To better isolate the association with the shift to remote work during the pandemic, Figure 3 controls for pre-pandemic trends by removing each industry’s average annualized productivity growth for 2006–2019 from its pandemic average. Hence, the vertical axis now captures the amount by which an industry’s pandemic productivity growth exceeded or fell short of its pre-pandemic pace. In Figure 3, the nearly flat blue line reflects that there is essentially no relationship between teleworkability and excess pandemic productivity growth. Although the association is still slightly positive, the relationship is much weaker than in Figure 2 and is not statistically significant.
- Date Posted:
- January 17, 2024
The Fed operates an “ample reserves” framework, but is not sure how to view non-reserve liabilities. Under the framework, the Fed primarily adjusts monetary policy through changes in short-term interest rates and provides the banking system with a bit more reserves than it actually needs. Reserves are just deposits commercial banks hold at the Fed. Although QT has been shrinking the overall size of the Fed’s balance sheet, the composition of the Fed’s liabilities is dynamic. Reserves can move into the RRP and into the TGA (and vice versa), so reserve levels today are around 2022 levels despite QT. Fed officials unanimously note that reserve levels are far above ample, but have diverged on how they view changes in the RRP. These differences have led to different potential QT timelines.