Has the U.S. Economy Become Less Interest Rate Sensitive--论文代写范文精选

例如,2012年9月,联邦公开市场委员会宣布无限期的基础上提供额外的货币,只要劳动力市场的前景不大幅提高,这意味着货币政策和就业之间的直接传播,在这篇essay代写范文中，实证分析表明近几十年的货币政策变得不那么敏感。下面的essay代写范文进行详述。

Abstract
Over the past three decades, the U.S. economy seems to have become less responsive to monetary policy. Slow recoveries followed recessions in 1990-91, 2001, and 2007-09, a contrast to the much more rapid recoveries that followed pre-1990 recessions. These slow recoveries occurred despite sizeable monetary accommodation from the Federal Reserve, primarily through reductions in short-term interest rates. This article investigates shifts in the economy’s interest sensitivity by examining how total employment responds to changes in monetary policy. The Federal Open Market Committee (FOMC) has emphasized the important link between monetary policy and employment. 

For example, in September 2012, the FOMC announced its intention to provide additional monetary policy accommodation on an open-ended basis that would continue as long as “the outlook for the labor market does not improve substantially.” While this implies a direct transmission channel between monetary policy and employment, the empirical analysis in this article suggests aggregate employment has become less responsive to monetary policy in recent decades. The responsiveness of employment to monetary policy could have diminished for three reasons. 

First, the shift could be a result of changing behavior of monetary policy makers. Numerous researchers have characterized monetary policy in the past three decades as following an active (systematic) approach compared with the passive approach of the 1960s and 1970s (Clarida, Gali, and Gertler). Second, the shift could be due to innovations in financial markets and changes in governmental regulation of the banking industry. Monetary policy works by influencing market interest rates. Studies have suggested that developments in financial markets have weakened the relationship between interest rates and firm and consumer activities (Dynan, Elmerndorf, and Sichel). Third, the shift could be due to changes within and across industries. For example, changes in the relative sizes of industries may affect the overall interest sensitivity of the economy as interest-sensitive sectors, such as durable goods manufacturing and construction, have contracted, and less interest-sensitive sectors, such as the private serviceproviding sector, have expanded. 

Supply-side structural shifts occurring within individual industries over the past several decades, including changes in technology and capital intensity, may also affect interest sensitivity. And on the demand side, each industry’s customers may now respond differently to changes in monetary policy. This article finds that the key contributors to declining interest sensitivity are structural shifts within industries and a weaker transmission mechanism between short-term interest rates and the economy. In particular, two segments of the transmission channel appear to have operated with a longer lag since the mid-1980s: the transmission from shorter-term to longer-term rates and the transmission from longerterm rates to employment. 

Overall, the findings suggest the decline in the economy’s interest sensitivity is not due to changes in the conduct of monetary policy but rather to structural changes in industries and financial markets. Section I describes the interest rate channel of monetary transmission and the vector autoregression (VAR) model used to evaluate interest sensitivity. Section II assesses whether the declining interest sensitivity is specific to certain industries or more widespread. Section III uses the VAR and a structural model to examine the three possible sources of declining interest sensitivity.

The Declining Interest Rate Sensitivity of Employment 
Monetary policy can affect the economy through several channels. The most frequently mentioned channel, or transmission mechanism, is the interest rate channel. In this channel, an increase in monetary accommodation such as a cut in the target federal funds rate leads to a decline in real interest rates if prices are slow to adjust.1 Lower interest rates increase spending in interest-sensitive sectors. Next, the increase in interest-sensitive spending increases aggregate demand and ultimately output. Finally, to produce more output, firms increase employment. While the interest rate channel is easy to describe, its recent effectiveness is hard to confirm. Monetary policy accommodation following the three most recent recessions did not produce the robust economic recoveries of the 1970s and 1980s. 

Furthermore, when the FOMC tightened monetary policy in 2004, the interest rate transmission channel appeared broken. In a speech in February 2005, the Federal Reserve’s then-Chairman Alan Greenspan called the decline in long-term interest rates in the face of steady increases in the federal funds rate a “conundrum.” Evidence suggests the interest sensitivity of the U.S. economy has declined over the past 50 years. The challenge, however, is disentangling the interest rate channel of monetary policy from other factors affecting economic activity, such as changes in technology and the behavior of consumers and businesses. This section introduces a statistical model relating the federal funds rate to employment to identify shifts in the interest rate channel of monetary policy.

A statistical model of the interest rate channel of monetary policy 
The statistical model consists of four economic variables. The first two—the federal funds rate and total nonfarm payroll employment— are included to capture the transmission of monetary policy to employment. The third variable is the Chicago Fed National Activity Index (CFNAI), which is included to capture movements in the economy associated with the business cycle. The fourth variable is the price index for personal consumption expenditures excluding food and energy, which captures movements in inflation. By including a nominal interest rate and a price index, the model implicitly incorporates a real interest rate, a key element of the interest rate channel. 

The framework for the analysis is a VAR with a sample period of January 1960 to December 2007. Data from the post-2007 period are excluded because the federal funds rate has been constrained at the zero lower bound during this period.2 Following Christiano, Eichenbaum, and Evans, the VAR includes 12 lags of each variable.3 The estimates are computed using ordinary least squares, and 90 percent confidence intervals are computed using Bayesian methods (Sims and Zha). A detailed description of the model is provided in Appendix A. The interest rate channel of monetary policy is identified through an assumption on the timing by which the four variables interact with one another. Independent changes, or shocks, to the federal funds rate are assumed to have no effect on the other three variables in the first month in which they occur—instead, they affect the other variables with a lag. This assumption follows Milton Friedman’s famous dictum that monetary policy operates on the economy with “long and variable lags.”

Evidence of changes in the interest rate channel of monetary policy 
The statistical model shows the response of employment to a specific change in the federal funds rate over time. While the timing assumption precludes an employment response in the first month, the employment response in subsequent months captures the dynamic interactions among the model’s four variables stemming from the initial shift in interest rates. All other possible shocks to the model are eliminated to focus solely on the interest rate channel of monetary policy. To determine whether the interest rate channel of policy has diminished over time, the analysis is split into two subsamples. 

The first subsample is the pre-1985 period (from January 1960 to December 1984), and the second subsample is the post-1984 period (from January 1985 to December 2007).4 The selection of these subsamples is similar to Boivin and Giannoni, who found the behavior of monetary policy makers changed in the early to mid-1980s. The estimated responses of employment to changes in the federal funds rate indicate aggregate employment has become less interestsensitive in recent decades (Chart 1). In the pre-1985 period, an unexpected 25 basis point cut in the federal funds rate led to a steady increase in employment, with a cumulative increase of approximately 0.2 percent after two years. Based on the current size of nonfarm payrolls, this response would have added 255,000 jobs over a two-year period. 

In the post-1984 period, an identical cut in the federal funds rate had a statistically insignificant effect on employment. The estimates suggest the interest sensitivity of the economy decreased markedly from the pre- 1985 to the post-1984 period.5 The estimated responses of employment, however, are sensitive to the choice of sample period. To illustrate this sensitivity, the VAR analysis is run repeatedly across 20-year segments of the data beginning with a start period of January 1960 and concluding with a start period of December 1987. Chart 2 shows the cumulative responses of employment at 12 months and 24 months following an unexpected 25 basis point cut in the federal funds rate. The 24-month response of employment is strong when the 20-year sample period starts before 1962. Both the 12- and 24-month responses weaken as the start date moves through the early 1970s. Once the start date moves past 1982, the 24-month response falls to a level near zero while the 12-month response becomes negative. When the start date reaches 1985, both employment responses increase briefly before subsequently declining.（essay代写)

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