The FOMC's New Individual Economic Projections and Macroeconomic Theories

This paper examines whether the individual economic projections made by Federal Open Market Committee’s (FOMC) policymakers are consistent with macroeconomic theories: Okun’s law, Phillips curve, and Taylor rule. By analyzing FOMC’s between 2007 2014, I find that they revealing a significantly negative relationship unemployment output growth projections. On other hand, inflation associated curve is much weaker more dispersed. The results on reaction function, rule, mixed: response of federal funds rate against gap projections—the deviation from target—is positive, whereas corresponding varies depending specification.