GDP numbers and tomorrow's inflation data will remain in focus with Bloomberg highlighting that the "
Fed model" suggests that there is still value in U.S.
One of the bubbles, real estate, well that was all the fault of "Ferbus." Ferbus, that's a
Fed model, "failed to show how a fall in home prices would ripple through the financial sector, freezing credit that was the life-blood of the economy" Are you crying?
The problem is that the
Fed model is "implicitly waiting for things to go back to Cynormal,'" Goolsbee said, but the Fed's model "defines normal as a mean reversion--what happens to the economy when house prices grew 8.5% a year," which is when consumers started spending and the economy grew.
Economic activity has picked up in the second quarter, with economic growth currently tracking 2.5 per cent according to the Atlanta
Fed model. Part of the pick-up in activity has been due to the recent slowdown in the appreciation of the US dollar, which had been a drag on growth last year.
This difference limits the ability to do historical real-time out-of-sample nowcasting exercises with the exact Cleveland
Fed model. But the results in Knotek and Zaman (2015) regarding the role of food inflation in making good nowcasts of headline inflation suggest that the nowcasting performance of the models should be highly comparable
* Ricardo Lagos, New York University and NBER, and Shengxing Zhang, London School of Economics, "Monetary Exchange in Over-the-Counter Markets: A Theory of Speculative Bubbles, the
Fed Model, and Self-Fulfilling Liquidity Crises"
For example, Chapter 2 discusses uses of the
FED model and charges of its lack of evidence without directly defining it.
The fasted model is therefore given by (5) and the
fed model by (6).
In fact, a lower real rate accounts for the bulk of the decrease in nominal interest rates (according to the Cleveland
Fed model).
According to the
FED model, the Treasury bond yields and the yield on earnings and dividends on stocks are either equal or highly correlated.
I keep telling the store manager to buy the clip
fed model as the outer tubes bulge at the seam when people attempt to load too many cartridges, causing the inner tube assembly to go flying off, sometimes into lakes, rivers or saltwater or mud, sand, gravel.