#2008-032A "The Great Inflation: Did The Shadow Know Better?"
by William Poole, Robert H. Rasche, and David C. Wheelock
September 2008

The Shadow Open Market Committee was formed in 1973 in response to rising inflation and the apparent unwillingness of U.S. policymakers to implement policies necessary to maintain price stability. More...

#2008-025A "Is Inflation an International Phenomenon?"
by Christopher J. Neely, and David E. Rapach
August 2008

Common shocks, similarities in central bank reaction functions, and international trade potentially produce common components in international inflation rates. More...

#2008-024A "The Loan Structure and Housing Tenure Decisions in an Equilibrium Model of Mortgage Choice"
by Matthew Chambers, Carlos Garriga, and Don Schlagenhauf
June 2008

The past decade has brought substantial innovations in the structure of mortgage loans. The objective of this paper is to understand how loan structure (terms of repayment and amortization schedule) affects (i) the borrower’s selection of a mortgage contract and (ii) the aggregate economy. More...

#2008-023A "Endogenous Productivity and Multiple Steady States"
by Levon Barseghyan, and Riccardo DiCecio
July 2008

We endogenize total factor productivity in a neoclassical model with increasing returns to scale. We obtain multiple steady-state equilibria with an arbitrarily small degree of increasing returns to scale. More...

#2008-021A "Institutional Causes of Macroeconomic Volatility"
by Levon Barseghyan, and Riccardo DiCecio
June 2008

In this paper we investigate the relation between the quality of institutions and macroeconomic volatility. Using instrumental variable regressions, we show that higher barriers to entry lead to higher volatility. More...

#2008-019A "Oil Crisis, Energy-Saving Technological Change and the Stock Market Crash of 1973-74"
by Sami Alpanda, and Adrian Peralta-Alva
June 2008

The market value of U.S. corporations was nearly halved following the oil crisis of October 1973. Real energy prices more than doubled by the end of the decade, increasing energy costs and spurring innovation in energy-saving technologies by corporations. This paper uses a neo-classical growth model to quantify the impact of the increase in energy prices on the market value of U.S. corporations. More...

#2008-018A "Real Interest Rate Persistence: Evidence and Implications"
by Christopher J. Neely, and David E. Rapach
June 2008

The real interest rate plays a central role in many important financial and macroeconomic models, including the consumption-based asset pricing model, neoclassical growth model, and models of the monetary transmission mechanism. We selectively survey the empirical literature that examines the time-series properties of real interest rates. More...

#2008-017A "A Macroeconomic Analysis of Obesity"
by Pere Gomis-Porqueras, and Adrian Peralta-Alva
June 2008

This paper tries to understand the underlying causes of the rapid increase in obesity rates over recent decades. In particular, we propose a dynamic general equilibrium model to derive the quantitative implications of a decline in the relative (monetary and time) cost of food prepared away from home on the caloric intake of the average American adult over the last forty years. More...

#2008-015A "Optimal Monetary and Fiscal Policies in a Search Theoretic Model of Monetary Exchange"
by Pere Gomis-Porqueras, and Adrian Peralta-Alva
June 2008

In this paper we study optimal monetary and fiscal policies, and the welfare costs of inflation, within the Lagos and Wright (2005) framework. Monetary equilibria may be inefficient without fiscal policy tools due to bargaining frictions. We show that subsidies in decentralized markets can be implemented to alleviate underproduction, while money is still essential. More...

#2008-014B "Excessive Demand and Boom-Bust Cycles"
by Patrick A. Pintus, and Yi Wen
June 2008
Revised June 2008

It has long been argued in the history of economic thought that boom-bust business cycles may be driven by over-investment (Tugan-Baranovsky, 1894; and Wicksell, 1906). But how is it possible to sustain over-investment without excessive savings? More...