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Saturday, December 10, 2005

The Ex-Post Real Federal Funds Rate and Inflation

This is the ex-post real federal funds rate along with the core inflation rate. The real rate is calculated as the effective federal funds rate minus the year over year core inflation rate for the CPI:

Notice the policy response of the real federal funds rate in the early 1970s as it falls rapidly in response to deteriorating economic conditions brought about by oil price shocks. That didn't work out so well.

    Posted by on Saturday, December 10, 2005 at 05:02 PM in Economics, Monetary Policy | Permalink  TrackBack (0)  Comments (11)

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