Most economists date the beginning of the Great Moderation as the mid-1980s. However, the Centennial Gateway Project uses a different convention for dating the various episodes of Federal Reserve history. In particular, since it defines the end of the Great Inflation episode as 1982, this becomes the beginning of the next episode—the Great Moderation.
“‘Constrained Discretion’ and Monetary Policy,” remarks by Governor Ben S. Bernanke, February 3, 2003, and “The Monetary Policy Debate Since October 1979: Lessons for Theory and Practice,” Marvin Goodfriend, Federal Reserve Bank of St. Louis Review, March/April 2005, Part 2, pp. 243-62.
In January 2012, the central tendency of FOMC participants’ estimates of the longer-run normal rate of unemployment was from 5.2 to 6 percent.
In late 2008 the FOMC began purchasing longer-term government debt, government agency debt, and agency-guaranteed mortgage-backed securities. The Committee has provided guidance about the future path of purchase in its post-meeting statements.
For example, on April 21, 2009, the Bank of Canada introduced forward guidance with the following statement: “With monetary policy now operating at the effective lower bound for the overnight policy rate, it is appropriate to provide more explicit guidance than is usual regarding its future path so as to influence rates at longer maturities.”
Personal correspondence with Todd Clark, vice president and economist, Federal Reserve Bank of Cleveland.
Bean, Charles, “The Great Moderation, the Great Panic and the Great Contraction,” Schumpeter Lecture at the Annual Congress of the European Economic Association, Barcelona, Spain, August 25, 2009.
Bernanke, Ben S., “The Great Moderation,” Remarks at the meetings of the Eastern Economic Association, Washington, DC, February 20, 2004.
Bernanke, Ben S., “A Century of U.S. Central Banking: Goals, Frameworks, Accountability,” Remarks at “The First 100 Years of the Federal Reserve: The Policy Record, Lessons Learned, and Prospects for the Future,” a conference sponsored by the National Bureau of Economic Research, Cambridge, MA, July 10, 2013.
Carlson, Mark, “A Brief History of the 1987 Stock Market Crash with a Discussion of the Federal Reserve Response,” Finance and Economics Discussion Series No. 2007-13, Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board, Washington, DC, November 2006.
Clark, Todd. “Is the Great Moderation Over? An Empirical Analysis,” Federal Reserve Bank of Kansas City Economic Review, Fourth Quarter (2009): 5-42.
Neely, Christopher J., “The Federal Reserve’s Response to the September 11 Attacks,” Federal Reserve Bank of St. Louis The Regional Economist, January 2002.
Sims, Christopher A., “Comment on ‘Disentangling the Channels of the 2007-09 Recession,’” Brookings Papers on Economic Activity, Spring 2012, 141-8.
Stock, James H., and Mark W. Watson. “Has the Business Cycle Changed?” Paper presented at the Federal Reserve Bank of Kansas City “Monetary Policy and Uncertainty: Adapting to a Changing Economy” symposium Jackson Hole, WY, August 28-30, 2003.
Stock, James H., and Mark W. Watson, “Disentangling the Channels of the 2007-09 Recession,” Brookings Papers on Economic Activity, Spring 2012, 81-156.
Written as of November 22, 2013. See disclaimer.