Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

Yes, Dave. So there is a lot written about nonlinearity and macroeconomic dynamics. There are these regime-switching econometric models characterizing real data. There is the 0.3 thing—I think it is 0.3— that people talk about regarding the unemployment rate: It doesn’t go up by more than 0.3 without going up by a ton. You guys are surely aware of those econometric properties or those methods of characterizing the data, and while your econometric models may be strictly linear in some sense, what you give us is your best judgment, right? Am I to take your forecast as reflecting the probabilities of nonlinear dynamics or not? If it doesn’t, are nonlinear dynamics something you believe in, that you think we should internally adjust your forecast with, or not?

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