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Economic Brief

Aug. 6, 2019

Richmond Fed Research Finds Monetary Moves Becoming Less Potent

The Richmond Fed’s latest Economic Brief finds that inflation and unemployment have become less responsive to monetary policy in the United States and Europe since the early 1980s.

The authors of the Brief analyze quarterly data for key economic variables from 1971 through 2013 in the United States, the United Kingdom and the Eurozone. They conclude that these variables tend to be more interconnected during periods of financial distress, but this conclusion does not suggest whether the increased connectedness is a cause or a symptom of recessions. In the data, monetary policy actions and responses to monetary policy actions correlate closely among the three regions, with the United States and the United Kingdom being the most similar.

The Richmond Fed’s Economic Brief series provides web-exclusive essays on economic issues and trends. Sign up to receive an email notification when a new essay is posted.

As part of our nation’s central bank, the Richmond Fed is one of 12 regional Reserve Banks working together with the Board of Governors to support a healthy economy and deliver on our mission to foster economic stability and strength. We connect with community and business leaders across the Fifth Federal Reserve District — including the Carolinas, District of Columbia, Maryland, Virginia, and most of West Virginia — to monitor economic conditions, address issues facing our communities, and share this information with monetary and financial policymakers. We also work with banks to ensure they are operating safely and soundly, supply financial institutions with currency that’s fit for distribution, and provide a safe and efficient way to transfer funds through our nation’s payments system.


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Jim Strader (804) 697-8956 (804) 332-0207 (mobile)