What is MacroWeb?

In approximately May of 1994, the economy was experiencing a contractionary monetary policy. This monetary policy lasted around eight months, ending around February of 1995. During this time, the federal fund rate targets changed once by a positive one-quarter. The federal fund rates did not differ much from the target. The discount rate closely followed the federal fund rate and was changed only once by a positive one-quarter. Because of this, bond and stock prices were falling. The growth that was experienced in 1994 was extremely large so the Fed was trying to keep inflation from going out of control at the beginning of 1995. The economic situation in mid-1994 was extreme growth in the economy. Moving from the second to the third quarter in 1994, the economy appeared to be accelerating from a growth rate of around four percent to a growth rate of around five percent. Because of this, the interest rate continued to increase. There was also strong inventory investments in the second quarter of 1994 which led to a slowdown in the third quarter because a lot of the inventory that was accumulated was not being sold. At the end of this period, the Fed seemed to have control of inflation and began to back off of this policy in February of 1995.

Who is Dave Tufte?