Board of Governors of the Federal Reserve System

Displaying 1-40 of 176 results

  • White Papers // Jul 2011

    U.S. Domestic And International Financial Reform Policy: Are G20 Commitments And The Dodd-Frank Act In Sync?

    The Dodd-Frank Act of 2010 is the keystone policy response directed at reforming U.S. financial system activities and oversight in the wake of the 2007-2009 financial crisis. The United States also has financial system reform policy commitments in the international arena, including in particular by virtue of its membership in...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Mar 2011

    Where Are Global And U.S. Trade Heading In The Aftermath Of The Trade Collapse: Issues And Alternative Scenarios

    Global and U.S. trade declined dramatically in the wake of the global financial crisis in late 2008 and early 2009. The subsequent recovery in trade, while vigorous at first, gradually lost momentum in 2010. Against this backdrop, this paper explores the prospects for global and U.S. trade in the medium...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Feb 2011

    U.S. International Equity Investment And Past Prospective Returns

    Counter to extant stylized facts, using newly available data on country allocations in U.S. investors' foreign equity portfolios the authors find that U.S. investors do not exhibit returns-chasing behavior, but, consistent with partial portfolio rebalancing, tend to sell past winners; and U.S. investors increase portfolio weights on a country's equity...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Feb 2011

    Explaining The Energy Consumption Portfolio In A Cross-section Of Countries: Are The BRICs Different?

    This paper uses disaggregated data from a broad cross-section of countries to empirically assess differences in energy consumption profiles across countries. The authors find empirical support for the energy ladder hypothesis, which contends that as an economy develops it transits away from a heavier reliance on traditional fuel sources towards...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Feb 2011

    International Capital Flows And The Returns To Safe Assets In The United States, 2003-2007

    A broad array of domestic institutional factors - including problems with the originate-to-distribute model for mortgage loans, deteriorating lending standards, deficiencies in risk management, conflicting incentives for the GSEs, and shortcomings of supervision and regulation - were the primary sources of the U.S. housing boom and bust and the associated...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jan 2011

    Nonlinearities In The Oil Price-output Relationship

    It is customary to suggest that the asymmetry in the transmission of oil price shocks to real output is well established. Much of the empirical work cited as being in support of asymmetries, however, has not directly tested the hypothesis of an asymmetric transmission of oil price innovations. Moreover, many...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Dec 2010

    Asymmetric Shocks In A Currency Union With Monetary And Fiscal Handcuffs?

    This paper investigates the impact of the asymmetric shocks within a currency union in a framework that takes account of the zero bound constraint on policy rates, and also allows for constraints on fiscal policy. In this environment, the authors document that the usual optimal currency argument showing that the...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Dec 2010

    Fiscal Positions And Government Bond Yields In OECD Countries

    The authors examine the impact of fiscal positions, both the level of debt and the fiscal balance, on long-term government bond yields in the OECD. In order to control for the endogenity of fiscal positions to the business cycle they utilize forward projections of fiscal positions from the OECD's Economic...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Oct 2010

    Could Asymmetric Information Alone Have Caused The Collapse Of Private-label Securitization?

    A key feature of the 2007-2008 financial crisis is that for some classes of securities trade has ceased. And where trade does occur, it appears that market prices are well below what one might believe to be the intrinsic value for that class of security. This seems to be especially...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Sep 2010

    An Analysis Of Government Guarantees And The Functioning Of Asset-Backed Securities Markets

    Mortgage securitization has been tried several times in the United States and each time it has failed amid a credit bust. In what is now a familiar recurring history, during the credit boom, underwriting standards are violated and guarantees are inadequately funded; subsequently, defaults increase and investors in mortgage-backed securities...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Sep 2010

    Oil Shocks And The Zero Bound On Nominal Interest Rates

    Beginning in 2009, in many advanced economies, policy rates reached their Zero Lower Bound (ZLB). Almost at the same time, oil prices started rising again. The authors analyze how the ZLB affects the propagation of oil shocks. As these shocks move inflation and output in opposite directions, their effects on...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Sep 2010

    Entry Dynamics And The Decline In Exchange-rate Pass-through

    The degree of exchange-rate pass-through to import prices is low. An average pass-through estimate for the 1980s would be roughly 50 percent for the United States implying that, following a 10 percent depreciation of the dollar, a foreign exporter selling to the U.S. market would raise its price in the...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Sep 2010

    Offshoring Bias In U.S. Manufacturing: Implications For Productivity And Value Added

    The rapid growth of offshoring has sparked a contentious debate over its impact on the U.S. manufacturing sector, which has recorded steep employment declines yet strong output growth - a fact reconciled by the notable gains in manufacturing productivity. The authors maintain, however, that the dramatic acceleration of imports from...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Sep 2010

    Has International Financial Co-movement Changed? Emerging Markets In The 2007-2009 Financial Crisis

    Emerging Market (EM) assets have historically been regarded as inherently risky and particularly vulnerable to international shocks that result in a general increase in investor risk perceptions. In this paper, the authors assess the ongoing relevance of this view by examining the linkages between EM and non-EM stock and bond...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Aug 2010

    Capturing The Evolution Of Dealer Credit Terms Related To Securities Financing And OTC Derivatives

    In the period prior to the financial crisis, leverage in the financial system increased substantially. This buildup was likely facilitated by, among other factors, a loosening of credit terms related to OTC derivatives and securities financing transactions. However, little or no systematic data on these trends were available at the...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Aug 2010

    The Effects Of Bank Capital On Lending: What Do We Know, And What Does It Mean?

    The effect of bank capital on lending is a critical determinant of the linkage between financial conditions and real activity, and has received special attention in the recent financial crisis. The author uses panel-regression techniques-following Bernanke and Lown (1991) and Hancock and Wilcox (1993, 1994)-to study the lending of large...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jul 2010

    Check In The Mail Or More In The Paycheck: Does The Effectiveness Of Fiscal Stimulus Depend On How It Is Delivered?

    Recent fiscal policies have aimed to stimulate household spending. In 2008, most households received one-time economic stimulus payments. In 2009, most working households received the Making Work Pay tax credit in the form of reduced withholding; other households, mainly retirees, received one-time payments. This paper quantifies the spending response to...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jul 2010

    The Information Content Of High-Frequency Data For Estimating Equity Return Models And Forecasting Risk

    The author demonstrate that the parameters controlling skewness and kurtosis in popular equity return models estimated at daily frequency can be obtained almost as precisely as if volatility is observable by simply incorporating the strong information content of realized volatility measures extracted from high-frequency data. For this purpose, the author...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jul 2010

    A Semiparametric Characterization Of Income Uncertainty Over The Life Cycle

    Income uncertainty plays an important role in household decisions regarding consumption, saving, and investment. First, in the presence of incomplete financial markets, households facing uninsurable income risk have to save for precautionary reasons. How much they need to save crucially depends on their level of future income uncertainty. Second, people...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jul 2010

    Input And Output Inventories In General Equilibrium

    The authors build and estimate a two-sector (goods and services) dynamic stochastic general equilibrium model with two types of inventories: materials (input) inventories facilitate the production of finished goods, while finished goods (output) inventories yield utility services. The model is estimated using Bayesian methods. The estimated model replicates the volatility...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jul 2010

    Is There A Fiscal Free Lunch In A Liquidity Trap?

    This paper uses a DSGE model to examine the effects of an expansion in government spending in a liquidity trap. If the liquidity trap is very prolonged, the spending multiplier can be much larger than in normal circumstances, and the budgetary costs minimal. But given this "Fiscal free lunch," it...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jun 2010

    Fiscal Policy In The United States: Automatic Stabilizers, Discretionary Fiscal Policy Actions, And The Economy

    This paper examines the effects of the economy on the government budget as well as the effects of the budget on the economy. First, the author provides measures of the effects of automatic stabilizers on budget outcomes at the federal and state and local levels. For the federal government, the...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jun 2010

    Granularity Adjustment For Mark-To-Market Credit Risk Models

    The impact of undiversified idiosyncratic risk on value-at-risk and expected shortfall can be approximated analytically via a methodology known as granularity adjustment (GA). In principle, the GA methodology can be applied to any risk-factor model of portfolio risk. Thus far, however, analytical results have been derived only for simple models...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jun 2010

    Immigration, Remittances And Business Cycles

    The authors use data on border enforcement and macroeconomic indicators from the U.S. and Mexico to estimate a two-country business cycle model of labor migration and remittances. The model matches the cyclical dynamics of labor migration to the U.S. and documents how remittances to Mexico serve an insurance role to...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jun 2010

    Financial Globalization And Monetary Policy

    This paper reviews the available evidence and previous research on potential effects of financial globalization, that is, the international integration of financial markets. In particular, the author addressed the questions: Has financial globalization materially increased the influence of external developments on domestic monetary conditions? And, has it reduced the influence...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jun 2010

    Imperfect Credibility And The Zero Lower Bound On The Nominal Interest Rate

    When the nominal interest rate reaches its zero lower bound, credibility is crucial for conducting forward guidance. The authors determine optimal policy in a New Keynesian model when the central bank has imperfect credibility and cannot set the nominal interest rate below zero. In their model, an announcement of a...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jun 2010

    Interpreting Investment-Specific Technology Shocks

    Investment-specific technology (IST) shocks are often interpreted as multi-factor productivity (MFP) shocks in a separate investment-producing sector. However, this interpretation is strictly valid only when some stringent conditions are satisfied. Some of these conditions are at odds with the data. Using a two-sector model whose calibration is based on the...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jun 2010

    Monetary Policy And The Cyclicality Of Risk

    The author use a DSGE model that generates endogenous movements in risk premia to ex-amine the positive and normative implications of alternative monetary policy rules. As emphasized by the microfinance literature, variation in risk arises because households face fixed costs of transferring cash across financial accounts, implying that some households...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jun 2010

    The Effect Of Gasoline Prices On Household Location

    Gasoline prices influence where households decide to locate by changing the cost of commuting. Consequently, the substantial increase in gas prices since 2003 may have reduced the demand for housing in areas far from employment centers, leading to a decrease in the price and/or quantity of housing in those locations...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // May 2010

    Interagency Statement On Meeting The Credit Needs Of Creditworthy Small Business Borrowers

    The federal financial institutions regulatory agencies and the state supervisors are issuing this Interagency Statement on Meeting the Credit Needs of Creditworthy Small Business Borrowers to restate and elaborate their supervisory views on prudent lending to creditworthy small business borrowers. This statement builds upon principles in existing guidance, including the...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // May 2010

    Exports, Borders, Distance, And Plant Size

    The fact that large manufacturing plants export relatively more than small plants has been at the foundation of much work in the international trade literature. The author examines this fact using Census micro data on plant shipments from the Commodity Flow Survey, also show the fact is not entirely an...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // May 2010

    News And Sovereign Default Risk In Small Open Economies

    This paper builds a model of sovereign debt in which default risk, interest rates, and debt depend not only on current fundamentals but also on news about future fundamentals. News shocks affect equilibrium outcomes because they contain information about the future ability of the government to repay its debt. First,...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // May 2010

    Oil Shocks And External Adjustment

    In reaction to the oil crises of the 1970s and early 1980s, as well as the more recent run-up in oil prices that started in 2003, the oil component of the U.S. trade balance consistently deteriorated. However, the link between oil prices and the overall goods trade balance appears more...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // May 2010

    Money, Reserves, And The Transmission Of Monetary Policy: Does The Money Multiplier Exist?

    With the use of nontraditional policy tools, the level of reserve balances has risen significantly in the United States since 2007. Before the financial crisis, reserve balances were roughly $20 billion whereas the level has risen well past $1 trillion. The effect of reserve balances in simple macroeconomic models often...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // May 2010

    The Bank Lending Channel Of Monetary Policy And Its Effect On Mortgage Lending

    The bank lending channel of monetary policy suggests that banks play a special role in the transmission of monetary policy. The author looks for this special role by examining the business strategies of banks as it relates to mortgage funding and mortgage lending. "Traditional banks" have a large supply of...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // May 2010

    The Depth Of Negative Equity And Mortgage Default Decisions

    A central question in the literature on mortgage default is at what point underwater homeowners walk away from their homes even if they can afford to pay. The author studies borrowers from Arizona, California, Florida, and Nevada who purchased homes in 2006 using non-prime mortgages with 100 percent financing. Almost...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Apr 2010

    How Has The Monetary Transmission Mechanism Evolved Over Time?

    The author discusses the evolution in macroeconomic thought on the monetary policy transmission mechanism and present related empirical evidence. The core channels of policy transmission - the neoclassical links between short-term policy interest rates, other asset prices such as long-term interest rates, equity prices, and the exchange rate, and the...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Apr 2010

    Effects Of The 2003 Dividend Tax Cut: Evidence From Real Estate Investment Trusts

    Recent literature has estimated that the 2003 dividend tax cut caused a large in-crease in aggregate dividend payouts, which would imply that dividend taxation creates large efficiency costs relative to the amount of revenue raised. The author documents that dividend payouts by real estate investment trusts also rose sharply following...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Apr 2010

    Financial Statistics For The United States And The Crisis: What Did They Get Right, What Did They Miss, And How Should They Change?

    Although the instruments and transactions most closely associated with the financial crisis of 2008 and 2009 were novel, the underlying themes that played out in the crisis were familiar from previous episodes: Competitive dynamics resulted in excessive leverage and risk taking by large, interconnected firms, in heavy reliance on short-term...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Apr 2010

    Consumption Responses To Permanent And Transitory Shocks To House Appreciation

    The author estimates the marginal propensity to consume (MPC) out of permanent and transitory shocks to house price appreciation. Besides borrowing constraints, the author considers two different models under which those shocks may affect consumption. In the first one, treats housing as a risky asset. In the second one, housing...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Mar 2009

    New Evidence On 401(K) Borrowing And Household Balance Sheets

    Despite news reports suggesting a rise in 401(k) borrowing in recent years, it's found that the share of eligible households with 401(k) loans in the 2007 Survey of Consumer Finances was about 15 percent, roughly what it has been since 1995. The author finds that the best predictors of 401(k)...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Mar 2009

    Fiscal Amenities, School Finance Reform And The Supply Side Of The Tiebout Market

    The author asks if local governments which provide a high level of public services per tax dollar attract housing capital. The first portion of the paper examines large shifts in property tax burdens induced by an unusual school finance reform in the state of New Hampshire. The estimates suggest that,...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Mar 2009

    Household Borrowing After Personal Bankruptcy

    A large literature has examined factors leading to filing for personal bankruptcy, but little is known about household borrowing after bankruptcy. Using data from the Survey of Consumer Finances, the author finds that relative to comparable nonfilers, bankruptcy filers generally have more limited access to unsecured credit but borrow more...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Mar 2009

    Reset Price Inflation And The Impact Of Monetary Policy Shocks

    A standard state-dependent pricing model implies very limited scope for using active monetary policy to stabilize real activity. Two modeling strategies which expand the role of monetary policy are time-dependent pricing and strategic complementarities between price-setting firms. These mechanisms have telltale implications for the persistence and volatility of "Reset price...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Feb 2009

    Inflation Expectations, Uncertainty, The Phillips Curve, And Monetary Policy

    Inflation expectations play a central role in models of the Phillips curve. At long time horizons inflation expectations may reflect the credibility of a monetary authority's commitment to price stability. These observations highlight the importance of inflation expectations for monetary policy. These comments touch on three issues regarding inflation expectations:...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Nov 2008

    Household Welfare, Precautionary Saving, And Social Insurance Under Multiple Sources Of Risk

    This paper assesses the quantitative importance of a number of sources of income risk for household welfare and precautionary saving. To that end the author constructs a lifecycle consumption model in which household income is subject to shocks associated with disability, health, unemployment, job changes, wages, work hours, and a...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jan 2009

    Ponds And Streams: Wealth And Income In The U.S., 1989 to 2007

    Much discussion treats the working definitions of wealth and income as if they were self-evident, but definitional choices can make substantial differences in the overall picture. To provide a clear basis on which to examine family wealth and income their interrelationship, this paper begins with a basic discussion of a...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Feb 2009

    Heterogeneous Car Buyers: A Stylized Fact

    Prices for light vehicles tend to fall over their model year, and retrace those declines when next year's models are introduced. Using a new dataset, the author documents that the characteristics of car buyers vary significantly over the model year as well: as average prices of vehicles fall over the...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Aug 2008

    Salience And Taxation: Theory And Evidence

    This paper presents evidence that consumer's under-react to taxes that are not salient and characterizes the welfare consequences of tax policies when agents make such optimization errors. The empirical evidence is based on two complementary strategies. First, the author conducted an experiment at a grocery store posting tax inclusive prices...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Feb 2010

    A Comparison Of Forecast Performance Between Federal Reserve Staff Forecasts, Simple Reduced-Form Models, And A DSGE Model

    This paper compares the forecasts of an estimated dynamic stochastic general equilibrium (DSGE) model with that of the Federal Reserve staff and reduced-form time-series models. The paper has three goals. First, much of the related literature has compared forecasts from DSGE models with simple reduced-form forecasting techniques: The comparison with...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Sep 2008

    Fluctuations In Individual Labor Income: A Panel VAR Analysis

    This paper studies variation in individual labor income over time using a panel vector autoregression (PVAR) in income, the wage rate, hours of work, and hours of unemployment. The framework is used to investigate how much of the residual variation in labor income is due to residual variation in the...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Feb 2009

    Modeling Earnings Dynamics

    In this paper the author uses indirect inference to estimate a joint model of earnings, employment, job changes, wage rates, and work hours over a career. The model incorporates duration dependence in several variables, multiple sources of unobserved heterogeneity, job-specific error components in both wages and hours, and measurement error....

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Dec 2008

    Factor Intensity And Price Rigidity: Evidence And Theory

    This paper establishes a new empirical finding: the degree of labor intensity and the degree of price flexibility are negatively correlated across industrial sectors. I model this in an economy with staggered nominal wage contracts and production sectors that differ in labor and capital intensities. Nominal disturbances affect capital-intensive and...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Dec 2008

    The Economics Of The Mutual Fund Trading Scandal

    The author examines the economic incentives behind the mutual fund trading scandal, which made headlines in late 2003 with news that several asset management companies had arranged to allow abusive - and, in some cases, illegal - trades in their mutual funds. Most of the gains from these trades went...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Oct 2008

    State And Local Finances And The Macroeconomy: The High-Employment Budget And Fiscal Impetus

    The author examines the interplay of the economy and state and local budgets by developing and examining two measures of fiscal policy: the high-employment budget and fiscal impetus. The author finds that a 1 percentage point increase in cyclical GDP results in a 0.1 percentage point increase in NIPA-based net...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Oct 2008

    The Shimer Puzzle And The Identification Of Productivity Shocks

    Shimer (2005) argues that the Mortensen-Pissarides (MP) model of unemployment lacks an amplification mechanism because it generates less than 10 percent of the observed business cycle fluctuations in unemployment given labor productivity shocks of plausible magnitude. This paper argues that part of the problem lies with the identification of productivity...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Apr 2009

    GSE Activity And Mortgage Supply In Lower-Income And Minority Neighborhoods: The Effect Of The Affordable Housing Goals

    In the 1990's Congress promoted policies to increase credit access and homeownership among lower-income and minority neighborhoods and households. Beliefs that credit access and homeownership entail individual and societal benefits (DiPasquale and Glaeser 1999, Aaronson 2000, Kubrin and Squires 2004, Garmaise and Moskowitz 2006), and that discrimination (Munnell et al...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Nov 2008

    Firms' Relative Sensitivity To Aggregate Shocks And The Dynamics Of Gross Job Flows

    The author proposes a measure for the importance of aggregate shocks for fluctuations in job flows at the firm level. Using data for the Portuguese economy, it's found that large and old firms exhibit higher relative sensitivity to aggregate shocks and have a disproportional influence over the dynamics of aggregate...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Feb 2009

    Revisiting The Supply-Side Effects Of Government Spending

    The author revisits the macroeconomic effects of government consumption in the neoclassical growth model when agents face uninsured idiosyncratic investment risk. Under complete markets, a permanent increase in government consumption has no long-run effect on the interest rate and the capital-labor ratio, while it increases hours due to the negative...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Sep 2008

    Research and development, Profits And Firm Value: A Structural Estimation

    Is the return to private R&D as high as believed? This paper identifies a flaw in the production function approach to estimating the return to R&D. The author provides new estimates based on a structural estimation approach that incorporates uncertainty about the outcome from R&D. The results shed light on...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // May 2010

    Interagency Statement On Meeting The Credit Needs Of Creditworthy Small Business Borrowers

    The federal financial institutions regulatory agencies and the state supervisors are issuing this Interagency Statement on Meeting the Credit Needs of Creditworthy Small Business Borrowers to restate and elaborate their supervisory views on prudent lending to creditworthy small business borrowers. This statement builds upon principles in existing guidance, including the...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Nov 2009

    Limitations On The Effectiveness Of Forward Guidance At The Zero Lower Bound

    The recent literature on monetary policy in the presence of a zero lower bound on interest rates has shown that forward guidance regarding the path of interest rates can be very effective in preserving macroeconomic stability in the face of a contractionary demand shock; moreover, that literature apparently leaves little...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jul 2009

    Ownership And Asymmetric Information Problems In The Corporate Loan Market: Evidence From A Heteroskedastic Regression

    In this paper, the authors examine whether asymmetric information problems exist in the corporate loan market, and whether ownership of loans provides lenders the incentive to mitigate asymmetric information problems. The authors attempt to identify asymmetric information problems by testing the prediction of Leland and Pyle (1977), that loan ownership...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Mar 2011

    Where Are Global And U.S. Trade Heading In The Aftermath Of The Trade Collapse: Issues And Alternative Scenarios

    Global and U.S. trade declined dramatically in the wake of the global financial crisis in late 2008 and early 2009. The subsequent recovery in trade, while vigorous at first, gradually lost momentum in 2010. Against this backdrop, this paper explores the prospects for global and U.S. trade in the medium...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Feb 2011

    U.S. International Equity Investment And Past Prospective Returns

    Counter to extant stylized facts, using newly available data on country allocations in U.S. investors' foreign equity portfolios the authors find that U.S. investors do not exhibit returns-chasing behavior, but, consistent with partial portfolio rebalancing, tend to sell past winners; and U.S. investors increase portfolio weights on a country's equity...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Feb 2011

    Explaining The Energy Consumption Portfolio In A Cross-section Of Countries: Are The BRICs Different?

    This paper uses disaggregated data from a broad cross-section of countries to empirically assess differences in energy consumption profiles across countries. The authors find empirical support for the energy ladder hypothesis, which contends that as an economy develops it transits away from a heavier reliance on traditional fuel sources towards...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Feb 2011

    International Capital Flows And The Returns To Safe Assets In The United States, 2003-2007

    A broad array of domestic institutional factors - including problems with the originate-to-distribute model for mortgage loans, deteriorating lending standards, deficiencies in risk management, conflicting incentives for the GSEs, and shortcomings of supervision and regulation - were the primary sources of the U.S. housing boom and bust and the associated...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jan 2011

    Nonlinearities In The Oil Price-output Relationship

    It is customary to suggest that the asymmetry in the transmission of oil price shocks to real output is well established. Much of the empirical work cited as being in support of asymmetries, however, has not directly tested the hypothesis of an asymmetric transmission of oil price innovations. Moreover, many...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Dec 2010

    Asymmetric Shocks In A Currency Union With Monetary And Fiscal Handcuffs?

    This paper investigates the impact of the asymmetric shocks within a currency union in a framework that takes account of the zero bound constraint on policy rates, and also allows for constraints on fiscal policy. In this environment, the authors document that the usual optimal currency argument showing that the...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Dec 2010

    Fiscal Positions And Government Bond Yields In OECD Countries

    The authors examine the impact of fiscal positions, both the level of debt and the fiscal balance, on long-term government bond yields in the OECD. In order to control for the endogenity of fiscal positions to the business cycle they utilize forward projections of fiscal positions from the OECD's Economic...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Sep 2009

    Credit Card Redlining Revisited

    Using a proprietary dataset of credit bureau records, Cohen-Cole (2008) finds that banks set credit limits on revolving accounts based in part on the racial composition of the neighborhood in which each borrower resides. This paper evaluates the evidence presented in that working paper using the same proprietary database of...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Sep 2009

    Intergenerational Aspects Of Health Care

    The physical process of aging means that the use of health services varies significantly by age. This association between age and health care consumption raises a number of issues related to intergenerational equity. In particular, how do society's resources get allocated across age groups, and how will increases in health...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // May 2009

    A Framework For Assessing The Systemic Risk Of Major Financial Institutions

    In this paper the author proposes a framework for measuring and stress testing the systemic risk of a group of major financial institutions. The systemic risk is measured by the price of insurance against financial distress, which is based on ex ante measures of default probabilities of individual banks and...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Aug 2009

    The Evolution Of A Financial Crisis: Panic In The Asset-Backed Commercial Paper Market

    The U.S. asset-backed commercial paper (ABCP) market erupted in late summer of 2007 and played a pivotal role in the global financial crisis that would become increasingly severe. In the ABCP market, where investors expect to be able to access their funds on demand at par value, even limited concerns...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jul 2009

    Vacancy Posting, Job Separation And Unemployment Fluctuations

    This paper studies the relative importance of the two main determinants of cyclical unemployment fluctuations: vacancy posting and job separation. Using a matching function to model the flow of new jobs, the author draws on Shimer's (2007) unemployment flow rates decomposition and finds that job separation and vacancy posting respectively...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Aug 2009

    And Banking For All?

    This paper presents data from a new survey of low- and moderate-income households in Detroit to examine bank account usage and alternative financial service (AFS) products. The author finds that for the vast majority of households, annual outlays on financial services for transactional and credit products are relatively small, around...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jun 2009

    Determinants Of The Locations Of Payday Lenders, Pawnshops And Check-Cashing Outlets

    A large and growing number of low-to-moderate income U.S. households rely upon alternative financial service providers (AFSPs) for a variety of credit products and transaction services, including payday loans, pawn loans, automobile title loans, tax refund anticipation loans and check-cashing services. The rapid growth of this segment of the financial...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Apr 2009

    Improving Real-Time Estimates Of The Output Gap

    This paper investigates strategies for real-time estimation of the output gap. First, the author examines estimates from univariate models with stochastic cycles. This corresponds to the use of model-based band-pass filters in real-time, and it's found that the turning points in real-time and final output gap series match more closely...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // Jun 2009

    Do Self-Insurance And Disability Insurance Prevent Consumption Loss On Disability?

    In this paper the author shows the extent to which public insurance and self-insurance mitigate the cost of health shocks that limit the ability to work. The author uses consumption data from the UK to estimate the insurance provided by the government disability program and account for the effectiveness of...

    Provided By Board of Governors of the Federal Reserve System

  • White Papers // May 2009

    Does Tax Policy Affect Executive Compensation? Evidence From Postwar Tax Reforms

    Evidence since the 1980s suggests that the level and structure of executive compensation in U.S. public corporations are largely unresponsive to tax incentives. However, the relative tax advantage of different forms of pay has been relatively small during this period. Using a sample of top executives in large firms from...

    Provided By Board of Governors of the Federal Reserve System