This article presents evidence on the relationship between price and financial stability. We construct an annual index of financial conditions for the United States, 1790--1997, and estimate the effect of aggregate price shocks on the index using a dynamic ordered probit model. We find that...

Many estimated macroeconomic models assume interest rate smoothing in the monetary policy equation. In practice, monetary policymakers adjust a target level for the federal funds rate by discrete increments. One often-neglected consequence of using a quarterly average of the daily federal funds...

Business recessions are notoriously hard to predict accurately, hence the quip that economists have predicted eight of the last five recessions. This article derives a six-month-ahead recession signal that reduces the number of false signals outside of recession, without impairing the ability to...

Empirical models of the federal funds rate almost uniformly use the quarterly or monthly average of the daily rates. One empirical question about the federal funds rate concerns the extent to which monetary policymakers smooth this interest rate. Under the hypothesis of rate smoothing,...

If price stability is to be sustained, monetary policy actions will inevitably resemble - in the long run - the prescriptions from nominal feedback rules, which are designed to achieve price stability. This property means that monetary policy might be well described by a nominal feedback rule in...