Federal Reserve Bank of Richmond

Displaying 1-18 of 18 results

  • White Papers // Mar 2011

    Market-Based Corrective Actions: An Experimental Investigation

    The authors report results from an experiment that evaluates the consequences of having a socially motivated monitor use the market price of a bank's traded assets to decide whether or not to intervene in the bank's operations. Consistent with predictions of a recent theoretical paper by Bond, Goldstein, and Prescott...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Aug 2010

    Changes In Monetary Policy And The Variation In Interest Rate Changes Across Credit Markets

    The conduct of monetary policy is most often interpreted in terms of the federal funds target rate set by the Federal Open Market Committee (FOMC), at least until recently when this rate effectively reached its zero bound and additional actions were then implemented. The federal funds rate is the interest...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Aug 2010

    Inflation Measure, Taylor Rules, And The Greenspan-Bernanke Years

    Recent research has highlighted several aspects of monetary policy under Chairman Alan Greenspan, noting that the Federal Reserve was forward looking, smoothed interest rates, and focused on core inflation. Some analysts have estimated Taylor rules that incorporate these salient features of monetary policy, and have shown that monetary policy actions...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Aug 2010

    Monetary Policy With Interest On Reserves

    In response to the emerging financial crisis of 2008, the Federal Reserve decided to increase the liquidity of the banking system. For this purpose, the Federal Reserve introduced or expanded a number of programs that made it easier for banks to borrow from it. For example, commercial banks were able...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Jul 2010

    Inflation And Unemployment: A Layperson's Guide To The Phillips Curve

    One key lesson from the history of the relationship between inflation and real activity is that any short-run trade-off depends on people's expectations for inflation. Ultimately, monetary policy has its greatest impact on real activity when it deviates from people's expectations. But if a central bank tries to deviate from...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Mar 2010

    Excess Reserves And The New Challenges For Monetary Policy

    In recent months, the level of total reserves held by Depository Institutions (DIs) in the United States has been consistently above $1 trillion. Of this, required reserves have been less than 7 percent. In the five years prior to September 2008, total reserves fluctuated between $38 billion and $56 billion,...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Feb 2010

    The Price Is Right?: Has The Financial Crisis Provided A Fatal Blow To The Efficient Market Hypothesis?

    Business cycle fluctuations are costly, but they do come with a small upside for economists: they serve as a way to test how well prevailing economic theories hold up to reality. The recent recession is no different. Some have suggested that the long-standing "Efficient Market Hypothesis" (EMH) has been disproved...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Jan 2010

    Inflation Uncertainty And The Recent Low Level Of The Long Bond Rate

    Many analysts and policymakers have been intrigued by the recently observed low levels of long-term interest rates. Figure 1 charts the actual and predicted levels of the nominal yield on ten-year U.S. Treasury bonds over 1994Q1 to 2005Q1; the predicted values were generated using the historical relationship that had existed...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Jan 2010

    Monetary Policy In The 2008-2009 Recession

    Powerful real shocks combined to buffet the economy in 2007 and 2008. A combination of a fall in housing wealth from declining house prices and a fall in real income from increasing energy and food prices made individuals worse off. Although a moderate recession began at the end of 2007,...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Jan 2010

    Inventories And Optimal Monetary Policy

    It has long been recognized that inventory investment plays a large role in explaining fluctuations in real Gross Domestic Product (GDP), although it makes up only a small fraction of it. Blinder and Maccini (1991) document that in a typical recession in the United States, the fall in inventory investment...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Dec 2009

    The Effect Of Interest On Reserves On Monetary Policy

    On October 13, 2006, the Federal Reserve was granted authority by Congress to begin paying banks interest on the reserves they hold (IOR), with implementation scheduled for October 1, 2011. The Emergency Economic Stabilization Act of 2008 accelerated implementation, at the Fed's request, to October 1, 2008. Under the authority...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Sep 2009

    Short-Term Headline-Core Inflation Dynamics

    Many analysts contend that the Federal Reserve under Chairmen Alan Greenspan and Ben Bernanke has conducted monetary policy that focuses on core rather than headline inflation. The measure of core inflation used excludes food and energy prices. The main argument in favor of using core inflation to implement monetary policy...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Aug 2009

    Recent Fiscal Policy And The Manipulation Of Aggregate Economic Activity

    A substantial portion of recent fiscal policy is predicated on the idea that increased public sector spending and investment can restore aggregate economic activity to efficient levels by stimulating current consumption, current production, or both. Understanding the likely impact of stimulative fiscal policies is currently of considerable importance, in particular...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Dec 2008

    Understanding Monetary Policy Implementation

    Over the last two decades, central banks around the world have adopted a common approach to monetary policy that involves targeting the value of a short-term interest rate. In the United States, for example, the Federal Open Market Committee (FOMC) announces a rate that it wishes to prevail in the...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Dec 2008

    Nominal Frictions, Relative Price Adjustment, And The Limits To Monetary Policy

    There are two broad classes of sticky-price models that have become popular in recent years. In the first class, prices adjust infrequently by assumption (so-called time-dependent models) and in the second class prices adjust infrequently because there is assumed to be a fixed cost of price adjustment (so-called state-dependent models)....

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Oct 2008

    Inflation Expectations: Their Sources And Effects

    Over the past year, rising inflation paired with growing unemployment have posed an increasingly complex problem for the Federal Reserve. The Consumer Price Index (CPI) jumped 5.6 percent from July 2007 to July 2008, a rate of growth not seen since the early 1990s. Given this macroeconomic climate, understanding the...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Aug 2008

    What Is The Monetary Standard, Or, How Did The Volcker-greenspan FOMCs Tame Inflation?

    What is the monetary standard? Another way to ask this question is to ask how central banks control the price level. In this paper, the author contrasts two views. What the author terms the "Quantity-theory" view implies that to control inflation (with the interest rate as its policy instrument) the...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Aug 2008

    On The Sources Of Movements In Inflation Expectations : A Few Insights From A VAR Model

    The public's expectations of inflation play an important role in influencing actual inflation and the Federal Reserve's ability to achieve price stability. Hence, there is considerable interest in identifying the economic factors that determine the public's expectations of inflation. In this paper, the authors consider some important macroeconomic determinants of...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Mar 2010

    Excess Reserves And The New Challenges For Monetary Policy

    In recent months, the level of total reserves held by Depository Institutions (DIs) in the United States has been consistently above $1 trillion. Of this, required reserves have been less than 7 percent. In the five years prior to September 2008, total reserves fluctuated between $38 billion and $56 billion,...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Dec 2009

    The Effect Of Interest On Reserves On Monetary Policy

    On October 13, 2006, the Federal Reserve was granted authority by Congress to begin paying banks interest on the reserves they hold (IOR), with implementation scheduled for October 1, 2011. The Emergency Economic Stabilization Act of 2008 accelerated implementation, at the Fed's request, to October 1, 2008. Under the authority...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Aug 2010

    Changes In Monetary Policy And The Variation In Interest Rate Changes Across Credit Markets

    The conduct of monetary policy is most often interpreted in terms of the federal funds target rate set by the Federal Open Market Committee (FOMC), at least until recently when this rate effectively reached its zero bound and additional actions were then implemented. The federal funds rate is the interest...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Aug 2009

    Recent Fiscal Policy And The Manipulation Of Aggregate Economic Activity

    A substantial portion of recent fiscal policy is predicated on the idea that increased public sector spending and investment can restore aggregate economic activity to efficient levels by stimulating current consumption, current production, or both. Understanding the likely impact of stimulative fiscal policies is currently of considerable importance, in particular...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Mar 2011

    Market-Based Corrective Actions: An Experimental Investigation

    The authors report results from an experiment that evaluates the consequences of having a socially motivated monitor use the market price of a bank's traded assets to decide whether or not to intervene in the bank's operations. Consistent with predictions of a recent theoretical paper by Bond, Goldstein, and Prescott...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Oct 2008

    Inflation Expectations: Their Sources And Effects

    Over the past year, rising inflation paired with growing unemployment have posed an increasingly complex problem for the Federal Reserve. The Consumer Price Index (CPI) jumped 5.6 percent from July 2007 to July 2008, a rate of growth not seen since the early 1990s. Given this macroeconomic climate, understanding the...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Sep 2009

    Short-Term Headline-Core Inflation Dynamics

    Many analysts contend that the Federal Reserve under Chairmen Alan Greenspan and Ben Bernanke has conducted monetary policy that focuses on core rather than headline inflation. The measure of core inflation used excludes food and energy prices. The main argument in favor of using core inflation to implement monetary policy...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Aug 2010

    Inflation Measure, Taylor Rules, And The Greenspan-Bernanke Years

    Recent research has highlighted several aspects of monetary policy under Chairman Alan Greenspan, noting that the Federal Reserve was forward looking, smoothed interest rates, and focused on core inflation. Some analysts have estimated Taylor rules that incorporate these salient features of monetary policy, and have shown that monetary policy actions...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Aug 2008

    What Is The Monetary Standard, Or, How Did The Volcker-greenspan FOMCs Tame Inflation?

    What is the monetary standard? Another way to ask this question is to ask how central banks control the price level. In this paper, the author contrasts two views. What the author terms the "Quantity-theory" view implies that to control inflation (with the interest rate as its policy instrument) the...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Aug 2008

    On The Sources Of Movements In Inflation Expectations : A Few Insights From A VAR Model

    The public's expectations of inflation play an important role in influencing actual inflation and the Federal Reserve's ability to achieve price stability. Hence, there is considerable interest in identifying the economic factors that determine the public's expectations of inflation. In this paper, the authors consider some important macroeconomic determinants of...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Jan 2010

    Inflation Uncertainty And The Recent Low Level Of The Long Bond Rate

    Many analysts and policymakers have been intrigued by the recently observed low levels of long-term interest rates. Figure 1 charts the actual and predicted levels of the nominal yield on ten-year U.S. Treasury bonds over 1994Q1 to 2005Q1; the predicted values were generated using the historical relationship that had existed...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Jul 2010

    Inflation And Unemployment: A Layperson's Guide To The Phillips Curve

    One key lesson from the history of the relationship between inflation and real activity is that any short-run trade-off depends on people's expectations for inflation. Ultimately, monetary policy has its greatest impact on real activity when it deviates from people's expectations. But if a central bank tries to deviate from...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Feb 2010

    The Price Is Right?: Has The Financial Crisis Provided A Fatal Blow To The Efficient Market Hypothesis?

    Business cycle fluctuations are costly, but they do come with a small upside for economists: they serve as a way to test how well prevailing economic theories hold up to reality. The recent recession is no different. Some have suggested that the long-standing "Efficient Market Hypothesis" (EMH) has been disproved...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Jan 2010

    Inventories And Optimal Monetary Policy

    It has long been recognized that inventory investment plays a large role in explaining fluctuations in real Gross Domestic Product (GDP), although it makes up only a small fraction of it. Blinder and Maccini (1991) document that in a typical recession in the United States, the fall in inventory investment...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Dec 2008

    Understanding Monetary Policy Implementation

    Over the last two decades, central banks around the world have adopted a common approach to monetary policy that involves targeting the value of a short-term interest rate. In the United States, for example, the Federal Open Market Committee (FOMC) announces a rate that it wishes to prevail in the...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Jan 2010

    Monetary Policy In The 2008-2009 Recession

    Powerful real shocks combined to buffet the economy in 2007 and 2008. A combination of a fall in housing wealth from declining house prices and a fall in real income from increasing energy and food prices made individuals worse off. Although a moderate recession began at the end of 2007,...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Aug 2010

    Monetary Policy With Interest On Reserves

    In response to the emerging financial crisis of 2008, the Federal Reserve decided to increase the liquidity of the banking system. For this purpose, the Federal Reserve introduced or expanded a number of programs that made it easier for banks to borrow from it. For example, commercial banks were able...

    Provided By Federal Reserve Bank of Richmond

  • White Papers // Dec 2008

    Nominal Frictions, Relative Price Adjustment, And The Limits To Monetary Policy

    There are two broad classes of sticky-price models that have become popular in recent years. In the first class, prices adjust infrequently by assumption (so-called time-dependent models) and in the second class prices adjust infrequently because there is assumed to be a fixed cost of price adjustment (so-called state-dependent models)....

    Provided By Federal Reserve Bank of Richmond