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Working Paper Archives

Federal Reserve Bank of St. Louis working papers are preliminary materials circulated to stimulate discussion and critial comment.

Monetary Policy/Macroeconomics

Universal Basic Income versus Unemployment Insurance

In this paper we compare the welfare effects of unemployment insurance (UI) with an universal basic income (UBI) system in an economy with idiosyncratic shocks to employment. Both policies provide a safety net in the face of idiosyncratic shocks.

Technology Innovation and Diffusion as Sources of Output and Asset Price Fluctuations

We develop a model in which innovations in an economy's growth potential are an important driving force of the business cycle.

Reaction Functions in a Small Open Economy: What Role for Non-traded Inflation?

I develop a structural general equilibrium model and estimate it for New Zealand using Bayesian techniques.

A Theory of Targeted Search

We present a theory of targeted search, where people with a finite information processing capacity search for a match.

Sovereign Default and Maturity Choice

This paper presents a new quantitative model of endogenous sovereign default, maturity choice, and the term structure of bond yield spreads.

A Cup Runneth Over: Fiscal Policy Spillovers from the 2009 Recovery Act

This paper studies the effects of interregional spillovers from the government spending component of the American Recovery and Reinvestment Act of 2009 (the Recovery Act). Using cross-county Census Journey to Work commuting data, we cluster U.S. counties into local labor markets, each of which we further partition into two subregions.

Rural-Urban Migration, Structural Transformation, and Housing Markets in China

This paper explores the contribution of the structural transformation and urbanization process in the housing market in China. City migration ‡flows combined with an inelastic land supply, due to entry restrictions, has raised house prices.

Three Scenarios for Interest Rates in the Transition to Normalcy

This article develops time-series models to represent three alternative, potential monetary policy regimes as monetary policy returns to normal. The first regime is a return to the high and volatile inflation rate of the 1970s.

Central Bank Purchases of Private Assets

A model is constructed in which consumers and banks have incentives to fake the quality of collateral. Conventional monetary easing can exacerbate these problems, in that the mispresentation of collateral becomes more profitable, thus increasing haircuts and interest rate differentials.

Occupational Hazards and Social Disability Insurance

Lifetime occupational exposure accounts for 42% of differences in disability risk across individuals.

The 2009 Recovery Act: Stimulus at the Extensive and Intensive Labor Margins

This paper studies the effect of government stimulus spending on a novel aspect of the labor market: the differential impact of spending on the total wage bill versus employment. We analyze the 2009 Recovery Act via instrumental variables using a new instrument, the spending done by federal agencies that were not instructed to target funds towards harder hit regions.

The Great Housing Boom of China

China’s housing prices have been growing nearly twice as fast as national income in the past decade despite (i) a phenomenal rate of return to capital and (ii) an alarmingly high vacancy rate.

Financial Stress Regimes and the Macroeconomy

We identify financial stress regimes using a model that explicitly links financial variables with the macroeconomy.

How Has Empirical Monetary Policy Analysis Changed After the Financial Crisis?

In the wake of the Great Recession, the Federal Reserve lowered the federal funds rate (FFR) target essentially to zero and resorted to unconventional monetary policy. With the nominal FFR constrained by the zero lower bound (ZLB) for an extended period, empirical monetary models cannot be estimated as usual.

Corporate Income Tax, Legal Form of Organization, and Employment

We adopt a dynamic stochastic occupational choice model with heterogeneous agents and evaluate the impact of a potential reduction in the corporate income tax on employment.

Taxing Top Earners: A Human Capital Perspective

We assess the consequences of substantially increasing the marginal tax rate on U.S. top earners using a human capital model.

QE: When and How Should the Fed Exit?

The essence of Quantitative Easing (QE) is to reduce the costs of private borrowing through large-scale purchases of privately issue debts, instead of public debts (Ben Bernanke, 2009).

The Cost of Business Cycles with Heterogeneous Trading Technologies

This paper investigates the welfare cost of business cycles in an economy where households have heterogeneous trading technologies.

Implications of Heterogeneity in Preferences, Beliefs and Asset Trading Technologies in an Endowment Economy

This paper analyzes and computes the equilibria of economies with large numbers of heterogeneous agents who have different asset trading technologies, preferences and beliefs.

Navigating Constraints: The Evolution of Federal Reserve Monetary Policy, 1935-59

The 1950s are often pointed to as a decade in which the Federal Reserve operated a particularly successful monetary policy. The present paper examines the evolution of Federal Reserve monetary policy from the mid-1930s through the 1950s in an effort to understand better the apparent success of policy in the 1950s.

Capital Goods Trade and Economic Development

We argue that international trade in capital goods has quantitatively important effects on economic development through two channels: (i) capital formation and (ii) aggregate TFP.

Credit Markets, Limited Commitment, and Government Debt

A dynamic model with credit under limited commitment is constructed, in which limited memory can weaken the effects of punishment for default.

Keynesian Inefficiency and Optimal Policy: A New Monetarist Approach

A simple model of monetary/labor search is constructed to study Keynesian indeterminacy and optimal policy.

Scarce Collateral, the Term Premium, and Quantitative Easing

A model of money, credit, and banking is constructed in which the differential pledgeability of collateral and the scarcity of collateralizable wealth lead to a term premium — an upward-sloping nominal yield curve.

Withstanding Great Recession like China

The Great Recession was characterized by two related phenomena: (i) a jobless recovery and (ii) a permanent drop in aggregate output.

How Persistent Are Unconventional Monetary Policy Effects?

Event studies show that the Federal Reserve’s announcements of forward guidance and large Scale asset purchases had large and desired effects on asset prices but they do not tell us how long such effects last.

Money, Liquidity and Welfare

This paper develops an analytically tractable Bewley model of money demand to shed light on some important questions in monetary theory, such as the welfare cost of inflation.

Labor Market Upheaval, Default Regulations, and Consumer Debt

In 2005, reforms made formal personal bankruptcy much more costly. Shortly after, the US began to experience its most severe recession in seventy years, and while personal bankruptcy rates rose, they rose only modestly given the severity of the rise in unemployment.

The Limitations of Forward Guidance

This article examines forward guidance via news shocks to the monetary policy rule in a nonlinear New Keynesian model with an occasionally binding zero lower bound (ZLB) constraint on the policy rate.

Mortgages and Monetary Policy

Mortgages are long-term nominal loans. Under incomplete asset markets, monetary policy is shown to affect housing investment and the economy through the cost of new mortgage borrowing and the value of payments on outstanding debt.


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