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2003 News Releases
For immediate release:
July 25, 2003
Media contact:
James Hoard
Phone: (214) 922-5307
e-mail: james.hoard@dal.frb.org
Dallas Fed Analyzes Monetary Policy, the Texas Economy
and Japan’s Economic Policy
DALLAS—As short-term interest rates fall toward
zero, it may be necessary for the Fed to rethink how it
conducts monetary policy, according to Dallas Fed economists
in the latest issue of the Federal Reserve Bank of Dallas
Southwest Economy. The Texas economy and Japan’s
economic policy are also topics for this edition.
In “Monetary Policy in a Zero-Interest-Rate Economy,” Dallas
Fed vice president Evan F. Koenig and senior economist
Jim Dolmas examine why conventional policy loses its effectiveness
at very low interest rates and review alternative tools,
ranging from the controversial to the mundane, for stimulating
the economy. The authors note that although low short-term
interest rates do not preclude Fed action to boost the
economy, none of the available alternatives to conventional
policy is problem-free.
In a second article, associate
economist D’Ann Petersen
notes that the Texas economy is warming up. Petersen writes
that midway through 2003, it appears the Texas economy
has bottomed out and is tilted toward expansion. Despite
this good news, improvement in the economy has been so
moderate that it still feels like a recession to many.
Overall job growth is lukewarm at best, with large numbers
of Texans still seeking work.
Petersen summarizes current activity in Texas' major economic
sectors and ranks the sectors based on the contribution
each is making to current economic growth. She concludes
that a more robust pickup in the Texas economy depends
on the strength of the U.S. recovery, because many of the
state's key sectors will benefit from stronger U.S. growth.
Finally, economist Jahyeong
Koo writes that the most notable sources of current economic
woe in Japan have been the
lack of policy coordination and a rigid labor market. In "Japanese
Economic Policy Conundrums,” Koo finds it unlikely
that an acute financial crisis looms in the near future,
especially in view of some positive signs for the Japanese
economy. Frozen labor markets are thawing, and the Bank
of Japan and the Ministry of Finance have begun to coordinate
economic policy. Koo concludes that Japan's economic future
depends on whether and how fast these positive changes
can revitalize the economy.
Find the July/August
issue of Southwest Economy online at www.dallasfed.org.
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