Wednesday, August 1, 2012

Growth and the FEDFUNDS proxy

Using FRED's TB3MS as a proxy for the FEDFUNDS rate, this graph compares "percent change from year ago" values for the FEDFUNDS proxy and RGDP.

The numbers are not as close as they look: the red line's on the right scale. However, there does appear to be a high degree of similarity between economic growth and changes in the interest rate -- at least in the years before 1970.

(For much of the time shown on this graph, the actual rate of interest was so low that the changes are difficult to see. That's my reason for showing "percent change from year ago" for the interest rate.)

No comments: