Distinguished Speaker Series: Credible Forward Guidance | Asian Development Bank

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Distinguished Speaker Series: Credible Forward Guidance

Event | 15 February 2019 ADBI, Tokyo, Japan
Speaker Details

Speaker: Taisuke Nakata
Affiliation: Board of Governors of the Federal Reserve System
Time: 13:00–14:00

Background

This seminar will feature Dr Taisuke Nakata of the United States Federal Reserve System Board of Governors. Dr Nakata’s research analyzes the optimal time-consistent forward guidance policies in a sticky-price model with an effective lower bound (ELB) constraint on nominal interest rates.

Lower-for-longer policies, while effective in stimulating the economy at the ELB, are potentially time-inconsistent, as the associated temporary overheating of the economy in the aftermath of a recession is undesirable ex post. However, if reneging on a lower-for-longer promise leads to loss of reputation and prevents a central bank from effectively using lower-for-longer strategies in future recessions, these strategies can be time-consistent.

Dr Nakata finds that even without an explicit commitment technology, a central bank can still credibly keep the policy rate at the ELB for an extended period, though not as long as with an explicit commitment technology, and meaningfully mitigate the adverse effects of the ELB constraint on economy activity.

About the Speaker

Taisuke Nakata is a Principal Economist in the Division of Research and Statistics at the Board of Governors of the United States Federal Reserve System. Originally from Japan, he received a BA in economics from the University of Chicago in 2003 and a PhD in economics from New York University in 2012. From 2003-2007, he was an assistant economist at the United States Federal Reserve Bank of Kansas City.

Dr Nakata has provided model-based analyses to the Federal Reserve’s Federal Open Market Committee and senior officials on a wide range of topics. His main areas of research are macroeconomics and monetary policy. His current research investigates how to best conduct monetary policy in the era of low neutral interest rates.

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