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In "Where Should Liquidity be Injected during a Financial Crisis?" Ricardo Reis formalizes the notion of a liquidity shortage and then studies the tactical aspects of monetary policy when such a shortage arises.The huge difference between the recent behavior of output and employment reflects the unprecedented growth of productivity in 2009.In determining the date for the trough in economic activity, the committee will be deciding how to weigh output and employment in its definition of economic activity.

Standard macro models imply that the effect of fiscal policy on output is positive but relatively small.

That month was the exact peak of employment, but real GDP reached a slightly higher value in the second quarter of 2008.

Both measures plunged in late 2008 as the financial crisis took hold.

EF&G is the largest of the Bureau's research programs, with 149 Research Associates and 45 Faculty Research Fellows (as of February 2010).

At recent Program Meetings, the papers have included two on the effects of the small probability of large disasters: Francois Gourio, "Disasters Risk and Business Cycles" (15399); and Robert Barro, Emi Nakamura, Jon Steinsson, "Crises and Recoveries in an Empirical Model of Consumption Disasters." Housing economics has played a major role in the meetings, too, with: Veronica Guerrieri, Daniel Hartley, and Erik Hurst, "Endogenous Gentrification and Housing Price Dynamics"; Jack Favilukis, Sydney Ludvigson, and Stijn Van Nieuwerburgh, "The Macroeconomic Effects of Housing Wealth, Housing Finance, and Limited Risk-Sharing in General Equilibrium"; and James Kahn, "What Drives Housing Prices?

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