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Shadow banks are defined as financial intermediaries that conduct functions of banking "without access to central bank liquidity or public sector credit guarantees." The size of the shadow banking sector was close to $20 trillion at its peak and shrank to about $15 trillion in 2010, making it at least as big as, if not bigger than, the traditional banking system. Given its size and role in the financial crisis, it would be useful to understand the mechanics of shadow banking. To do so, some basics of traditional banking need to be understood first.
The second in a series of videos on economic issues and the Federal Reserve focuses on gross domestic product, or GDP. Engaging graphics and straightforward examples help define total output and explain the difference between real and potential GDP.
By Andrew Zimbalist, Finance and Development, March 2010, 47(1), pp. 8-11.
The economic and noneconomic value of hosting a major event like the Olympic Games is complex and likely to vary from one situation to another. Simple conclusions are impossible to draw. The bidders for the next Summer and Winter Olympics in 2020 and 2022 would do well to steer clear of the inevitable Olympic hype and to take a long, hard, and sober look at their regions’ long-term development goals.
Federal Reserve Bank of St. Louis, Economic Education Podcast series, The Economic Lowdown, Volume 1, Episode 4 (8:18)
By Scott Wolla
This episode discusses three aspects of inflation: what it is, what causes it and how it is measured. The episode also addresses related topics such as deflation, disinflation and the role of the Federal Reserve in monitoring inflation.
This podcast introduces three topics in economics: choice, scarcity and opportunity cost. The Economic Lowdown Podcast is for high school students. The series covers topics in economics, banking and monetary policy. The brief videos use clear, simple language and graphic elements so that students can better visualize the economic concepts being presented. In the end, they will see how economic principles affect the choices they make in their everyday lives.
Although income inequality is seen as a social ill by many people, it is important to understand that income inequality has many economic benefits and is the result of, and not a detriment to, a well-functioning economy. The unconstrained opportunity for individuals to create value for society, which is reflected by their income, encourages innovation and entrepreneurship. Economic research has documented a positive correlation between entrepreneurship/innovation and overall economic growth. Sound economic policy to reduce poverty would lift those out of poverty (increase their productivity) while not reducing the well-being of wealthier individuals. Tools to implement such a policy include investments in education and job training.
In this edition, the Classroom Economist offers a close look at money—its definition, the problem it solves,
what fiat money accomplishes, and how the Yapese used giant wheels of stone for money.
Gross domestic product (GDP) and gross domestic income (GDI) are the two featured measures of the National Income and Product Accounts (NIPAs). Measuring the accuracy of national accounts estimates is a long-standing challenge for three main reasons. One, the early GDP and GDI estimates are based on partial data. Two, the source data come from a mix of survey, tax, and other business and administrative data; these source data are subject to a mix of sampling and nonsampling errors. Three, the national accounts are regularly revised to reflect the changes in the economic concepts and methods necessary for these accounts to provide a picture of the evolving U.S. economy that is relevant and accurate for today’s economy.
Many analysts fear that a rising saving rate could hamper the economic recovery.
Federal Reserve Bank of St. Louis Economic Education, Online Course for Teachers and Students
By Scott Wolla
In this course, superhero Jack of All Trades and his sidekick Andy are confronted by a villain that threatens to disrupt society and rob the world of the certainty people have come to expect. And this dastardly villain is…Inflation. Jack and Andy time travel to the period known as The Great Inflation to discover the truth about inflation. With the help of Dr. Equilibrium, professor of economics, they learn that inflation is the result of too much money chasing too few goods and that the Federal Reserve System plays a key role in maintaining stable prices.
One look at recent Congressional Budget Office data shows how much estimates of the output gap can change as time passes.
By Emmons, William R. / Neely, Christopher J.
Some people complain they are being gouged at the pump, but raising prices now in anticipation of what might happen helps ensure an adequate gas supply.
Okun’s law describes one of the most famous empirical relationships in macroeconomics. Proposed by economist Arthur Okun in 1962, it basically states that if GDP grows rapidly the unemployment rate declines, if growth is very low or negative the unemployment rate rises, and if growth equals potential the unemployment rate remains unchanged.
Updated April 2012
By Federal Reserve Bank of St. Louis Economic Education and Library Staff
A lesson on measures of inflation to be used in conjunction with FRED® (Federal Reserve Economic Data), a database of over 55,000 U.S. and international economic time series.
Is a two-day, online course produced by the Federal Reserve Bank of St. Louis. It is designed to help students in civics, economics and other social studies classes grasp the challenging economic content—and to explain why these topics are important for citizens to understand.
Section One covers:
- the definition of Gross Domestic Product (GDP)
- the components of GDP
- per capita GDP
Section Two covers:
- real vs. nominal GDP
- levels vs. percentage change
- importance of a growing economy
- trend growth rate
- uses for GDP data
- automatic stabilizers
The cost of a college education continues to rise.The Project on Student Debt estimates that a typical 2009 college graduate accumulated $24,000 in student loan debt. Is a college degree worth the cost? This article provides data on college versus high school graduates' earnings and employment prospects.
By Scott Wolla. Federal Reserve Bank of St. Louis, Feducation Videocast series.
How are the money supply and inflation related? And what does the Federal Reserve have to do with this relationship? This video reviews the functions of money, features an interactive auction that demonstrates the relationship between the money supply and inflation, then utilizes a simple equation to show how changes in the money supply affect the economy. The video also describes how the Fed uses monetary policy to achieve its dual mandate of maximum employment and price stability.
The seventh episode of the podcast series discusses the supply side of the market – the law of supply, slope of the curve and the difference between a change in supply and a change in quantity supplied.
