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Federal Reserve Bank of St. Louis Review

A quarterly research journal intended for an economically informed but broad readership—from the undergraduate student to the PhD. In print and online.


FOURTH QUARTER 2014 Vol. 96, No. 4

The Balance Sheets of Younger Americans: Is the American Dream at Risk?

Selected articles from a symposium sponsored by the Center for Household Financial Stability and the Research Division of the Federal Reserve Bank of St. Louis and the Center for Social Development at Washington University in St. Louis, May 8-9, 2014

Introduction

The State of Young Adults’ Balance Sheets: Evidence from the Survey of Consumer Finances

The authors investigate recent trends in the financial circumstances of young adults using data from the triennial Survey of Consumer Finances (SCF) from 2001 to 2013. They examine trends in young adults’ net worth, break down the composition into specific assets and liabilities, and describe young adults’ experiences with credit markets.

Student Loan Debt: Can Parental College Savings Help?

Postsecondary education costs in the United States today are rising with an increasing shift from societal responsibility to individual burden, thereby driving greater student borrowing. Evidence suggests that (i) such student debt may have undesirable educational effects and potentially jeopardize household balance sheets and (ii) student loans may better support educational attainment and economic mobility if accompanied by other, non-repayable financial awards.

Toward Healthy Balance Sheets: Are Savings Accounts a Gateway to Young Adults’ Asset Diversification and Accumulation?

Understanding the balance sheets of today’s young adults—particularly the factors that set them on a path to financial security through asset diversification and accumulation—lends some insight into the balance sheets they will have when they are older. This study uses panel data from the Census Bureau’s 1996 Survey of Income and Program Participation to investigate the acquisition of a savings account as a gateway to asset diversification and accumulation for young adults.

Asset Holdings of Young Households: Trends and Patterns

The authors use multiple waves of the triennial Survey of Consumer Finances (SCF) from 1989 to 2013 to examine the composition of the asset portfolios of young households whose head of household is between 18 and 41 years of age. The focus is on households’ decisions to hold different types of assets, including both financial assets (e.g., bank accounts, stocks, and retirement accounts) and nonfinancial assets (e.g., residential real estate, businesses, and automobiles).

 

THIRD QUARTER 2014 Vol. 96, No. 3

Liquidity: Meaning, Measurement, Management

This article is based on the author’s Homer Jones Memorial Lecture delivered at the Federal Reserve Bank of St. Louis, April 2, 2014.

Making Sense of Dissents: A History of FOMC Dissents

This article presents a record of dissents on Federal Open Market Committee (FOMC) monetary policy votes from the Committee’s inception in its modern form in 1936 through 2013. Dissents were rare during the Committee’s first 20 years but began to increase in the late 1950s.

The Effects of Terrorism on Trade: A Factor Supply Approach

The conventional view of terrorism is that it raises risks and, as a result, reduces trade. The authors use a factor supply approach to show that this hypothesis is not necessarily correct.

When and How To Exit Quantitative Easing?

The essence of quantitative easing (QE) is reducing the cost of private borrowing through large-scale purchases of privately issued debt instead of public debt (Bernanke, 2009). Considering the economy has drastically recovered, it is time to consider how exiting from these private asset purchases will affect the economy.

An International Perspective on the Recent Behavior of Inflation

Several commentators have been concerned about the possibility that the euro area may be experiencing disinflation with the risk of deflation. However, the euro area is not the only economy navigating the risky waters of low inflation.

 

SECOND QUARTER 2014 Vol. 96, No. 2

Monetary Policy in the United States: A Brave New World?

This article is a reflection on monetary policy in the United States during Ben Bernanke’s two terms as Chairman of the Federal Open Market Committee, from 2006 to 2014. Inflation targeting, policy during the financial crisis, and post-crisis monetary policy (forward guidance and quantitative easing) are discussed and evaluated.

The 2009 Recovery Act: Directly Created and Saved Jobs Were Primarily in Government

Over one-half of the fiscal spending component of the American Recovery and Reinvestment Act (ARRA; i.e., the Recovery Act) was allocated via grants, loans, and contracts. Businesses, nonprofits, and nonfederal government agencies that received this type of stimulus funding were required to report the number of jobs directly created and saved as a result of their funding.

Representative Neighborhoods of the United States

Many metropolitan areas in the United States display substantial racial segregation and substantial variation in incomes and house prices across neighborhoods. To what extent can this variation be summarized by a small number of representative (or synthetic) neighborhoods?

Factor-Based Prediction of Industry-Wide Bank Stress

This article investigates the use of factor-based methods for predicting industry-wide bank stress. Specifically, using the variables detailed in the Federal Reserve Board of Governors’ bank stress scenarios, the authors construct a small collection of distinct factors.

Special Centennial Section

FRED®, the St. Louis Fed’s Force of Data

No history of the St. Louis Fed would be complete without a chapter on its leadership in providing economic data for the public. Today, this long-standing commitment to data service is encapsulated in one name: FRED®.

 

FIRST QUARTER 2014 Vol. 96, No. 1

The Rise and Fall of Labor Force Participation in the United States

Monetary policy choices going forward are explicitly tied to labor market performance. Hence, the sharp decline in the labor force participation rate following the 2007-09 recession has become a salient topic.

The Great Trade Collapse and Rebound: A State-by-State View

During the Great Trade Collapse in the United States, which began in late 2008, one concern was that such a large collapse would transform exporting firms into strictly domestic firms or, worse, drive them out of business. In either case, it was feared that U.S. exporting might, at best, revive slowly.

A Guide to Tracking the U.S. Economy

Analyzing and forecasting the performance and direction of a large, complex economy like that of the United States is a difficult task. The process involves parsing a great deal of data, understanding key economic relationships, and assessing which events or factors might cause monetary or fiscal policymakers to change policy.

QE: Is There a Portfolio Balance Effect?

The Federal Open Market Committee has recently attempted to stimulate economic growth using unconventional methods. Prominent among these is quantitative easing (QE)—the purchase of a large quantity of longer-term debt on the assumption that it will reduce long-term yields through the portfolio balance channel.

The Evolution of Federal Reserve Policy and the Impact of Monetary Policy Surprises on Asset Prices

This article describes the joint evolution of Federal Reserve policy and the study of the impact of monetary policy surprises on high-frequency asset prices. Since the 1970s, the Federal Open Market Committee has clarified its objectives and modified its procedures to become more transparent and predictable.

 


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