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Second Quarter 2015

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Posted 2015-06-19

Monetary Policy Normalization in the United States

by Stephen Williamson

Because of the Federal Reserve’s unconventional approaches to monetary policy during the Great Recession and recovery, the Fed now finds itself in an unconventional situation. Short-term nominal interest rates have been close to zero for more than six years, and the Fed’s balance sheet is currently more than four times as large as in 2007.

Posted 2015-06-19

Common Fluctuations in OECD Budget Balances

by Christopher J. Neely and David E. Rapach

The authors use a dynamic latent factor model to analyze comovements in OECD surpluses. The world factor underlying common fluctuations in budget surpluses across countries explains an average of 28 to 44 percent of the variation in individual country surpluses.

Posted 2015-06-19

Does the United States Lead Foreign Business Cycles?

by Neville Francis, Michael T. Owyang, and Daniel Soques

The U.S. financial crisis of 2007-08 had detrimental and lasting effects on the economies of other nations, reinforcing the leading role played by the United States in the global economy. The authors assess this role by determining whether U.S. output growth informs business cycle turning points in the economies of other nations.

Posted 2015-06-19

How Does Informal Employment Affect the Design of Unemployment Insurance and Employment Protection?

by Emilio Espino and Juan M. Sánchez

The authors use a simple model to study the optimal design of unemployment insurance and employment protection. Workers are risk averse and face the possibility of unemployment.