Here, we discuss six potential improvements to the Evans Rule that the Federal Reserve (Fed) should consider as it formulates its forward guidance strategy in response to the COVID-19 economic crisis.
State governments are on the front line of the COVID-19 pandemic and its economic fallout. The pace of the Federal response remains slow and local funding needs are still at risk of going unmet.
The Fed now recognizes that its interventions have helped to create millions of jobs and promoted a better equilibrium in the long run. A deeper shift to its reaction function is now needed.
Whether you’ve been converted to #FloorGLI or you stick to the Fed’s preferred methods for framing economic developments, the case for the Fed to cut 50 basis points at the June FOMC meeting is underrated.
The Federal Reserve should revise its framework to achieve at least a floor rate of gross labor income (GLI) growth, as opposed to simply tweaking its existing strategy of targeting consumer price inflation.
