Business fluctuations and cycles

• Fiscal and Monetary Stabilization Policy at the Zero Lower Bound: Consequences of Limited Foresight

  Staff Working Paper 2021-51 Michael Woodford, Yinxi Xie

  How do outcomes of monetary and fiscal stabilization policies at the zero lower bound change when decision makers have finite planning horizons in the economy? We explore the effects of limited foresight on policy tools and the interaction between monetary and fiscal policy.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Central bank research, Fiscal policy, Monetary policy JEL Code(s): E, E5, E52, E6, E63, E7

• Assessing Labour Market Slack for Monetary Policy

  Staff Discussion Paper 2021-15 Erik Ens, Laurence Savoie-Chabot, Kurt See, Shu Lin Wee

  Measuring labour market slack is essential for central banks: without full employment in the economy, inflation will not stay close to target. We propose a comprehensive approach to assessing labour market slack that reflects the complexity and diversity of the labour market.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Business fluctuations and cycles, Coronavirus disease (COVID-19), Econometric and statistical methods, Labour markets, Monetary policy JEL Code(s): E, E2, E24, J, J2, J21, J6

• Energy Efficiency and Fluctuations in CO2 Emissions

  Staff Working Paper 2021-47 Soojin Jo, Lilia Karnizova

  Carbon dioxide emissions have been commonly modelled as rising and falling with total output. Yet many factors, such as energy-efficiency improvements and shifts to cleaner energy, can break this relationship. We evaluate these factors using US data and find that changes in energy efficiency of consumption goods explain a significant proportion of emissions fluctuations. This finding also implies that models that omit energy efficiency likely overestimate the trade-off between environmental protection and economic performance.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Climate change, Econometric and statistical methods JEL Code(s): E, E3, E32, Q, Q4, Q43, Q5, Q50, Q55