The failure of forward guidance: Lessons from the pandemic recovery

Thomas L. Hogan

Southern Economic Journal, 2025, vol. 91, issue 4, 1265-1286

Abstract: This paper considers the effectiveness of the Federal Reserve's forward guidance in the 2020–2022 recovery from the Coronavirus pandemic. Forward guidance has become a common feature in macroeconomic policy models and a key tool of the Fed's monetary policy. I discuss three strategies for creating effective forward guidance: rules‐based policy, disclosing forecasts or projections, and statements by Fed officials. The Fed instituted some form of each of these strategies during the pandemic recovery. I find, however, that they were implemented in ways that made monetary policy less, rather than more, effective.

Date: 2025
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https://doi.org/10.1002/soej.12760

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Persistent link: https://EconPapers.repec.org/RePEc:wly:soecon:v:91:y:2025:i:4:p:1265-1286

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