What is MacroWeb?

The federal funds rate target was changed nine times, falling 4 points from 11 3/4% in August 1984 to 7 3/4% in August 1985. The actual Federal Funds Rate was not significantly different than the target rates. The discount rate changed three times over this period, from 8 ½% to 7 ½ %.

There were no unusual events in the Federal Reserve. The Chairman was Paul A. Volcker and the Vice-Chairman was Preston Martin. Both Mr. Volcker and Mr. Martin were in before, during, and after this period. Membership of the Board of Governors of the Federal Reserve did change. In June 1984 member’s service ended (Nancy H. Teeters, Chicago). Another member began service in July 1984 (Martha R. Seger, Chicago). Lyle E. Gramley (Kansas City), resigned at the end of this expansionary period in September 1985.

The unemployment rate for 1984 was 7.5% and for 1985 was 7.2%. The unemployment rates before these periods were 9.6% for 1983 and 7.0% for 1986. The exchange rates began and ended with close numbers at the beginning and end of the expansionary period, but had fluctuations in between. Inflation grew between 3% and 4% during 1984 and 1985. Before this period began (in 1992 and 1993) inflation also grew between 3% and 4%. Real GDP growth was averaged at 1% during this time period. Before this period started the average growth rate was 2%. Previously, the GDP growth rate was growing, but when this period began the growth rate started falling. This could be a reason why an expansionary monetary policy was implemented.

Who is Dave Tufte?

Copyright, Naomi Miner, 2001.