David Reifschneider

Gauging the Ability of the FOMC to Respond to Future Recessions David Reifschneider

As this note will argue, however, such historical comparisons are misleading for several reasons, including their failure to take account of the demonstrated ability of the FOMC to provide accommodation through large-scale asset purchases and guidance about the future path of the federal funds rate. Given these problems with historical comparisons, this note instead focuses on a different method for gauging the ability of the Federal Reserve to respond to future recessions-model simulations. Specifically, we use FRB/US, a model of the U. S. economy.