Federal Reserve Bank of St. Louis Review
A bimonthly research journal intended for an economically informed but broad readershipfrom the undergraduate student to the PhD. In print and online.
NOVEMBER/DECEMBER 2013 Vol. 95, No. 6
A Special Issue of Review in Commemoration of the Federal Reserve System Centennial: December 23, 1913–December 23, 2013
Homer Jones: "Propensity, capacity, and opportunity"
Forces at Work: The Fed, Money, and Forward Guidance
The Reform of October 1979: How It Happened and Why
This study offers a historical review of the monetary policy reform of October 6, 1979, and discusses the influences behind it and its significance. We lay out the record from the start of 1979 through the spring of 1980, relying almost exclusively on contemporaneous sources, including the recently released transcripts of Federal Open Market Committee (FOMC) meetings during 1979.
Announcements and the Role of Policy Guidance
By providing guidance about future economic developments, central banks can affect private sector expectations and decisions. This can improve welfare by reducing private sector forecast errors, but it can also magnify the impact of noise in central bank forecasts.
Seven Faces of "The Peril"
In this paper the author discusses the possibility that the U.S. economy may become enmeshed in a Japanese-style deflationary outcome within the next several years. To frame the discussion, the author relies on an analysis that emphasizes two possible long-run steady states for the economy: one that is consistent with monetary policy as it has typically been implemented in the United States in recent years and one that is consistent with the low nominal interest rate, deflationary regime observed in Japan dur- ing the same period.
SEPTEMBER/OCTOBER 2013 Vol. 95, No. 5
Restoring Household Financial Stability after the Great Recession: Why Household Balance Sheets Matter
Selected articles from a symposium sponsored by the Federal Reserve Bank of St. Louis and Washington University in St. Louis, February 5-7, 2013
The Current State of U.S. Household Balance Sheets
The Board of Governors of the Federal Reserve System is responsible for two of the most widely used datasets containing information about U.S. household balance sheets: the quarterly macro-level Financial Accounts of the United States (FA, formerly known as the Flow of Funds Accounts) and the triennial microlevel Survey of Consumer Finances (SCF) ...
Economic Vulnerability and Financial Fragility
Unfortunately, many families with the greatest exposure to the economic dislocations of the recent recession also had very risky balance sheets beforehand that were characterized by low levels of liquid assets, high portfolio concentrations in housing, and relatively high balance-sheet leverage. The authors argue that economic vulnerability and risky balance sheets are correlated because they derive from common factors ...
The Effects of Health and Wealth Shocks on Retirement Decisions
Both health status and net worth can affect retirement decisions. In some cases, early retirement may be precipitated by a shock to an individual’s health and/or economic status. The authors examine how health and wealth shocks affect retirement decisions ...
Is Student Debt Jeopardizing the Short-Term Financial Health of U.S. Households?
In this study, the authors use the Survey of Consumer Finances to determine whether student loans are associated with household net worth. They find that median 2009 net worth ($117,700) for households with no outstanding student loan debt is nearly three times higher than for households with outstanding student loan debt ($42,800) ...
JULY/AUGUST 2013 Vol. 95, No. 4
Donor Motives for Foreign Aid
The literature on foreign aid has contributed to our understanding of the motives for developed nations to provide aid to developing nations. In this article, the authors primarily focus on donor motivation, but they also touch on the consequences of receiving aid for developing nations.
MAY/JUNE 2013 Vol. 95, No. 3
Financial Regulatory Reform: A Progress Report
The 2007-09 financial and economic crisis was the result of a lack of effective regulation. The author addresses the problems with regulations in effect at the time of the crisis and offers proposals for regulation reform to address future crises.
Big Banks in Small Places: Are Community Banks Being Driven Out of Rural Markets?
The shares of total U.S. banking assets and deposits held by the very largest banking organizations have increased markedly over the past 25 years, while the shares held by small “community” banks have declined. Advances in information technology may have reduced the advantages of small scale, close proximity, and local ties that traditionally have given small, community-focused banks a competitive advantage in lending to small businesses and other “informationally opaque” borrowers.
Foreign Currency Loans and Systemic Risk in Europe
Foreign currency loans to the unhedged non-banking sector are remarkably prevalent in Europe and create a significant exchange-rate-induced credit risk to European banking sectors. In particular, Swiss franc (CHF)-denominated loans, popular in Eastern European countries, could trigger simultaneous bank failures if depreciation of the domestic currencies prevents unhedged borrowers from servicing the loans.
Labor Mismatch in the Great Recession: A Review of Indexes Using Recent U.S. Data
Labor mismatch, also known as structural imbalance, can be defined as a poor match between the characteristics of unemployed workers and those required for vacant jobs. In the wake of the jobless recovery from the Great Recession, economists have sought to explain the coexistence of a high unemployment rate and increasing job openings as a mismatch phenomenon.
MARCH/APRIL 2013 Vol. 95, No. 2
Intertemporal Discounting and Policy Selection
The choice of the intertemporal discount rate affects the measurement of the tax burden of different age cohorts. Small changes in the discount rate affect not only the magnitude of the measured changes, but also the ranking of policies using that metric.
JANUARY/FEBRUARY 2013 Vol. 95, No. 1
Why Did Young Families Lose So Much Wealth During the Crisis? The Role of Homeownership
The authors use the Federal Reserve’s Survey of Consumer Finances to document a boom in home ownership and mortgage borrowing among young families in the years leading up to the recent financial crisis. Many young families lost more of their wealth during the downturn than middle-aged and older families. The authors find ...
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Four Stories of Quantitative Easing
This article describes the circumstances of and motivations for the quantitative easing programs of the Federal Reserve, Bank of England, European Central Bank, and Bank of Japan during the recent financial crisis and recovery. The programs initially ...
International Trade, Female Labor, and Entrepreneurship in MENA Countries
Middle Eastern and North African (MENA) countries stand out in international comparisons of de jure obstacles to female employment and entrepreneurship. These obstacles manifest themselves in low rates of female labor participation, entrepreneurship, and ownership. Recent research suggests ...
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