumer confidence has pointed to another recession in the near future. In this case, we will look at the way the Fed has implemented short term policies to lower this risk in order to fight volatile markets, however, fluctuating interest rates has its consequences. The goal of this thesis is to analyze the various ways the Fed has managed interest rates in the past and present, and further, to offer a framework to serve as the most effective policy to combat volatility and recessionary sentiment in the U.S. economy.
ContributorsPatel, Dylan (Author) / Sacks, Jana (Thesis director) / Simonson, Mark (Committee member) / Economics Program in CLAS (Contributor) / Department of Finance (Contributor) / Barrett, The Honors College (Contributor)
Created2020-05
Description
This paper examines the decreasing affordability of single-family residential homes across the United States, with a special emphasis on Maricopa and Pinal County, Arizona. A historical analysis was conducted on the single-family residential property sector utilizing Federal Reserve and local government data. An affordability model is developed to demonstrate income thresholds needed to afford a median priced home in Maricopa and Pinal County, while a factor model is developed to predict the economic shifts needed to rectify this issue. My findings suggest that single-family homes have reached peak prices and are not affordable for the average American, based on median income. This housing crisis is the result of many economic factors, including but not limited to: below-average homebuilding, the lock-in effect, excessively cheap monetary policy, mortgages rates, and housing inflation. This is an unprecedented time in our nation’s history, placing tremendous pressure on the Federal Open Market Committee (FOMC) and Congress to tackle this issue. A closing recommendation will discuss the outlook for the single family residential sector.
ContributorsNunez, Christian (Author) / Koblenz, Blair (Thesis director) / Stapp, Mark (Committee member) / Barrett, The Honors College (Contributor) / Department of Finance (Contributor)
Created2024-05