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

2013 / No. 34
Posted 2013-12-20

The Role of Total Hours Worked in Japan’s (Lack of) GDP Growth

by Juan M. Sánchez and Emircan Yurdagul

The diverging paths of total hours worked account for most of the difference in GDP growth between Japan and the United States.

2013 / No. 33
Posted 2013-12-06

U.S. Inflation and Its Components

by Fernando M. Martin

The short-term volatility of the price of nondurable goods, especially energy, may explain why inflation occasionally appears off target. The recent decline in average inflation may be partially attributable to the ongoing reduction in the cost of durable goods and a significant deceleration in the inflation rate of services expenditures.

2013 / No. 32
Posted 2013-11-22

The Recent Boom in House Prices: Why Is This Time Different?

by Carlos Garriga

The current housing boom is the first nationwide boom since the postwar era not driven by increased demand for owner-occupied housing.

2013 / No. 31
Posted 2013-11-15

Bank vs. Bond Financing Over the Business Cycle

by Silvio Contessi, Li Li, and Katheryn Russ

While bank lending contracts during the typical recession, liquidity in bond markets may not.

2013 / No. 30
Posted 2013-10-25

The Size and Growth of Businesses Started During the Financial Crisis

by Juan M. Sánchez

Firms started during recessions, especially those started in 2008, have grown less during the first 3 years of their life than those started in non-recession years.

2013 / No. 29
Posted 2013-10-17

Is Nominal GDP Targeting a Rule Policymakers Could Accept?

by Daniel L. Thornton

The economy is too complex to be summarized by a single rule. Economies are constantly changing in ways difficult to explain after the fact and nearly impossible to predict. Consequently, policymakers seem destined to rely on discretion rather than rules.

2013 / No. 28
Posted 2013-10-16

Forward Guidance 101B: A Roadmap of the International Experience

by Silvio Contessi and Li Li

The Federal Reserve is just one of several central banks that have adopted forward guidance since the beginning of the financial crisis and in an environment of near-zero policy rates (zero lower bound).

2013 / No. 27
Posted 2013-09-25

Major U.S. Trading Partners Before and After the Great Recession

by Alexander Monge-Naranjo

One of the most interesting features of the Great Recession is that—contrary to other global recessions—it was mostly a rich-country phenomenon.

2013 / No. 26
Posted 2013-09-20

Current Risks from Exports and Foreign Sales

by Silvio Contessi and Li Li

Consistent with national data, foreign sales of affiliates of U.S. multinational firms headquartered in the Eighth Federal Reserve District are larger for Europe and the Asia Pacific region—not Mexico and Canada, the major U.S. trading partners.

2013 / No. 25
Posted 2013-09-10

Forward Guidance 101A: A Roadmap of the U.S. Experience

by Silvio Contessi and Li Li

Forward guidance consists of communicating to the public the stance of monetary policy that is expected to prevail in the future.

2013 / No. 24
Posted 2013-08-20

Does the Economy Need More Spending Now?

by Daniel L. Thornton

Economic growth requires more labor, more and better capital, and up-to date technology—what might be collectively referred to as social infrastructure— to support entrepreneurship and efficient markets. It is hardly surprising that periods of more-rapid economic growth include invention, innovation, new methods of production (e.g., the assembly line, robotics), and entrepreneurship.

2013 / No. 23
Posted 2013-08-16

Okun's Law in Recession and Recovery

by Michael T. Owyang and E. Katarina Vermann

The relationship between unemployment and output growth changes during recoveries.

2013 / No. 22
Posted 2013-08-13

Mind the Regional Output Gap

by Carlos Garriga

This national outlook masks significant variation among states in their paths to recovery.

2013 / No. 21
Posted 2013-08-02

A Perspective on Possible Fed Exit Strategies

by Daniel L. Thornton

As the IOER rate increases, less money will be given to the Treasury and more will be given to banks for the sole purpose of holding excess reserves (i.e., idle deposits at Federal Reserve Banks).

2013 / No. 20
Posted 2013-07-26

The Mechanics Behind Manufacturing Job Losses

by William T. Gavin

Manufacturing jobs as a percentage

of private employment has fallen by half—from about 21 percent in 1987 to less than 11 percent today. Yet, manufacturing output as a percentage of private output is cyclical with a fairly flat trend averaging about 14 percent.

2013 / No. 19
Posted 2013-07-12

Japan as a Role Model?

by Richard G. Anderson

Some analysts, noting Japan's continued slow deflation, assert that Japan is trapped in a slow-growth, deflationary equilibrium. Former Governor Shirakawa argued that Japan had "gotten out"—at least when judged by the growth of real GDP.

2013 / No. 18
Posted 2013-06-28

Unemployment Benefits: How Much Money Goes Unclaimed?

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

Not all who are eligible to receive unemployment benefits actually collect them.

2013 / No. 17
Posted 2013-06-14

Translating Kurzarbeit

by Silvio Contessi and Li Li

With more research and given the limits of conventional fiscal and monetary policies in addressing the consequences of jobless recoveries, a U.S. version of Kurzarbeit may provide another option in the policymaker’s toolkit.

2013 / No. 16
Posted 2013-06-12

Household Wealth: Has It Recovered?

by William T. Gavin

Adjusting for inflation, population growth, and a risk-free real interest rate shows there is still a substantial gap between the peak of household wealth in 2007 and the level today.

2013 / No. 15
Posted 2013-05-31

Low Inflation in a World of Securitization

by Brett W. Fawley and Yi Wen

Weak lending may still be the culprit behind low inflation, but monetary aggregates may no longer closely track credit conditions.

2013 / No. 14
Posted 2013-05-30

What Flattened the Earnings Profile of Recent College Graduates?

by Yu-Chien Kong and B. Ravikumar

Over their working lifetimes, college graduates who entered the workforce many decades ago experienced a greater increase in wages than more-recent college graduates.

2013 / No. 13
Posted 2013-05-03

The Great Chinese Housing Boom

by Brett W. Fawley and Yi Wen

Significant store-of-value demand for housing suggests a bubble that could burst, especially when both the household income growth rate and the savings rate start to decline and capital controls in China start to relax.

2013 / No. 12
Posted 2013-04-26

Winners and Losers in the Great Recession

by Fernando M. Martin

For a significant number of industries - representing roughly a quarter of the U.S. economy - the most recent recession has been business as usual when judged by pre-recession trends. For a slightly larger group of industries, mostly related to construction, manufacturing, and trade, the contractions have been severe, reinforcing a preexisting process of steady relative decline.

2013 / No. 11
Posted 2013-04-12

The Macroeconomy of the U.S. States: On the Road to Recovery?

by Carlos Garriga

Despite the recent recovery in house prices, most state economies have yet to recover from the Great Recession.

2013 / No. 10
Posted 2013-03-29

Lessons from the Recent Recession: The Faster They Grow, the Harder They Fall

by Fernando M. Martin

U.S. gross domestic product (GDP) contracted significantly and persistently during the recent financial crisis and recession. Lessons can be learned from comparing the U.S. experience with that of other industrialized countries.

2013 / No. 9
Posted 2013-03-22

Life Cycle Patterns and Boom-Bust Dynamics in U.S. Housing Prices

by Juan Carlos Hatchondo, Leonardo Martinez, and Juan M. Sánchez

Home equity did not increase much for households younger than 35 years of age between 1998 and 2007 because the increase in house prices was offset by an equivalent increase in mortgage debt.

2013 / No. 8
Posted 2013-03-08

Would It Help To Eliminate Interest on Reserves?

by Christopher J. Neely

Although we can’t be certain of the size of the effect, the ECB’s recent experience suggests that eliminating interest paid on reserves held with the Federal Reserve would not substantially increase bank lending and money growth.

2013 / No. 7
Posted 2013-03-01

Political Pressure on the Bank of Japan: Interference or Accountability?

by Christopher J. Neely

Markets have come to believe that the Bank of Japan can and will raise Japan’s inflation rate to meet its new target.

2013 / No. 6
Posted 2013-02-15

Measuring the Contribution of Construction to the Slow Recovery

by Carlos Garriga

Recovery of the construction sector seems a necessary ingredient for a strong and sustained recovery of economic activity and a reduction in the unemployment rate.

2013 / No. 5
Posted 2013-02-01

Is the Fed Monetizing Government Debt?

by David Andolfatto and Li Li

Under this latter scenario, the Fed is not monetizing government debt—it is simply managing the supply of the monetary base in accordance with the goals set by its dual mandate.

2013 / No. 4
Posted 2013-01-24

Why Is Output Growth So Slow?

by Daniel L. Thornton

The excess supply of commercial and residential real estate might explain why the historically low nominal and real interest rates have had relatively little effect on stimulating investment.

2013 / No. 3
Posted 2013-01-18

From "Man-Cession" to "He-Covery": Same Old, Same Old

by Silvio Contessi and Li Li

The male labor force was hit harder during the recent recession because more jobs were lost in occupations and sectors that traditionally employ more men.

2013 / No. 2
Posted 2013-01-11

Rent or Buy?

by Silvio Contessi and Li Li

The residential real estate market showed additional signs of improvement in 2012, though the recovery has been quite different for single-family compared with multifamily markets.

2013 / No. 1
Posted 2013-01-04

Is the FOMC’s Unemployment Rate Threshold a Good Idea?

by Daniel L. Thornton

The November 2012 unemployment rate would have been 1.6 percent higher had the labor force participation rate declined as it did following the 2001 recession.


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