The article review
Rewriting Monetary Policy 101: What’s
the Fed’s Preferred Post-Crisis Approach
The article “Rewriting Monetary Policy 101: What’s the Fed’s Preferred Post-Crisis Approach to Raising Interest Rates?” has multiply authors: Jane E. Ihrig, Ellen E. Meade, and Gretchen C.Weinbach. This article was published in the Journal of Economic Perspectives—Volume 29, Number 4—Fall 2015—Pages 177–198.
This article is a primary source in which authors try to answer the relevant questions about the USA Monetary Policy. Nevertheless, the use points of view of other authors in order to prove their own statements. This article is also an original research with the elements of comments of other original researches. This article can be divided in the main parts: Introduction, Main Body and Conclusion. It is also contains a references list. In its turn, Main Body has four parts, each of them presents an answer to a certain question highlighted above each parts. These questions are:
How Did the Fed Implement Monetary Policy Prior to the Financial Crisis?
How Did the Financial Crisis Affect the Fed’s Operational Framework?
What Tools Could the Fed Use to Raise Interest Rates?
What Is the Fed’s Preferred Approach for Raising the Federal Funds Interest Rate?
The article is well-structured and all of these parts are very important for the whole context of the article.
The article presents both quantitative and qualitative researches. The aim of this article- as of any quantitative research- is to quantify the problem using mathematical and statistical data. This article contains 6 figures from different sources: the original authors working-outs and borrowed from other sources. At the same time, like in qualitative research, in this research historical and comparative methodologies used to support its ideas. Historical methodology is used when authors analyzed the state of the USA Monetary Policy before the crisis of 2008. When they compare that situation with those of the contemporary times – they resort to the comparative methodology. The main methodology used in this research is evaluation. The problem was divided into parts, than each part was fully evaluated and after the evaluations, certain conclusions were made.
All the sources of the article are reliable. In their research, the authors referred to different sources such as:
journals on economic (International Journal of Central Banking, Journal of Macroeconomic);
collection of papers from economic forums and meetings (Remarks at the 2015 U.S. Monetary Policy Forum, Finance and Economics Discussion Series 2015-010, Speech prepared for the Money Marketeers, Shadow Open Marke Committee Meeting, Brookings Papers on Economic Activity);
Governmental documents (Federal Reserve System, Board of Governors).
The types of reasoning employed in this article are inductive with a use of “examples, observations, and experiences to form conclusive propositions” (Rodriguez). What concerns types of evidence used, it is necessary to name logical and testimonial evidence. Logical evidence means that facts are reliable, scientifically verifiable and may be proved. In its turn, testimonial evidence is facts that illustrate opinions of other people. The example of logical evidence “The Fed has seen its assets rise from about $900 billion in 2006 to about $4.5 trillion today” (Journal of Economic Perspectives, 178). The example of testimonial evidence: “The Federal Reserve states that”. It is also necessary to mention that in this article there is no authors’ personal opinion about the problem. Such situation make the article more scientific with purely scientific facts and without assumptions of nonprofessional economists.
The data implemented in the article adequately support the conclusion drawn by the researchers. All the 6 figures and statistical data used in the article develop the theme and provides illustrative examples to authors’ theses. The conclusions made in this article can be treated as vision on the situation from authors’ point of view. Nevertheless, their conclusions are supported by reliable facts and statistics. This article made an invaluable contribution to the understanding of the topic of the USA Monetary Policy. All economic topics considered difficult to understand for those who does not poses knowledge in economics. The language of this article is scientific and full of economic terms. In this case, this article is not for wider audience. It will be useful for students of economics, employees of economic and banking sector, civil servants and bank managers. The possible audience of this article is not limited to US citizens but also may attract attentions of people from other countries especially from Europe. This is true, because American and European economies are сlosely connected. Nevertheless, this article contains many useful materials for those who are just interested in economics and monitor the global economic trends: factor affecting the federal funds market, tools used to help raise the federal funds interest, etc.
The main assumption that authors made in this article is that “the Federal Reserve conducts monetary policy in order to achieve its statutory mandate of maximum employment, stable prices, and moderate long-term interest rates as prescribed by the Congress” ” (Journal of Economic Perspectives, 179). On this assumption, the USA Monetary Policy is based. Authors of this article were logical. They accounted for all the presented data, did not switch from topic to topic, all conclusions were made successively.
In conclusion I would like to say that this article I would recommend for my classmates and professors on economic. The information presented in this article is relevant, useful and of a high interest nowadays. After reading this article, one will improve his knowledge of the USA Monetary Policy and its mechanism of actions, will delve into the topic and take a note for presented data that may be useful for further researches. Moreover, the text of the article contains links to different sources with possibility to learn more information on the topic.
References
Rodriguez, M. What are the Different Types of Reasoning?, The Bettersweet End, November 17, 2012, Web. 8 April 2016. https://bittersweetend.wordpress.com/2012/11/17/what-are-the-different-types-of-reasoning/
Ihrig, J., Meade, E., and Weinbach, G. Rewriting Monetary Policy 101: What’s the Fed’s Preferred Post-Crisis Approach to Raising Interest Rates?, Journal of Economic Perspectives, Volume 29, Number 4, Fall 2015, pages 177–198.
