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These brief essays delve into the economic issues of the day for a generally informed readership.

2009 / No. 47
Posted 2009-12-18

The Case for “Inflation First” Monetary Policy

by Daniel L. Thornton

Policymakers should not think of price stability and economic stability as competing objectives but as complements—the best way to achieve the latter is to be firmly committed to achieving the former.
2009 / No. 46
Posted 2009-12-17

Personal Saving and Economic Growth

by Daniel L. Thornton

Many analysts fear that a rising saving rate could hamper the economic recovery.
2009 / No. 45
Posted 2009-12-16

Has the Recent Real Estate Bubble Biased the Output Gap?

by Chanont Banternghansa and Adrian Peralta-Alva

We offer a word of caution to policymakers: Policies based on point estimates of the output gap may not rest on solid ground.
2009 / No. 44
Posted 2009-11-12

Vacancies and Unemployment

by Riccardo DiCecio and Charles S. Gascon

Expansions are usually associated with plentiful vacancies and a low number of unemployed workers. During recessions the unemployment pool swells while employers seek to fill fewer job openings.
2009 / No. 43
Posted 2009-10-30

International Trade Integration and Business Cycle Synchronization

by Luciana Juvenal

The changes in international trade and finance are linked to the changes in business cycle correlations.
2009 / No. 42
Posted 2009-10-29

Home Prices: A Case for Cautious Optimism

by Rajdeep Sengupta and Yu Man Tam

Many analysts are cautiously optimistic that the house price decline has ended, citing that house prices increased in June and July. There are several reasons for being cautious.
2009 / No. 41
Posted 2009-10-22

Monetary Policy Stance: The View from Consumption Spending

by William T. Gavin

We should expect a third business cycle in succession in which the real federal funds rate reaches its trough well after the economy begins to recover.
2009 / No. 40
Posted 2009-09-21

Is the Financial Crisis Over? A Yield Spread Perspective

by Massimo Guidolin and Yu Man Tam

Our finding is consistent with some recent, substantial volatility in the U.S. corporate bond market and leaves open a possibility that additional, future shocks to default premia may have long-lived effects.
2009 / No. 39
Posted 2009-09-14

The Financial Services Sector: Boom and Recession

by Richard G. Anderson

The fluctuations in home construction (and prices) have been widely discussed, but swings in the financial services sector also are important elements of economic activity within U.S. states.
2009 / No. 38
Posted 2009-08-26

How Not to Reduce Excess Reserves

by David C. Wheelock

Experience demonstrates that raising reserve requirements is surely not the best way to eliminate excess reserves.
2009 / No. 37
Posted 2009-08-17

Would Quantitative Easing Sooner Have Tempered the Financial Crisis and Economic Recession?

by Daniel L. Thornton

Would financial markets and the economy have been better off if the Fed pursued a policy of quantitative easing sooner?
2009 / No. 36
Posted 2009-08-06

Commercial Bank Lending Data during the Crisis: Handle with Care

by Silvio Contessi and Hoda El-Ghazaly

Caution is necessary when making inferences based solely on aggregate loans data.
2009 / No. 35
Posted 2009-08-04

World Trade: Pirated by the Downturn

by Cletus C. Coughlin

A post-World War II record decline in world trade is likely in 2009.
2009 / No. 34
Posted 2009-08-03

Examining the Housing Crisis by Home Price Tier

by Michelle T. Armesto and Carlos Garriga

When broken down by price level—high-priced, mid-priced, and lower-priced homes—the housing boom and subsequent implosion affected each tier differently.
2009 / No. 33
Posted 2009-07-09

U.S. Migration Over the Life Cycle

by Rubén Hernández-Murillo

Migration incentives for working-age and retired individuals are quite different and are sensitive to the level of human capital within the family.
2009 / No. 32
Posted 2009-07-08

What Caused Long-Term Rates to Rise?

by Daniel L. Thornton

The marked rise in longer-term rates is reflected in a rise in both real rates and expectations for inflation.
2009 / No. 31
Posted 2009-07-06

Asset Prices and Their Effect on the U.S. Trade Balance

by Luciana Juvenal

Pronounced cycles and booms in asset prices have usually accompanied widening trade deficits.
2009 / No. 30
Posted 2009-07-01

Negating the Inflation Potential of the Fed's Lending Programs

by Daniel L. Thornton

The sale of typical securities would force the Fed to contract its lending programs, whereas the sale of Fed bills would not.
2009 / No. 29
Posted 2009-06-18

Uncertainty About When the Fed Will Raise Interest Rates

by Michael W. McCracken

It’s hard to make a firm prediction as to when the Fed will raise interest rates.
2009 / No. 28
Posted 2009-06-12

Dating the End of the Recession: Evaluating the Economic Indicators

by Kevin L. Kliesen

Economists focus on certain indicators that might signal when one business expansion ends and the next one begins.
2009 / No. 27
Posted 2009-06-10

The U.S. Financial Sector's Value Added: Trends Now and Then

by Chanont Banternghansa and Adrian Peralta-Alva

The U.S. financial growth between 1995 and 2006 certainly translated into record-high shareholder returns. Labor compensation returns were also dramatically high at the onset of the current crisis.
2009 / No. 26
Posted 2009-05-22

Taming the Long-Term Spreads

by Massimo Guidolin and Yu Man Tam

Given the size of the underlying markets, cutting the cost of capital to firms and households by reducing the yields required on long-term corporate bonds and mortgages is a key policy objective.
2009 / No. 25
Posted 2009-05-18

The Effect of the Fed’s Purchase of Long-Term Treasuries on the Yield Curve

by Daniel L. Thornton

Chairman Bernanke seems to suggest that the purchase of a large quantity of longer-term government securities might reduce longer-term rates.
2009 / No. 24
Posted 2009-05-11

What the Libor-OIS Spread Says

by Daniel L. Thornton

“Libor-OIS remains a barometer of fears of bank insolvency.”
2009 / No. 23
Posted 2009-05-06

Lending Standards in Mortgage Markets

by Carlos Garriga

While the data seem to suggest that lenders did the right thing by tightening standards and increasing denials...the ongoing financial crisis suggests that they did not tighten them enough.
2009 / No. 22
Posted 2009-05-05

The Global Recession

by Craig P. Aubuchon and David C. Wheelock

...an unusually high percentage of the world’s large countries and major U.S. trading partners are currently experiencing a recession.
2009 / No. 21
Posted 2009-04-24

Can Monetary Policy Affect GDP Growth?

by Yi Wen

We merely want to see whether, historically, fast growth of the monetary base has been associated with faster growth of real output.
2009 / No. 20
Posted 2009-04-15

What’s Under the TARP?

by Craig P. Aubuchon

The Financial Stability Plan, initiated under the belief that “[t]here is more risk and greater cost in gradualism than in aggressive action,” has several features.
2009 / No. 19
Posted 2009-04-14

Recession or Depression? Part II

by Kevin L. Kliesen

“The economic performance during the current recession is sharply different from the 1929-33 episode in most key respects, but not in all...”
2009 / No. 18
Posted 2009-04-07

The Success of the CPFF?

by Richard G. Anderson

“The CPFF is regarded as a hallmark of success among credit-easing policies.”
2009 / No. 17
Posted 2009-04-06

Household Retrenchment

by Riccardo DiCecio and Charles S. Gascon

“Economic misfortunes have caused many to reassess their finances, triggering sharp reversals in borrowing and spending habits.”
2009 / No. 16
Posted 2009-04-03

British Banking in Crisis

by Richard G. Anderson and Andrew W. Mullineux

“The root of the problems of the British banks is the same as that of American banks: shaky mortgage-backed securities.”
2009 / No. 15
Posted 2009-03-23

Recession or Depression?

by Kevin L. Kliesen

“Although the current recession may… be the longest in the postwar period, it is by no means certain that it will be the deepest, but it’s increasingly looking that way.”
2009 / No. 14
Posted 2009-03-18

Bankers Acceptances and Unconventional Monetary Policy: FAQs

by Richard G. Anderson

“Here, I answer selected questions asked by readers of my earlier essay.”
2009 / No. 13
Posted 2009-03-10

Federal Reserve Assets: Understanding the Pieces of the Pie

by Charles S. Gascon

“One way to examine the composition of assets on the Fed’s balance sheet is to group them according to the objectives of the programs used to acquire them.”
2009 / No. 12
Posted 2009-03-06

Recent Movements in the Baltic Dry Index

by Rajdeep Sengupta and Yu Man Tam

“The BDI can be viewed as the equilibrium price of shipping raw materials, determined by the supply of cargo ships and the demand for transporting raw materials by ship.”
2009 / No. 11
Posted 2009-02-19

Putting the Financial Crisis and Lending Activity in a Broader Context

by Kevin L. Kliesen

“Banks typically tighten credit standards and/or loan terms as the economy weakens and nonperforming loans increase. But an adverse shock from outside the financial sector can be just as important—such as a sharp increase in oil prices or a plunge in house prices.”
2009 / No. 10
Posted 2009-02-18

Resolving a Banking Crisis, the Nordic Way

by Richard G. Anderson

“The Nordic bank resolution is widely regarded as among the most successful in history.”
2009 / No. 9
Posted 2009-02-06

How Accurate Are Forecasts in a Recession?

by Michael W. McCracken

“On average, professional forecasters have tended to be less accurate when the U.S. economy was in recession.”
2009 / No. 8
Posted 2009-01-26

Markets Worry More about Sovereign Debt

by Christopher J. Neely

"Market perceptions of sovereign default risk have risen recently."
2009 / No. 7
Posted 2009-01-23

Bagehot on the Financial Crises of 1825…and 2008

by Richard G. Anderson

“Bagehot’s principal message is that the first task of a central bank during a financial panic is to end the panic.”
2009 / No. 6
Posted 2009-01-15

The Fed’s Response to the Credit Crunch

by Craig P. Aubuchon

“The Federal Reserve Board has used Section 13(3) of the Federal Reserve Act to create several new lending facilities to address the ongoing strains in the credit market.”
2009 / No. 5
Posted 2009-01-09

Bankers’ Acceptances: Yesterday’s Instrument to Restart Today’s Credit Markets?

by Richard G. Anderson

“A bankers’ acceptance is created when a bank agrees to ‘accept,’ or guarantee, a future payment between two firms.”
2009 / No. 4
Posted 2009-01-08

The Current Recession: How Bad Is It?

by Charles S. Gascon

“In a recession, the severity of the decline is just as relevant as the duration of the recession.”
2009 / No. 3
Posted 2009-01-07

Gross Credit Flows of U.S. Commercial Banks until 2008:Q3

by Silvio Contessi and Johanna L. Francis

“The first two quarters of 2008 show sharply decreased expansion and increased contraction, followed by a third-quarter rebound.”
2009 / No. 2
Posted 2009-01-06

A Perspective on the Current Recession: It’s Not the “Worst Case” Yet

by Daniel L. Thornton

“The current recession actually looks relatively mild, so far, when we look at the decline in industrial production.”
2009 / No. 1
Posted 2009-01-05

Is There Less Agreement About Inflation?

by Daniel L. Thornton

“Agreement about current-year CPI inflation for 2008 began to deteriorate about midyear.”

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