Data and Code for: "From Deviations to Shortfalls: The Effects of the FOMC’s New Employment Objective"

We analyze the effects of a monetary policy that stabilizes "shortfalls" rather than"deviations" of employment from its maximum level. A shortfalls-stabilization ruleleads to expectations of more accommodative policy in expansions, raising average inflation and nominal rates. These effects are significantly amplified by incorporating history dependence in labor markets, a feature in labor-search frameworks. In a calibratedmodel of labor-search frictions and nominal rigidities, the adoption of a shortfalls ruleraises average inflation and nominal policy rates by 90 basis points, reduces the likelihoodof a binding zero lower bound, and implies a steeper and nonlinear Phillips curve.