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

2012 / No. 35
Posted 2012-12-21

Can Repatriation Taxes Explain the Recent Increase in Cash Holdings?

by Juan M. Sánchez and Emircan Yurdagul

Repatriation taxes are unlikely to explain the rise in cash holdings of U.S. firms.

2012 / No. 34
Posted 2012-12-14

The Fiscal Cliff in Context

by Fernando M. Martin

Federal revenue is currently well below its postwar, pre-crisis average, while expenditure is well above, with both factors contributing to a large and persistent deficit. Under current law, the deficit situation would be quickly, if painfully, resolved, with the lion’s share resulting from increased tax revenue.

2012 / No. 33
Posted 2012-11-16

Quantitative Easing the Swedish Way

by Richard G. Anderson

Most central banks implement quantitative easing through asset purchases. Sweden took a different path.

2012 / No. 32
Posted 2012-11-09

Bouncing Back from the Great Recession: The United States Versus Europe

by Thomas F. Cooley, B. Ravikumar, and Peter Rupert

When the economic shocks that cause recessions in different economies have large common components, there may be lessons to be learned by studying how different economies respond.

2012 / No. 31
Posted 2012-10-26

How Can QE3 Affect the Housing Market?

by Carlos Garriga

The Fed’s concern for housing is a relatively new phenomenon. Historically, house price bubbles have been localized and affected only areas with rapid growth. The latest housing bust, however, was a nationwide problem with important ramifications for employment and economic activity.

2012 / No. 30
Posted 2012-10-12

Monetary Policy and the Expected Adjustment Path of Key Variables

by James Bullard

It is reasonable to believe that output, employment, and inflation will return to their long-run or targeted values slowly and steadily.

2012 / No. 29
Posted 2012-10-11

Prime and Subprime Hybrid Mortgages

by Rajdeep Sengupta and Yang Liu

Although similar in many ways, subprime hybrids were really different from prime hybrids.

2012 / No. 28
Posted 2012-10-05

Unemployment Insurance Fraud

by David L. Fuller, B. Ravikumar, and Yuzhe Zhang

Concealed Earnings fraud accounts for almost two-thirds of the total overpayments due to all fraud.

2012 / No. 27
Posted 2012-09-28

A Proposal for Improving Forward Guidance

by Leo Krippner and Daniel L. Thornton

Our approach offers several advantages over LSAPs as a financial mechanism to enhance forward guidance.

2012 / No. 26
Posted 2012-09-28

Verbal Guidance and the Efficacy of Forward Guidance

by Daniel L. Thornton

The behavior of term OIS rates following the three instances of FOMC verbal guidance provides no support for the efficacy of the FOMC’s forward guidance monetary policy.

2012 / No. 25
Posted 2012-09-14

How Positive Are Recent Employment and Labor Market Trends?

by Richard G. Anderson

Assessing the state of the economy requires estimates of trends in employment and the labor force. Large monthly fluctuations make it difficult to infer these from monthly data.

2012 / No. 24
Posted 2012-09-07

Can Trade Links Transmit a European Crisis?

by Jan Auerbach and Adrian Peralta-Alva

A GIIPS crisis wouldn't have too strong an effect on the U.S. economy, but an EU-wide crisis may be a serious concern.

2012 / No. 23
Posted 2012-09-04

The Efficacy of the FOMC’s Zero Interest Rate Policy

by Daniel L. Thornton

If investment spending is sufficiently insensitive to interest rate changes

and the effect of Fed actions on interest rates is sufficiently weak, the net effect of the persistent zero interest rate policy could be negative.

2012 / No. 22
Posted 2012-08-24

Driving to Recession and Recovery

by Richard G. Anderson

Vehicle sales have been a bright spot during the tepid rebound of the American economy from its 2009 trough.

2012 / No. 21
Posted 2012-08-10

Commodity Futures Index Trading and Spot Oil Prices

by William T. Gavin

Politicians, market participants, and economists have argued about

whether the increased trading induced by the growth of index funds over

the past decade is a cause of high commodity prices.

2012 / No. 20
Posted 2012-07-27

Coming to America: Covered Bonds?

by Brett W. Fawley and Luciana Juvenal

Ultimately, covered bonds and ABS are complements, not substitutes.

2012 / No. 19
Posted 2012-07-13

The Effects of Wealth Bubbles on Consumption

by Adrian Peralta-Alva

Changes in wealth, according to our simple calculations, can account for almost all of the observed consumption fluctuations of the past two decades.

2012 / No. 18
Posted 2012-07-12

The Efficacy of Monetary Policy: A Tale from Two Decades

by Daniel L. Thornton

Little difference in economic performance during the past two decades…is consistent with the theoretical and empirical evidence that monetary policy has no permanent effect on real variables.

2012 / No. 17
Posted 2012-07-06

Reducing the U.S. Deficit by Recycling Capital Inflows

by Yi Wen

The United States can simply recycle the financial capital inflows from China and re-export them back to China in the form of FDI. In so doing, the United States gains a substantially larger rate of return from FDI than China does from owning U.S. government bonds.

2012 / No. 16
Posted 2012-06-22

Firm Size and Employment Dynamics in Recessions and Recoveries

by Yu-Chien Kong and Juan M. Sánchez

Gross job losses for large firms were 60 percent higher in 2009:Q2 than in 2006:Q1, while those for medium and small firms were 42 percent and 12 percent higher, respectively.

2012 / No. 15
Posted 2012-06-08

Okun’s Law: A Meaningful Guide for Monetary Policy?

by Yi Wen and Mingyu Chen

Okun’s law can be a useful guide for monetary policy, but only if the natural rate of unemployment is properly measured.

2012 / No. 14
Posted 2012-06-01

Foreign Direct Investment in the United States During the Financial Crisis

by Silvio Contessi and Li Li

FDI flows from overseas parent companies contracted, but intracompany debt and reinvested earnings were affected much more than equity FDI.

2012 / No. 13
Posted 2012-05-18

The Relationships Among Changes in GDP, Employment, and Unemployment: This Time, It’s Different

by Juan M. Sánchez and Constanza S. Liborio

Recent changes in the relationships

among GDP growth, the unemployment

rate, and the employment-to-population

ratio cast doubt on using these relationships

to predict future unemployment.

2012 / No. 12
Posted 2012-05-09

Get by with a Little Help from My…Other Exports

by Silvio Contessi and Li Li

The European debt crisis could certainly affect the U.S. economy through other channels…but its direct impact on U.S. exports is likely to be small.

2012 / No. 11
Posted 2012-04-20

What Is Potential GDP and Why Does It Matter?

by William T. Gavin

One look at recent Congressional Budget Office data shows how much estimates of the output gap can change as time passes.

2012 / No. 10
Posted 2012-04-06

Home Equity and Household Income

by Bryan J. Noeth and Rajdeep Sengupta

During 1995-2007, home equity increased more than gross income for high-, low- and middle-income groups.

2012 / No. 9
Posted 2012-03-16

The FOMC: Transparency Achieved?

by Richard G. Anderson

Greater transparency is a means to better synchronize the public with policymakers and minimize the risks of undesirable economic outcomes.

2012 / No. 8
Posted 2012-03-12

Speculation in the Oil Market

by Luciana Juvenal and Ivan Petrella

Disentangling the true drivers of oil prices is a critical first step for allocating resources and designing good policy.

2012 / No. 7
Posted 2012-03-09

How Well Do Initial Claims Forecast Employment Growth Over the Business Cycle and Over Time?

by Kevin L. Kliesen and David C. Wheelock

Initial claims may now be useful for forecasting employment growth during periods of increasing economic activity.
2012 / No. 6
Posted 2012-03-02

The Mysterious Greek Yield Curve

by Christopher J. Neely

The hump in the Greek yield curve exists because the calculated yields assume that the bonds will pay off at their full value but market prices incorporate expectations that the payoff will be much lower.

2012 / No. 5
Posted 2012-02-17

Identifying Structural and Cyclical Shocks Across U.S. Regions

by David Andolfatto and Constanza S. Liborio

It is not clear how monetary policy might be used to reduce local unemployment rates where recruiting intensity is high but the right kind of worker is hard to find.

2012 / No. 4
Posted 2012-02-03

Quantitative Easing and Money Growth: Potential for Higher Inflation?

by Daniel L. Thornton

The enormous quantity of excess reserves can create an even greater expansion in the money supply.

2012 / No. 3
Posted 2012-02-01

Following the Fed with a News Tracker

by Michael W. McCracken

How should one conclude whether the data have come in stronger, weaker, or as expected?

2012 / No. 2
Posted 2012-01-20

Employment Dynamics During Economic Recoveries

by Constanza S. Liborio and Juan M. Sánchez

Employment turnover was significantly lower following the Great Recession than following the previous two recessions.

2012 / No. 1
Posted 2012-01-06

Fiscal Policy in the Great Recession and Lessons from the Past

by Fernando M. Martin

The recent behavior of key fiscal policy variables draws some parallels with the U.S. experience in the Civil War and the two world wars. A specific concern is the possibility of high inflation to finance the accumulated debt.


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