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2002 / No. 20
Posted 2002-08-03

Was the Recent Economic Downturn a Recession?

by Jeremy M. Piger

The National Bureau of Economic Research (NBER) announced that the U.S. economy entered a recession in March 2001. Some have questioned whether the recent downturn really qualifies as a recession, as by some measures it has been quite mild. For example, the broadest measure of the economy’s output, real gross domestic product (GDP), experienced only a modest decline in the current recession. However, given that more timely measures of economic activity are available, the NBER gives relatively little weight to GDP in determining recession dates.

2002 / No. 19
Posted 2002-08-02

Ownership-Based Trade

by Michael R. Pakko

In the modern world of multinational corporations and international economic integration, simple movements of the flow of goods across borders are not the only way to measure international trade. The U.S. Department of Commerce has recently compiled statistics that measure international trade by ownership, rather than location of production.
2002 / No. 18
Posted 2002-08-01

Withering Dissents

by Daniel L. Thornton

At each FOMC meeting, the members vote on a policy directive, which is a statement about the desired course of monetary policy in the period between meetings. Member are free to dissent in favor of an alternative course for policy. While dissents have always been infrequent, there has been a decline in the number of dissents in recent years.
2002 / No. 17
Posted 2002-07-03

Expected Stock Market Returns and Business Investment

by Hui Guo

Business investment projects are unavoidably “lumpy” by nature, and firms have strong incentives to wait for the most profitable periods to invest in irreversible, large-scale projects. Do we see any evidence that business investment keys off expected stock market returns, and, if so, what is the current outlook for business investment?

2002 / No. 16
Posted 2002-07-02


by Patricia S. Pollard

Does the World Cup affect economic growth? Consider that growth in France was sluggish between 1994 and 1997, averaging 1.6 percent per year. But growth accelerated to 3.1 percent per year from 1998 to 2001, spurred by a rise in business investment and domestic demand. But was it also spurred by France winning the FIFA World Cup in 1998? As the Financial Times claimed, “the win inspired an optimism that boosted France's fledgling economic recovery."

2002 / No. 15
Posted 2002-07-01

The Condition of Banks: What Are Examiners Finding?

by R. Alton Gilbert and Sarosh R. Khan

While the CAMELS ratings assigned to individual banks are confidential, comparison of CAMELS ratings across all banks over time may provide useful information about the condition of U.S. banks as a whole.
2002 / No. 14
Posted 2002-06-02

Subject to Revision

by Abbigail Chiodo and Michael T. Owyang

Initial estimates garner quite a bit of attention in the financial world, but how well do they reflect the true state of the economy? How well do they predict final GDP?
2002 / No. 13
Posted 2002-06-01

How Expensive Are Stocks?

by Christopher J. Neely

Stocks now seem considerably less expensive when one compares their price with the exponential trend for earnings rather than with earnings of only the past year.
2002 / No. 12
Posted 2002-05-03


by Michael R. Pakko

Since 1973, when President Richard Nixon announced the goal of making the United States energy-independent by the end of that decade, the nation has steadily increased its energy imports.
2002 / No. 11
Posted 2002-05-02

International Travel: Double Trouble

by Cletus C. Coughlin

The number of passengers on U.S. airlines fell sharply between 2000 and 2001. For example, the number of revenue passengers enplaned on international flights declined from 55.5 million to approximately 52.7 million. This essay focuses on the reasons for this decline and provides some historical perspective by examining previous declines.
2002 / No. 10
Posted 2002-05-01

The Balance of Risks

by David C. Wheelock

In the past, whenever the FOMC had issued such a statement at one meeting, it had cut its funds rate target at (or before) the next scheduled meeting. Many analysts had begun to interpret this statement—that risks are weighted mainly toward conditions that may generate economic weakness—as almost a guarantee of a target cut at the next FOMC meeting.

2002 / No. 9
Posted 2002-04-02

Does a Mild Recession Imply a Weak Recovery?

by Kevin L. Kliesen and Daniel L. Thornton

Some analysts have suggested that there is a statistically reliable relationship between the severity of a recession and the strength of the subsequent recovery. Specifically, the suggestion is that severe recessions are followed by robust recoveries and that mild recessions are followed by relatively weak recoveries. Because the 2001 recession appears to have been the mildest during the post-WWII period, can we expect a below-average recovery?

2002 / No. 8
Posted 2002-04-01

Gambler’s Fallacy?

by Frank A. Schmid

Judged by historical data, the stock market is the growth optimal investment vehicle among standard types of U.S. securities. The capital of a buy-and-hold portfolio invested in a value-weighted index of large-company U.S. stocks (with capital gains and dividends reinvested) grew at an annualized inflation-adjusted rate of 7.43 percent between the end of 1925 and the end of 2001.
2002 / No. 7
Posted 2002-03-02

Putting Off Retirement: The Rise of the 401(k)

by Abbigail Chiodo and Michael T. Owyang

Economic theory suggests that one reason companies offer defined-benefit pensions is to induce workers to retire at a specific age. Does the rise of the 401(k) plan change the retirement incentives of workers?
2002 / No. 6
Posted 2002-03-01

Stock Market Volatility: Reading the Meter

by Hui Guo

After declining in the early 1990s, volatility started to rise in 1996 and since then has remained at remarkably high levels by postwar standards. Although unusual, the prolonged period of high volatility appears to be the result of a string of specific events.
2002 / No. 5
Posted 2002-02-03

Color Me Beige

by Howard J. Wall

Prior to every FOMC meeting, anecdotal survey information is compiled into what is known as the Beige Book. The information provided by the Beige Book adds value in two ways.
2002 / No. 4
Posted 2002-02-02

Argentina Agonistes

by Michael J. Dueker

The evolution of the Argentine economy—one step forward and two steps backward—satisfied no constituency: not domestic borrowers, labor unions, exporters, or foreign creditors.

2002 / No. 3
Posted 2002-02-01

Interpreting Monetary Growth

by Richard G. Anderson

Rapid money growth has led some analysts to express concern that the past two decades’ progress toward low, stable inflation may be at risk.
2002 / No. 2
Posted 2002-01-02


by James Bullard

Unfortunately, the world’s three largest economies appear to be slumping simultaneously. Is this a problem inhibiting U.S. economic recovery?
2002 / No. 1
Posted 2002-01-01

Getting “Real” About Monetary Policy

by Jeremy M. Piger

The FOMC lowered its target for the nominal federal funds rate by 450 basis points between January and November of 2001—one of the most aggressive policy actions ever undertaken by the Fed. However, some have suggested that monetary policy is still too tight.

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