Short essays on the economic issues of the day written for a generally informed readership.
2013, No. 33
U.S. Inflation and Its Components
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. 29
Is Nominal GDP Targeting a Rule Policymakers Could Accept?
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. 26
Current Risks from Exports and Foreign Sales
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. 24
Does the Economy Need More Spending Now?
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. 21
A Perspective on Possible Fed Exit Strategies
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
The Mechanics Behind Manufacturing Job Losses
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
Japan as a Role Model?
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. 17
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
Household Wealth: Has It Recovered?
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. 13
The Great Chinese Housing Boom
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
Winners and Losers in the Great Recession
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. 8
Would It Help To Eliminate Interest on Reserves?
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. 5
Is the Fed Monetizing Government Debt?
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
Why Is Output Growth So Slow?
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. 2
Rent or Buy?
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.