Our economists engage in scholarly research and policy oriented analysis on a wide range of important issues. The center for microeconomic data is your one stop shop for the wide ranging microeconomic data, research and analysis from the new york fed. The governance culture reform hub is designed to foster discussion about corporate governance and the reform of culture and behavior in the financial services industry. Economy in a snapshot is a monthly presentation designed to give you a quick and accessible look at developments in the economy. The fed in recent years has issued an assessment of its economic outlook after each meeting of its policy making committee, but that assessment was missing from the statement after the most recent meeting in january.

Published on wednesday after a standard three week delay, makes clear that fed officials simply did not know what to say. Most policy makers thought that the extent to which tighter conditions would persist and what that might imply for the outlook were unclear, and they therefore judged it was premature to alter appreciably their assessment of the medium term economic outlook, the meeting account said. It was the first time since march 2003 that the fed declined to characterize the risks to its outlook, according to michael feroli, chief united states economist at jpmorgan chase. Wieland japan’s great economic experiment known as abenomics appears to be increasing the country’s immediate economic growth, accounting for 0.9 to 1.7 percentage points of the nation’s 2013 gdp growth, but its long term effects appear likely to be modest relative to what some had hoped, in part because japan’s new monetary policy is not yet fully credible. Bpea co editor justin wolfers discusses this paper named after prime minister shinzo abe, abenomics includes a monetary regime shift, fiscal stimulus measures, and structural reforms, also known as the ldquo three arrows. Rdquo in ldquo abenomics: preliminary analysis and outlook , rdquo authors joshua k.

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Wieland of the university of california at san diego examine the impact of those recent policies, with a focus on the most radical arrow, the monetary policy regime shift, because it has the most to teach other countries. It encompasses the bank of japan rsquo s new 2 percent inflation target hoped to be achieved by 2015 , which is accompanied by large scale asset purchases and a doubling of the monetary base also by 2015. An annual inflation rate of 2 percent would be the highest japan has had since 1991, just before japan rsquo s two decade long stagnation began from 1993 to 2012 annual japanese real gdp growth averaged just 0.8 percent, they note. /media/projects/bpea/spring 2014/data viz figure 3 hausmanwieland 3131401.png?h 638 amp w 600 la en /%% the research shows that the bank of japan is achieving its intermediate objective of higher expected inflation, but that the inflation target itself ldquo remains imperfectly credible, rdquo with long run inflation expectations below 1.5 percent. Thus the modest estimates of abenomics rsquo effects reflect in part that the bank of japan has not yet fully convinced the public that inflation will be two percent. Private sector economic forecasts suggest that abenomics will cause japanese gdp to be 3.1 percent higher than it otherwise would be by 2022, which the authors say is a large achievement for any policy, especially one with little or no obvious cost. They find that the welfare benefits of the policy are likely high, but that as of now, it looks unlikely to close the country rsquo s large output gap.

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The authors note the contrast between the modest forecast improvement for japanese output and japan rsquo s booming stock market, which has been seen as evidence of abenomics rsquo success: the nikkei 225 rose 77 percent and the broader topix index rose 70 percent from october 2012 to december 2013. Although an increase in stock prices is better than the alternative, at least historically, the stock market has been a poor predictor of dividend growth and is thus also likely to be a poor predictor of gdp growth, they write. It is possible that abenomics may work better than current estimates suggest if the bank of japan can give more credibility to its inflation target. Politics may partly explain this lack of credibility and could cause the bank of japan to have to reverse course, given that rising inflation could lower retiree incomes as well as the take home pay of current workers. Time will tell if credibility improves and abenomics outperforms current projections. In particular, hausman and wieland suggest several signals that would indicate whether japan is likely to beat current forecasts: inflation expectations mdash the output effects of abenomics could as much as double if inflation expectations rose all the way to the bank of japan rsquo s 2 percent target, according to their calculations. real wages mdash thus far, abenomics has lowered real wages as prices have risen more than nominal wages, but the medium run success of a higher inflation target may depend on this ending soon.

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Higher real wages would increase consumer confidence and reduce uncertainty about japan rsquo s commitment to higher inflation. consumption tax mdash the increase in japan rsquo s consumption tax from 5 to 8 percent next month is likely to cause uneven growth in the first half of 2014, but if the economy can weather the shock, it would be favorable news for abenomics, they find. structural reform mdash the largest long run unknown is what structural reforms will be enacted. If it becomes clearer that bold structural reforms will take place, the authors expect higher growth forecasts to be accompanied by lower inflation expectations. Ldquo the outcome of abenomics will determine whether japan experiences another lost decade or resumes healthy growth. As this was going to press, in march 2014, both the federal reserve and the european central bank were up against the zero lower bound, with inflation near one percent on both sides of the atlantic. Thus far, neither the federal reserve nor the european central bank has considered a radical regime shift.

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This statement presents the economic forecasts that underlie the budget estimates. The australian economy is in the midst of a major transformation, moving from growth led by investment in resources projects to broaderbased drivers of activity in the nonresources sectors. This is occurring at a time when the economy has generally been growing below its trend rate and the unemployment rate has been rising.

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During this transition, the economy is expected to continue to grow slightly below trend and the unemployment rate is expected to rise further to 6 188 per cent by mid2015. In this environment, the government is focused on implementing measures to support growth and jobs while putting in place lasting structural reforms to restore the nation's finances to a sustainable footing. The timing and composition of the new policy decisions mean that the faster pace of consolidation in this budget does not have a material impact on economic growth over the forecast period, relative to the 201314 midyear economic and fiscal outlook myefo. Leading indicators of dwelling investment are consistent with rising activity, while household consumption and retail trade outcomes have improved recently, consistent with gains in household wealth.

This is partly offset by weaker business investment intentions, particularly for nonresources sectors. Resources investment is still expected to detract significantly from growth through until at least 201516, as reflected in the outlook for investment in engineering construction which is forecast to decline by 13 per cent in 201415 and 20 189 per cent in 201516. Rising resources exports are only expected to partially offset the impact on growth.

Overall, real gdp is forecast to continue growing below trend at 2 189 per cent in 201415, before accelerating to neartrend growth of 3 per cent in 201516. The labour market has been subdued since late 2011, characterised by weak employment growth, a falling participation rate and a rising unemployment rate, although outcomes since the beginning of 2014 have been more positive. The unemployment rate is forecast to continue to edge higher, settling around 6 188 per cent, consistent with the outlook for real gdp growth. Consumer price inflation is expected to remain well contained, with moderate wage pressures and the removal of the carbon tax. The outlook for the global economy has improved gradually since the end of 2013, led by a pickup in activity in advanced economies, most notably the united states. While activity has moderated in emerging market economies, these economies are still expected to contribute nearly three quarters of global growth over the forecast period. Despite continued solid growth in china, prices for australia's key commodity exports have fallen sharply since the start of the year.