Federal Reserve Bank of Atlanta

Displaying 1-40 of 48 results

  • White Papers // May 2011

    New Keynesian Dynamics In A Low Interest Rate Environment

    Recent research has found that the dynamic properties of the New Keynesian model can be very different when the nominal interest rate is zero. Improvements in technology and reductions in the labor tax rate lower economic activity, and the size of the government purchase output multiplier can be well above...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2011

    Accounting For The Cyclical Dynamics Of Income Shares

    Over the business cycle, labor's share of output is negatively but weakly correlated with output, and it lags output by about four quarters. Profit's share is strongly procyclical. It neither leads nor lags output, and its volatility is about four times that of output. Despite the importance of understanding the...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2011

    Monetary And Exchange Rate Policy Under Remittance Fluctuations

    Using data for the Philippines, the author develops and estimates a heterogeneous agent model to analyze the role of monetary policy in a small open economy subject to sizable remittance fluctuations. The author includes rule-of-thumb households with no access to financial markets and tests whether remittances are countercyclical and serve...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2011

    Creating An EU-level Supervisor For Cross-border Banking Groups: Issues Raised By The U.S. Experience With Dual Banking

    The European Union (EU) has been facilitating the growth of cross-border banking groups, but bank supervision remains the responsibility of national supervisors. This mismatch has long been recognized and various proposals have been offered to address this weakness. An alternative that would retain the most important advantages of full centralization...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2011

    Measuring The Welfare Gain From Personal Computers: A Macroeconomic Approach

    The welfare gain to consumers from the introduction of personal computers is estimated here. A simple model of consumer demand is formulated that uses a slightly modified version of standard preferences. The modification permits marginal utility, and hence total utility, to be finite when the consumption of computers is zero,...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2011

    Uninsured Countercyclical Risk: An Aggregation Result And Application To Optimal Monetary Policy

    The authors consider an incomplete-markets economy with capital accumulation and endogenous labor supply. Individuals face countercyclical idiosyncratic labor and asset risk. They derive conditions under which the aggregate allocations and price system can be found by solving a representative agent problem. This result is applied to analyze the properties of...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2011

    Price Discrimination And Business-cycle Risk

    A parsimonious theoretical model of second degree price discrimination suggests that the business cycle will affect the degree to which firms are able to price-discriminate between different consumer types. The authors analyze price dispersion in the airline industry to assess how price discrimination can expose airlines to aggregate-demand fluctuations. Performing...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2011

    To Work Or Not To Work: The Economics Of A Mothers Dilemma

    Utilizing linked vital statistics, administrative employer, and state welfare records, the analysis in this paper investigates the determinants of a woman's intermittent labor force decision at the time of a major life event: the birth of a child. The results indicate that both direct and opportunity labor market costs of...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Dec 2010

    The Impact Of Medical And Nursing Home Expenses And Social Insurance

    The authors consider a life-cycle model with idiosyncratic risk in labor earnings, out-of-pocket medical and nursing home expenses, and survival. Partial insurance is available through welfare, Medicaid, and social security. Calibrating the model to the United States, they find that 12 percent of aggregate savings is accumulated to finance and...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Dec 2010

    Confronting Model Misspecification In Macroeconomics

    The authors confront model misspecifications in macroeconomics by proposing an analytic framework for merging multiple models. This framework allows them to address uncertainty about models and parameters simultaneously and trace out the historical periods in which one model dominates other models. They apply the framework to a richly parameterized Dynamic...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Dec 2010

    How Amsterdam Got Fiat Money

    The authors investigate a fiat money system introduced by the Bank of Amsterdam in 1683. Using data from the Amsterdam Municipal Archives, they partially reconstruct changes in the bank's balance sheet from 1666 through 1702. The calculations show that the Bank of Amsterdam, founded in 1609, was engaged in two...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Sep 2010

    The Effect Of Social Entitlement Programs On Private Transfers: New Evidence Of Crowding Out

    This paper exploits a natural policy experiment to directly identify the crowding out effects of public transfers on the incidence and level of private transfers. The introduction of a large social security program in Taiwan is used to estimate the effect of an exogenous increase in government transfer payments to...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Sep 2010

    Entry Cost, Financial Friction, And Cross-Country Differences In Income And TFP

    This paper develops a model to assess the quantitative effect of entry cost and financial friction on cross-country income and Total Factor Productivity (TFP) differences. The main focus is on the interaction between entry cost and financial friction. The model is calibrated to match establishment-level statistics for the U.S. economy...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Aug 2010

    Expected Returns To Stock Investments By Angel Investors In Groups

    Angel investors invest billions of dollars in thousands of entrepreneurial projects annually, far more than the number of firms that obtain venture capital. Previous research has calculated realized internal rates of return on angel investments, but empirical estimates of expected returns have not yet been produced. Although calculations of realized...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Aug 2010

    Fixed-Term And Permanent Employment Contracts: Theory And Evidence

    This paper constructs a theory of the coexistence of fixed-term and permanent employment contracts in an environment with ex ante identical workers and employers. Workers under fixed-term contracts can be dismissed at no cost while permanent employees enjoy labor protection. In a labor market characterized by search and matching frictions,...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Jul 2010

    Performance And Turnover In A Stochastic Partnership

    This paper characterizes the social-welfare maximizing equilibrium of a "Stochastic partnership matching market", in which players paired to play a stochastic game may quit to be costlessly and anonymously re-matched. Patterns of performance and turnover in this equilibrium are consistent with the well-known "Survivorship bias" and, if partners form "Meaningful...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Jul 2010

    Further Results On The Limiting Distribution Of GMM Sample Moment Conditions

    In this paper, the authors extend the results in Hansen (1982) regarding the asymptotic distribution of Generalized Method of Moments (GMM) sample moment conditions. In particular, they show that the part of the scaled sample moment conditions that gives rise to degeneracy in the asymptotic normal distribution is T-consistent and...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // May 2010

    Immigration, Remittances, And Business Cycles

    The authors use data on border enforcement and macroeconomic indicators from the United States 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 United States and documents how remittances to Mexico serve an insurance...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Apr 2010

    Financial Literacy And Subprime Mortgage Delinquency: Evidence From A Survey Matched To Administrative Data

    The exact cause of the massive defaults and foreclosures in the U.S. subprime mortgage market is still unclear. This paper investigates whether a particular aspect of borrowers' financial literacy - their numerical ability - may have played a role. The authors measure several aspects of financial literacy and cognitive ability...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2010

    Tests Of Ex Ante Versus Ex Post Theories Of Collateral Using Private And Public Information

    Collateral is a widely used, but not well understood, debt-contracting feature. Two broad strands of theoretical literature explain collateral as arising from the existence of either ex ante private information or ex post incentive problems between borrowers and lenders. However, the extant empirical literature has been unable to isolate each...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2010

    The Information Revolution And Small Business Lending: The Missing Evidence

    This paper provides empirical confirmation for Petersen and Rajan's (2002) widely accepted conjecture that information technology was the primary driver of the observed increase in small business borrower-lender distances in the United States in recent years. Using a different data source for small business loans, the authors show that annual...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2010

    What Do Premiums Paid For Bank M&As Reflect? The Case Of The European Union

    The authors analyze the takeover premiums paid for a sample of European bank mergers between 1997 and 2007. They find that acquiring banks value profitable, high-growth, and low-risk targets. They also find that the strength of bank regulation and supervision and of deposit insurance regimes in Europe has measurable effects...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Feb 2010

    Assessing The Impact Of Education And Marriage On Labor Market Exit Decisions Of Women

    During the late 1990s, the convergence of women's labor force participation rates to men's rates came to a halt. This paper explores the degree to which the role of education and marriage in women's labor supply decisions also changed over this time period. Specifically, this paper investigates women's decisions to...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Feb 2010

    Do Credit Constraints Amplify Macroeconomic Fluctuations?

    Previous studies on financial frictions have been unable to establish the empirical significance of credit constraints in macroeconomic fluctuations. This paper argues that the muted impact of credit constraints stems from the absence of a mechanism to explain the observed persistent comovements between housing prices and business investment. The authors...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Oct 2009

    Managing Expectations And Fiscal Policy

    This paper studies an optimal fiscal policy problem of Lucas and Stokey (1983) but in a situation in which the representative agent's distrust of the probability model for government expenditures puts model uncertainty premia into history-contingent prices. This situation gives rise to a motive for expectation management that is absent...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Oct 2009

    Job Search With Bidder Memories

    This paper revisits the no-recall assumption in job search models with take-it-or-leave-it offers. Workers who can recall previously encountered potential employers in order to engage them in Bertrand bidding have a distinct advantage over workers without such attachments. Firms account for this difference when hiring a worker. When a worker...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Oct 2009

    Price Distributions And Competition

    Considerable evidence demonstrates that significant dispersion exists in the prices charged for seemingly homogeneous goods. This paper adopts a simple, flexible equilibrium model of search to investigate the way the market structure influences price dispersion. Using the noisy search approach, the paper demonstrates the effects of having a single large,...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Sep 2009

    Wage Dispersion And Wage Dynamics Within And Across Firms

    This paper examines wage dispersion and wage dynamics in a stock-flow matching economy with on-the-job search. Under stock-flow matching, job seekers immediately become fully informed about the stock of viable vacancies. If only one option is available, monopsony wages result. With more than one firm bidding, Bertrand wages arise. The...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Sep 2009

    Inflation And Monetary Regimes

    Correlations of inflation with the growth rate of money increase when data are averaged over longer time periods. Correlations of inflation with the growth of money also are higher when high-inflation as well as low-inflation countries are included in the analysis. The authors show that serial correlation in the underlying...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Sep 2009

    Sector-Specific Human Capital And The Distribution Of Earnings

    This paper incorporates assignment frictions and sector-specific training into the Roy model of occupational choice. Assignment frictions represent the extent of the market whereas differences in sector-specific training reflect worker specialization. This framework thus captures Adam Smith's idea that the extent of the market determines the division of labor. The...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Aug 2009

    Voters Hold The Key: Lock-in, Mobility, And The Portability Of Property Tax Exemptions

    Since California voters approved Proposition 13 in 1978, fifteen states have enacted caps on the annual growth in assessed property values. These laws often impose a great burden on municipal finances and create horizontal inequity among homeowners. Why do voters choose to limit local government in this way? Reasons may...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Aug 2009

    Why Don't Lenders Renegotiate More Home Mortgages? Redefaults, Self-Cures, And Securitization

    The authors document the fact that servicers have been reluctant to renegotiate mortgages since the foreclosure crisis started in 2007, having performed payment-reducing modifications on only about 3 percent of seriously delinquent loans. They show that this reluctance does not result from securitization: Servicers renegotiate similarly small fractions of loans...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Aug 2009

    UK World War I And Interwar Data For Business Cycle And Growth Analysis

    This paper contributes new time series for studying the U.K. economy during World War I and the interwar period. The time series are per capita hours worked and average tax rates of capital income, labor income, and consumption. Uninterrupted time series of these variables are provided for an annual sample...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Aug 2009

    The Financial Crisis Of 2008 In Fixed Income Markets

    The authors explore how a relatively small amount of heterogeneous securities created turmoil in financial markets in much of the world in 2007 and 2008. The drivers of the financial turmoil and the financial crisis of 2008 were heterogeneous securities that were hard to value. These securities created concerns about...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Jul 2009

    Business Cycle Implications Of Internal Consumption Habit For New Keynesian Models

    This paper studies the implications of internal consumption habit for propagation and monetary transmission in New Keynesian Dynamic Stochastic General Equilibrium (NKDSGE) models. The authors use Bayesian methods to evaluate the role of internal consumption habit in NKDSGE model propagation and monetary transmission. Simulation experiments show that internal consumption habit...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // May 2009

    Reducing Foreclosures: No Easy Answers

    This paper takes a skeptical look at a leading argument about what is causing the foreclosure crisis and what should be done to stop it. The authors use an economic model to focus on two key decisions: the borrower's choice to default on a mortgage and the lender's subsequent choice...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Apr 2009

    Employer Monopsony Power In The Labor Market For Undocumented Workers

    Using matched employer-employee data from the state of Georgia, this paper investigates the potential for employer monophony power in the labor market for undocumented workers. The authors find that the labor supply elasticity of undocumented workers is about 13 percent lower than that estimated for documented workers, suggesting that at...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2009

    Decomposing Changes In The Aggregate Labor Force Participation Rate

    This paper presents a simple methodology for decomposing changes in the aggregate Labor Force Participation Rate (LFPR) over time into demographic group changes in labor force participation behavior and in population share. The purpose is to identify the relative importance of behavioral changes and population changes as driving forces behind...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2009

    The Surprising Use Of Credit Scoring In Small Business Lending By Community Banks And The Attendant Effects On Credit Availability And Risk

    The literature has documented a positive relationship between the use of credit scoring for small business loans and small business credit availability, broadly defined. However, this literature is hampered by the fact that all of the studies are based on a single 1998 survey of the very largest U.S. banking...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2009

    Entry Barriers, Competition, And Technology Adoption

    There are large differences in income per capita across countries. Growth accounting finds that a large part of the differences comes from the differences in Total Factor Productivity (TFP). This paper explores whether barrier to entry is an important factor for the cross-country differences in TFP. The paper develops a...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2009

    Decomposing Changes In The Aggregate Labor Force Participation Rate

    This paper presents a simple methodology for decomposing changes in the aggregate Labor Force Participation Rate (LFPR) over time into demographic group changes in labor force participation behavior and in population share. The purpose is to identify the relative importance of behavioral changes and population changes as driving forces behind...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Feb 2009

    The Federal Home Loan Bank System: The Lender Of Next-to-last Resort?

    The Federal Home Loan Bank (FHLB) System is a large, complex, and understudied government-sponsored liquidity facility that currently has more than $1 trillion in secured loans outstanding, mostly to commercial banks and thrifts. This paper first documents the significant role played by the FHLB System at the outset of the...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Feb 2009

    Making Sense Of The Subprime Crisis

    This paper explores the question of whether market participants could have or should have anticipated the large increase in foreclosures that occurred in 2007 and 2008. Most of these foreclosures stemmed from loans originated in 2005 and 2006, leading many to suspect that lenders originated a large volume of extremely...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Sep 2006

    An Economic Explanation Of The Early Bank Of Amsterdam, Debasement, Bills Of Exchange, And The Emergence Of The First Central Bank

    The Bank of Amsterdam, founded in 1609, was the first public bank to offer accounts not directly convertible to coin. As such, it can be described as the first true central bank. The debut of central bank money did not result from any conscious policy decision, however, but instead arose...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Jul 2010

    Performance And Turnover In A Stochastic Partnership

    This paper characterizes the social-welfare maximizing equilibrium of a "Stochastic partnership matching market", in which players paired to play a stochastic game may quit to be costlessly and anonymously re-matched. Patterns of performance and turnover in this equilibrium are consistent with the well-known "Survivorship bias" and, if partners form "Meaningful...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2011

    Accounting For The Cyclical Dynamics Of Income Shares

    Over the business cycle, labor's share of output is negatively but weakly correlated with output, and it lags output by about four quarters. Profit's share is strongly procyclical. It neither leads nor lags output, and its volatility is about four times that of output. Despite the importance of understanding the...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2011

    Monetary And Exchange Rate Policy Under Remittance Fluctuations

    Using data for the Philippines, the author develops and estimates a heterogeneous agent model to analyze the role of monetary policy in a small open economy subject to sizable remittance fluctuations. The author includes rule-of-thumb households with no access to financial markets and tests whether remittances are countercyclical and serve...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2011

    Creating An EU-level Supervisor For Cross-border Banking Groups: Issues Raised By The U.S. Experience With Dual Banking

    The European Union (EU) has been facilitating the growth of cross-border banking groups, but bank supervision remains the responsibility of national supervisors. This mismatch has long been recognized and various proposals have been offered to address this weakness. An alternative that would retain the most important advantages of full centralization...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2011

    Measuring The Welfare Gain From Personal Computers: A Macroeconomic Approach

    The welfare gain to consumers from the introduction of personal computers is estimated here. A simple model of consumer demand is formulated that uses a slightly modified version of standard preferences. The modification permits marginal utility, and hence total utility, to be finite when the consumption of computers is zero,...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2011

    Uninsured Countercyclical Risk: An Aggregation Result And Application To Optimal Monetary Policy

    The authors consider an incomplete-markets economy with capital accumulation and endogenous labor supply. Individuals face countercyclical idiosyncratic labor and asset risk. They derive conditions under which the aggregate allocations and price system can be found by solving a representative agent problem. This result is applied to analyze the properties of...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2011

    Price Discrimination And Business-cycle Risk

    A parsimonious theoretical model of second degree price discrimination suggests that the business cycle will affect the degree to which firms are able to price-discriminate between different consumer types. The authors analyze price dispersion in the airline industry to assess how price discrimination can expose airlines to aggregate-demand fluctuations. Performing...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2011

    To Work Or Not To Work: The Economics Of A Mothers Dilemma

    Utilizing linked vital statistics, administrative employer, and state welfare records, the analysis in this paper investigates the determinants of a woman's intermittent labor force decision at the time of a major life event: the birth of a child. The results indicate that both direct and opportunity labor market costs of...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Dec 2010

    The Impact Of Medical And Nursing Home Expenses And Social Insurance

    The authors consider a life-cycle model with idiosyncratic risk in labor earnings, out-of-pocket medical and nursing home expenses, and survival. Partial insurance is available through welfare, Medicaid, and social security. Calibrating the model to the United States, they find that 12 percent of aggregate savings is accumulated to finance and...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Dec 2010

    Confronting Model Misspecification In Macroeconomics

    The authors confront model misspecifications in macroeconomics by proposing an analytic framework for merging multiple models. This framework allows them to address uncertainty about models and parameters simultaneously and trace out the historical periods in which one model dominates other models. They apply the framework to a richly parameterized Dynamic...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Dec 2010

    How Amsterdam Got Fiat Money

    The authors investigate a fiat money system introduced by the Bank of Amsterdam in 1683. Using data from the Amsterdam Municipal Archives, they partially reconstruct changes in the bank's balance sheet from 1666 through 1702. The calculations show that the Bank of Amsterdam, founded in 1609, was engaged in two...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Sep 2010

    The Effect Of Social Entitlement Programs On Private Transfers: New Evidence Of Crowding Out

    This paper exploits a natural policy experiment to directly identify the crowding out effects of public transfers on the incidence and level of private transfers. The introduction of a large social security program in Taiwan is used to estimate the effect of an exogenous increase in government transfer payments to...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Jul 2010

    Further Results On The Limiting Distribution Of GMM Sample Moment Conditions

    In this paper, the authors extend the results in Hansen (1982) regarding the asymptotic distribution of Generalized Method of Moments (GMM) sample moment conditions. In particular, they show that the part of the scaled sample moment conditions that gives rise to degeneracy in the asymptotic normal distribution is T-consistent and...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2010

    Tests Of Ex Ante Versus Ex Post Theories Of Collateral Using Private And Public Information

    Collateral is a widely used, but not well understood, debt-contracting feature. Two broad strands of theoretical literature explain collateral as arising from the existence of either ex ante private information or ex post incentive problems between borrowers and lenders. However, the extant empirical literature has been unable to isolate each...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Feb 2010

    Assessing The Impact Of Education And Marriage On Labor Market Exit Decisions Of Women

    During the late 1990s, the convergence of women's labor force participation rates to men's rates came to a halt. This paper explores the degree to which the role of education and marriage in women's labor supply decisions also changed over this time period. Specifically, this paper investigates women's decisions to...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Feb 2010

    Do Credit Constraints Amplify Macroeconomic Fluctuations?

    Previous studies on financial frictions have been unable to establish the empirical significance of credit constraints in macroeconomic fluctuations. This paper argues that the muted impact of credit constraints stems from the absence of a mechanism to explain the observed persistent comovements between housing prices and business investment. The authors...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Sep 2009

    Wage Dispersion And Wage Dynamics Within And Across Firms

    This paper examines wage dispersion and wage dynamics in a stock-flow matching economy with on-the-job search. Under stock-flow matching, job seekers immediately become fully informed about the stock of viable vacancies. If only one option is available, monopsony wages result. With more than one firm bidding, Bertrand wages arise. The...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Aug 2009

    Voters Hold The Key: Lock-in, Mobility, And The Portability Of Property Tax Exemptions

    Since California voters approved Proposition 13 in 1978, fifteen states have enacted caps on the annual growth in assessed property values. These laws often impose a great burden on municipal finances and create horizontal inequity among homeowners. Why do voters choose to limit local government in this way? Reasons may...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // May 2009

    Reducing Foreclosures: No Easy Answers

    This paper takes a skeptical look at a leading argument about what is causing the foreclosure crisis and what should be done to stop it. The authors use an economic model to focus on two key decisions: the borrower's choice to default on a mortgage and the lender's subsequent choice...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2009

    The Surprising Use Of Credit Scoring In Small Business Lending By Community Banks And The Attendant Effects On Credit Availability And Risk

    The literature has documented a positive relationship between the use of credit scoring for small business loans and small business credit availability, broadly defined. However, this literature is hampered by the fact that all of the studies are based on a single 1998 survey of the very largest U.S. banking...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2009

    Entry Barriers, Competition, And Technology Adoption

    There are large differences in income per capita across countries. Growth accounting finds that a large part of the differences comes from the differences in Total Factor Productivity (TFP). This paper explores whether barrier to entry is an important factor for the cross-country differences in TFP. The paper develops a...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Sep 2009

    Inflation And Monetary Regimes

    Correlations of inflation with the growth rate of money increase when data are averaged over longer time periods. Correlations of inflation with the growth of money also are higher when high-inflation as well as low-inflation countries are included in the analysis. The authors show that serial correlation in the underlying...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Sep 2009

    Sector-Specific Human Capital And The Distribution Of Earnings

    This paper incorporates assignment frictions and sector-specific training into the Roy model of occupational choice. Assignment frictions represent the extent of the market whereas differences in sector-specific training reflect worker specialization. This framework thus captures Adam Smith's idea that the extent of the market determines the division of labor. The...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Dec 2008

    Determinants Of Domestic And Cross-Border Bank Acquisitions In The European Union

    This paper analyzes the determinants of bank acquisitions both within and across 25 members of the European Union (EU-25) during the period 1997 - 2004. These results suggest that poorly managed banks (those with a high cost-to-income ratio) and larger banks are more likely to be acquired by other banks...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Apr 2010

    Financial Literacy And Subprime Mortgage Delinquency: Evidence From A Survey Matched To Administrative Data

    The exact cause of the massive defaults and foreclosures in the U.S. subprime mortgage market is still unclear. This paper investigates whether a particular aspect of borrowers' financial literacy - their numerical ability - may have played a role. The authors measure several aspects of financial literacy and cognitive ability...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Sep 2010

    Entry Cost, Financial Friction, And Cross-Country Differences In Income And TFP

    This paper develops a model to assess the quantitative effect of entry cost and financial friction on cross-country income and Total Factor Productivity (TFP) differences. The main focus is on the interaction between entry cost and financial friction. The model is calibrated to match establishment-level statistics for the U.S. economy...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Jul 2009

    Business Cycle Implications Of Internal Consumption Habit For New Keynesian Models

    This paper studies the implications of internal consumption habit for propagation and monetary transmission in New Keynesian Dynamic Stochastic General Equilibrium (NKDSGE) models. The authors use Bayesian methods to evaluate the role of internal consumption habit in NKDSGE model propagation and monetary transmission. Simulation experiments show that internal consumption habit...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Aug 2009

    Why Don't Lenders Renegotiate More Home Mortgages? Redefaults, Self-Cures, And Securitization

    The authors document the fact that servicers have been reluctant to renegotiate mortgages since the foreclosure crisis started in 2007, having performed payment-reducing modifications on only about 3 percent of seriously delinquent loans. They show that this reluctance does not result from securitization: Servicers renegotiate similarly small fractions of loans...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Aug 2009

    UK World War I And Interwar Data For Business Cycle And Growth Analysis

    This paper contributes new time series for studying the U.K. economy during World War I and the interwar period. The time series are per capita hours worked and average tax rates of capital income, labor income, and consumption. Uninterrupted time series of these variables are provided for an annual sample...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Aug 2009

    The Financial Crisis Of 2008 In Fixed Income Markets

    The authors explore how a relatively small amount of heterogeneous securities created turmoil in financial markets in much of the world in 2007 and 2008. The drivers of the financial turmoil and the financial crisis of 2008 were heterogeneous securities that were hard to value. These securities created concerns about...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // May 2010

    Immigration, Remittances, And Business Cycles

    The authors use data on border enforcement and macroeconomic indicators from the United States 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 United States and documents how remittances to Mexico serve an insurance...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Feb 2009

    Sources Of The Great Moderation: Shocks, Frictions, Or Monetary Policy?

    The authors study the sources of the Great Moderation by estimating a variety of medium-scale Dynamic Stochastic General Equilibrium (DSGE) models that incorporate regime switches in shock variances and the inflation target. The best-fit model - the one with two regimes in shock variances - gives quantitatively different dynamics compared...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2009

    Product Market Regulation And Market Work: A Benchmark Analysis

    Recent empirical work finds a negative correlation between product market regulation and aggregate employment. The authors examine the effect of product market regulations on hours worked in a benchmark aggregate model of time allocation as well as in a standard dynamic model of entry and exit. They find that product...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2009

    Technological Change, Financial Innovation, And Diffusion In Banking

    This paper discusses the technological change and financial innovation that commercial banking has experienced during the past twenty-five years. The paper first describes the role of the financial system in economies and how technological change and financial innovation can improve social welfare. The authors then survey the literature relating to...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Mar 2009

    A Note On The Estimation Of Asset Pricing Models Using Simple Regression Betas

    Since Black, Jensen, and Scholes (1972) and Fama and MacBeth (1973), the two-pass Cross Sectional Regression (CSR) methodology has become the most popular tool for estimating and testing beta asset pricing models. In this paper, the authors focus on the case in which simple regression betas are used as repressors...

    Provided By Federal Reserve Bank of Atlanta

  • White Papers // Apr 2009

    Employer Monopsony Power In The Labor Market For Undocumented Workers

    Using matched employer-employee data from the state of Georgia, this paper investigates the potential for employer monophony power in the labor market for undocumented workers. The authors find that the labor supply elasticity of undocumented workers is about 13 percent lower than that estimated for documented workers, suggesting that at...

    Provided By Federal Reserve Bank of Atlanta