Richard Clarida on FAIT, R-Star, and the Future of the Fed’s Framework
Macro Musings with David Beckworth
Criticism of Fed's Decision Delay
The Federal Reserve decided to delay liftoff until March 2022, despite signals showing liftoff would be appropriate by the third quarter of 2021. Critics often challenge the Fed's decisions without offering alternate scenarios. Real-time counterfactuals suggest a rules-based approach would have likely indicated liftoff in September 2021. Criticism focuses on what the last four years would have looked like if liftoff had been in September 2021. David Papal conducts counterfactual calculations based on policy rules, providing updates at every FOMC meeting using available data and Fed projections.
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