<<<-table 8 shows the rate of change in prices after a change in one of the three explanatory variables: federal debt, rdgp and federal reserve assets. this table shows the error correction term that says 73% of the discrepancy between long-term and short-term price equilibriums vanished within one calendar quarter. this supports the hypothesis that fed asset purchases readily accommodate government deficits. slow convergence of price levels levels after a deficit shock, suggests that fed monetary policy has little effect on the deficit. however, rapid convergence back to equilibrium by federal reserve assets and deficits show that the fed is ready and willing to accommodate growing federal budget deficits, as seen in table 8.
United States