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on Central Banking |
| By: | William C. Dudley |
| Abstract: | Remarks at the Andrew Crockett Memorial Lecture, Bank for International Settlements 2013 Annual General Meeting, Basel, Switzerland. |
| Keywords: | Financial stability ; Monetary policy ; Banks and banking, Central ; Federal funds rate ; Interest rates ; Credit ; Demand for money ; Financial leverage ; Bank capital ; Bank of Japan ; Taylor's rule |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsp:108&r=cba |
| By: | William C. Dudley |
| Abstract: | Remarks at the Central Bank Independence Conference—Progress and Challenges in Mexico, Mexico City, Mexico. |
| Keywords: | Monetary policy ; Banks and banking, Central ; Federal Reserve banks - Costs ; Federal Reserve banks - Profits ; Federal funds rate ; Federal Reserve System |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsp:119&r=cba |
| By: | Thomas C. Baxter, Jr. |
| Abstract: | Remarks at the Committee on International Monetary Law of the International Law Association Meeting, Madrid, Spain. |
| Keywords: | Lenders of last resort ; Banks and banking, Central ; Bank liquidity ; Recessions ; European Central Bank ; Federal Reserve System ; Federal Reserve Bank of New York ; Systemic risk ; Public welfare ; Investment banking ; Bank supervision |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsp:114&r=cba |
| By: | Camille Cornand (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure [ENS] - Lyon); Cheick Kader M'Baye (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure [ENS] - Lyon) |
| Abstract: | We use laboratory experiments with human subjects to test the relevance of di-fferent inflation targeting regimes. In particular and within the standard New Keynesian model, we evaluate to what extent communication of the inflation target is relevant to the success of inflation targeting. We -find that if the central bank only cares about inflation stabilization, announcing the inflation target does not make a difference in terms of macroeconomic performances compared to a standard active monetary policy. However, if the central bank also cares about the stabilization of the economic activity, communicating the target helps to reduce the volatility of inflation, interest rate, and output gap although their average levels are not aff-ected. This finding is consistent with those of the theoretical literature and provides a rationale for the adoption of a flexible inflation targeting regime. |
| Keywords: | Inflation targeting; inflation expectations; monetary policy; New Keynesian model; laboratory experiments |
| Date: | 2013–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00877409&r=cba |
| By: | Sarah Dahlgren |
| Abstract: | Remarks at the Institute of International Bankers' Seminar on Risk Management and Regulatory/Examinations Compliance Issues. |
| Keywords: | Financial crises ; Bank capital ; Bank liquidity ; Banks and banking - Regulations ; Financial market regulatory reform ; Clearing of securities ; Systemic risk ; Federal Reserve Bank of New York |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsp:120&r=cba |
| By: | Eric S. Rosengren |
| Abstract: | Remarks by Eric S. Rosengren, President and Chief Executive Officer, Federal Reserve Bank of Boston, at the Bank for International Settlements Forum on Key Regulatory and Supervisory Issues in a Basel III World, Bank of Korea, Seoul, Korea, February 25, 2013. |
| Keywords: | Financial crises - United States ; Bank capital |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbsp:67&r=cba |
| By: | James Bullard |
| Abstract: | May 23, 2013. Presentation. "Monetary Policy in a Low Policy Rate Environment." OMFIF Golden Series Lecture, London. |
| Keywords: | Interest rates ; Monetary policy |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlps:216&r=cba |
| By: | Bo Young Chang; Bruno Feunou |
| Abstract: | We measure uncertainty surrounding the central bank’s future policy rates using implied volatility computed from interest rate option prices and realized volatility computed from intraday prices of interest rate futures. Both volatility measures show that uncertainty decreased following the most important policy actions taken by the Bank of Canada as a response to the financial crisis of 2007-08, such as the conditional commitment of 2009-10, the unscheduled cut in the target rate coordinated with other major central banks, and the introduction of term purchase and resale agreements. We also find that, on average, uncertainty decreases following the Bank of Canada’s policy rate announcements. Furthermore, our measures of policy rate uncertainty improve the estimation of policy rate expectations from overnight index swap (OIS) rates by predicting the risk premium in the OIS market. |
| Keywords: | Credit and credit aggregates; Financial markets |
| JEL: | E4 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:13-37&r=cba |
| By: | Francesco Lippi; Stefania Ragni; Nicholas Trachter |
| Abstract: | We study the optimal anticipated monetary policy in a flexible-price economy featuring heterogenous agents and incomplete markets, which give rise to a business cycle. In this setting money policy has distributional effects that depend on the state of the cycle. We parsimoniously characterize the dynamics of the economy and study the optimal regulation of the money supply as a function of the state. The optimal policy prescribes monetary expansions in recessions, when insurance is most needed by cash-poor unproductive agents. To minimize the inflationary effect of these expansions, the policy prescribes monetary contractions in good times. Although the optimal money growth rate varies greatly through the business cycle, this policy "echoes" Friedman's principle in the sense that the expected real return of money approaches the rate of time preference. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedrwp:13-17&r=cba |
| By: | Floro, Danvee; Tesfaselassie, Mewael |
| Abstract: | [Concluding remarks] The financial crisis has rendered conventional monetary policy (of major central banks) powerless. Unconventional monetary policy, in the form of forward guidance and quantitative easing, has taken center stage. Recent moves in financial markets have challenged the notion that forward guidance can be separated from the unwinding of quantitative easing and also shown that forward guidance can have perverse effects on market expectations. Nonetheless, forward guidance, as is currently formulated in practice, may be ineffective in managing market expectations not because central banks are powerless, but because they are too cautious, resulting in ambiguity in policy communication. Vagueness in communication is manifested by the insertion of conditionality and/or by the expression of intent, belief etc., to maintain accommodative policy on a certain course. Setting aside whether caution is warranted or not, the fact is that such vagueness is driven mainly by central banks unwavering commitment to price stability, a commitment which is credible owing to their hard-won reputation. Financial markets are aware of this commitment. Saying that, the remark in January 2000 by Ben Bernanke that 'far from being powerless, the Bank of Japan could achieve a great deal if it were willing to abandon its excessive caution,' is still relevant now, as it was back then. -- |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkpb:65&r=cba |
| By: | James Bullard |
| Abstract: | February 21, 2013. Presentation. "Perspectives on the Current Stance of Monetary Policy." NYU Stern Center for Global Economy and Business, New York, N.Y. |
| Keywords: | Monetary policy - United States |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlps:212&r=cba |
| By: | Zheng Liu; Mark M. Spiegel |
| Abstract: | The recent financial crisis has led to large declines in world interest rates and surges of capital flows to emerging market economies. We examine the effectiveness and welfare implications of capital control policies in the face of such external shocks in a monetary DSGE model of a small open economy. We consider both optimal, time-varying restrictions on capital inflows and a simple capital account restriction, such as a constant tax on foreign debt holdings. We then compare the effectiveness of such capital account restrictions under alternative monetary regimes. We find that the optimal time-varying capital control policy is very effective in mitigating foreign interest rate shocks, but less effective for insulating the economy from export demand shocks; in the presence of export demand shocks, an exchange-rate stabilizing monetary policy regime can enhance macroeconomic stability and improve welfare. Under a simple and more practical capital control policy, a monetary policy regime that places larger weight on inflation fluctuations leads to additional gains in macroeconomic stability, although an exchange-rate stabilizing regime leads to even greater gains. Our findings suggest that, with either type of capital control policies, stabilizing the real exchange rate is a robust and effective monetary policy to help weather external shocks. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2013-33&r=cba |
| By: | John C. Williams |
| Abstract: | Presentation to UC San Diego Economic Roundtable, San Diego, California, October 3, 2013 |
| Keywords: | Monetary policy |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfsp:123&r=cba |
| By: | Sarah Dahlgren |
| Abstract: | Remarks at the Center for Transnational Legal Studies Seminar on the Impact of U.S. Regulatory Reform on Global Banks, New York City. |
| Keywords: | Bank supervision ; Banks and banking, International ; Risk management ; Banks and banking - Regulations ; Regulatory reform ; Transparency ; Corporate governance |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsp:96&r=cba |
| By: | David Cook; Michael B. Devereux |
| Abstract: | Open economy macro theory says that when a country is subject to idiosyncratic macro shocks, it should have its own currency and a flexible exchange rate. But recently in many countries policy rates have been pushed down close to the lower bound, limiting the ability of policy-makers to accommodate shocks, even in open economies with flexible exchange rates. In this paper, we show that if the zero bound constraint is binding and policy lacks an effective `forward guidance' mechanism, a flexible exchange rate system may be inferior to a single currency area, even when there are country-specific macro shocks. When monetary policy is constrained by the zero bound, under independent currencies with flexible exchange rates, the exchange rate exacerbates the impact of shocks. Remarkably, this may hold true even if only a subset of countries are constrained by the zero bound, and other countries freely adjust their interest rates. In order for a regime of multiple currencies to dominate a single currency area in a liquidity trap environment, it is necessary to have effective forward guidance in monetary policy. |
| JEL: | F3 F33 F4 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19588&r=cba |
| By: | Eric S. Rosengren |
| Abstract: | Remarks by Eric S. Rosengren, President and Chief Executive Officer, Federal Reserve Bank of Boston, at The Council on Foreign Relations, New York, New York, October 11, 2013. |
| Keywords: | Monetary policy |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbsp:76&r=cba |
| By: | James Bullard |
| Abstract: | February 14, 2013. Presentation. "U.S. Monetary Policy: Easier Than You Think It Is." Mississippi State University, Starkville, Mississippi |
| Keywords: | Monetary policy - United States |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlps:211&r=cba |
| By: | Thomas C. Baxter, Jr. |
| Abstract: | Remarks at the International Insolvency Institute 13th Annual Conference, Columbia University Law School, New York City. |
| Keywords: | Financial Regulatory Reform (Dodd-Frank Act) ; Bank failures ; Liquidity (Economics) ; Banking law ; Federal Deposit Insurance Corporation ; Bank holding companies ; Systemic risk |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsp:107&r=cba |
| By: | John C. Williams |
| Abstract: | Presentation to The Forecasters Club, New York, New York, February 21, 2013 |
| Keywords: | Economic conditions ; Monetary policy |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfsp:116&r=cba |
| By: | John C. Williams |
| Abstract: | Presentation to Boise business and community leaders’ luncheon, Boise, Idaho, October 10, 2013 |
| Keywords: | Monetary policy |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfsp:124&r=cba |
| By: | Richard W. Fisher |
| Abstract: | Remarks before the Causes & Macroeconomic Consequences of Uncertainty Conference, Dallas, Texas, October 3, 2013 ; "A policy that takes a longer-term perspective and is properly communicated and executed—so as to instill confidence that monetary policy will hew to a 2 percent inflation target rather than fixate on the run-rate of the past four quarters or the outlook for the next four—may better supply the longer-term comfort that households and businesses need to plan and budget." |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddsp:137&r=cba |
| By: | Mark Flood; Jonathan Katz; Stephen J Ong; Adam Smith |
| Abstract: | We elucidate the tradeoffs between transparency and confidentiality in the context of financial regulation. The structure of information in financial contexts creates incentives with a pervasive effect on financial institutions and their relationships. This includes supervisory institutions, which must balance the opposing forces of confidentiality and transparency that arise from their examination and disclosure duties. Prudential supervision can expose confidential information to examiners who have a duty to protect it. Disclosure policies work to reduce information asymmetries, empowering investors and fostering market discipline. The resulting confidentiality/transparency dichotomy tends to push supervisory information policies to one extreme or the other. We argue that there are important intermediate cases in which limited information sharing would be welfare-improving, and that this can be achieved with careful use of new techniques from the fields of secure computation and statistical data privacy. We provide a broad overview of these new technologies. We also describe three specific usage scenarios where such beneficial solutions might be implemented. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:1312&r=cba |
| By: | Ekaterina V. Peneva |
| Abstract: | Recent empirical research by Olivei and Tenreyro (2007) demonstrates that the effect of monetary policy shocks on output and prices depends on the shock's timing: In the United States, a monetary policy shock that takes place in the first half of the year has a larger effect on output than on prices, while the opposite is true in the second half of the year. Olivei and Tenreyro argue that this finding reflects the fact that a greater fraction of wage rates are re-contracted in the second half of the year, implying that wages (and prices) are less flexible in the first half. In this paper, I assess this explanation in light of several additional empirical results. Most importantly, I demonstrate that within-year differences in the responses of output and prices following a monetary policy shock are not more pronounced in the service-producing sector, where labor costs represent a larger fraction of total production costs. I also find that movements in prices following a monetary shock tend to lead wage changes. These and other empirical results suggest that something other than uneven wage adjustment might be responsible for the differential within-year effect of monetary policy shocks that Olivei and Tenreyro document. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2013-70&r=cba |
| By: | Christine Garnier; Elmar Mertens; Edward Nelson |
| Abstract: | We derive estimates of trend inflation for fourteen advanced economies from a framework in which trend shocks exhibit stochastic volatility. The estimated specification allows for time-variation in the degree to which longer-term inflation expectations are well anchored in each economy. Our results bring out the effect of changes in monetary regime (such as the adoption of inflation targeting in several countries) on the behavior of trend inflation. Our estimates expand on the previous literature in several dimensions: For each country, we employ a multivariate approach that pools different inflation series in order to identify their common trend. In addition, our estimates of the inflation gap—defined as the difference between trend and observed inflation—are allowed to exhibit considerable persistence. Consequently, the fluctuations in estimates of trend inflation are much lower than those reported in studies that use stochastic volatility models in which inflation gaps are serially uncorrelated. This specification also makes our estimates less sensitive than trend estimates in the literature to the effect of distortions to inflation arising from non-market influences on prices, such as tax changes. A forecast evaluation based on pseudo-real-time estimates documents improvements in inflation forecasts, even though it remains hard to outperform simple random walk forecasts to a statistically significant degree. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2013-74&r=cba |
| By: | David Andolfatto; Aleksander Berentsen; Christopher J. Waller |
| Abstract: | We study the use of intermediated assets as media of exchange in a neo- classical growth model. An intermediary is delegated control over productive capital and finances itself by issuing claims against the revenue generated by its operations. Unlike physical capital, intermediated claims are assumed to be liquid-they constitute a form of asset-backed money. The intermediary is assumed to control 1) the number of claims outstanding, 2) the dividends paid out to claim holders and 3) the fee charged for collecting the dividend. We find that for patient economies, the first-best allocation can always be implemented as a competitive equilibrium through an appropriately designed intermediary policy rule. The optimal policy requires strictly positive inflation. While it is also possible to implement the first-best by introducing at money and a lump- sum tax instrument, our results demonstrate that neither of these interventions are necessary for efficiency. |
| Keywords: | Monetary policy ; Asset-backed financing |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2013-030&r=cba |
| By: | James Bullard |
| Abstract: | September 20, 2013. Presentation. "Four Questions for Current Monetary Policy." New York Association for Business Economics, New York, N.Y. |
| Keywords: | Monetary policy |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlps:221&r=cba |
| By: | Brun , Matthieu; Fraisse , Henri; Thesmar , David |
| Abstract: | We measure the impact of bank capital requirements on corporate borrowing and expansion. We use French loan-level data and take advantage of the transition from Basel I to Basel II. While under Basel I the capital charge was the same for all firms, under Basel II, it depends in a predictable way on both the bank's model and the firm's risk. We exploit this two-way variation to empirically estimate the sensitivity of bank lending to capital requirement. This rich identification allows us to control for firm-level credit demand shocks and bank-level credit supply shocks. We find very large effects of capital requirements on bank lending: A 1 percentage point decrease in capital requirement leads to an increase in loan size by about 5%. At the firm level, borrowing also responds strongly although a bit less, consistent with some limited between-bank substitutability. Investment and employment also increase strongly. Overall, because the transition to Basel II led to an average reduction by 2 percentage points of capital requirements, we estimate that the new regulation led, in France, to an increase in average loan size by 10%, an increase in aggregate corporate lending by 1.5%, an increase in aggregate investment by 0.5%, and the creation or preservation of 235,000 jobs. |
| Keywords: | Bank capital ratios; Bank regulation; Credit supply |
| JEL: | E51 G21 G28 |
| Date: | 2013–07–04 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:0988&r=cba |
| By: | Fernando Duarte; Thomas Eisenbach |
| Abstract: | We construct a new systemic risk measure that quantifies vulnerability to fire-sale spillovers using detailed regulatory balance-sheet data for U.S. commercial banks and repo market data for broker-dealers. Even for moderate shocks in normal times, fire-sale externalities can be substantial. For commercial banks, a 1 percent exogenous shock to assets in the first quarter of 2013 produces fire-sale externalities equal to 10 percent of system equity. For broker-dealers, a 0.1 percent shock to assets in August 2013 generates spillover losses equivalent to almost 6 percent of system equity. Externalities during the last financial crisis are between two and three times larger. Our systemic risk measure reaches a peak in the fall of 2008 but shows a notable increase starting in 2005, ahead of many other systemic risk indicators. Although the largest banks and broker-dealers produce—and are victims of—most of the externalities, leverage and "connectedness" of financial institutions also play important roles. |
| Keywords: | Systemic risk ; Bank holding companies ; Repurchase agreements ; Financial leverage ; Financial institutions |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:645&r=cba |
| By: | Ghosh, Saibal |
| Abstract: | Employing data on Indian banks for 1992-2012, the article examines the impact of macroprudential measures on bank performance. First, it finds that state-owned banks tend to have lower profitability and soundness than their private counterparts. Next, it tests whether such differentials between state-owned and private banks are driven by macroprudential measures; it finds strong support for this hypothesis. |
| Keywords: | banking; macroprudential; capital adequacy; loan classification; provisioning; ownership; India |
| JEL: | G21 L51 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:51226&r=cba |
| By: | John H. Makin (American Enterprise Institute) |
| Abstract: | The monetary cliff, or US potential to slip into a period of negative inflation (deflation), is more threatening than the fiscal cliff the United States faced earlier this year. Fed Chairman Ben Bernanke and soon-to-be chairman Janet Yellen should make deflation avoidance a more clearly stated Fed objective. |
| Keywords: | the Federal Reserve,Janet Yellen,FOMC,Economic outlook,deflation |
| JEL: | A E |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:aei:rpaper:39269&r=cba |
| By: | Aerdt Houben; Jan Kakes |
| Abstract: | Despite the efforts that commercials banks have made to promote the use of debit cards and the introduction of new payment methods, the migration from cash to electronic payment methods is not proceeding as quickly as sometimes expected. Why do people pay by cash on one occasion and by bank card on another? How conscious is people’s decision making? How rational are there reasons for choosing one method over another? For policy makers at a central bank it is relevant to have insight into the psychological aspects and effects of payment method choice, because it provides a pointer to the roles that payment methods will play in the future. Also these insights are helpful if an authority wants to encourage the usage of a specific means of payment. |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbocs:1105&r=cba |
| By: | Nævdal, Eric (Ragnar Frisch Centre for Economic Research); Vislie, Jon (Dept. of Economics, University of Oslo) |
| Abstract: | An intertemporal optimal strategy for accumulation of reversible capital and management of an exhaustible resource is analyzed for a global economy when resource depletion generates discharges that add to a stock pollutant that affects the likelihood for hitting a tipping point or threshold of unknown location, causing a random“disembodied technical regress”. We characterize an optimal strategy by imposing the notion “precautionary tax” on current extraction for preventing a productivity shock driven by stock pollution and a capital subsidy to promote capital accumulation so as to build up a buffer for future consumption opportunities should the threshold be hit. The precautionary tax will internalize the expected welfare loss should a threshold be hit, whereas the capital subsidy will internalize the expected post-catastrophic long-run return from current capital accumulation. |
| Keywords: | Catastrophic; risk; stochastic; threshold; optimal; saving |
| JEL: | C61 Q51 Q54 |
| Date: | 2013–11–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2013_024&r=cba |
| By: | Dave Reifschneider; William Wascher; David Wilcox |
| Abstract: | The recent financial crisis and ensuing recession appear to have put the productive capacity of the economy on a lower and shallower trajectory than the one that seemed to be in place prior to 2007. Using a version of an unobserved components model introduced by Fleischman and Roberts (2011), we estimate that potential GDP is currently about 7 percent below the trajectory it appeared to be on prior to 2007. We also examine the recent performance of the labor market. While the available indicators are still inconclusive, some indicators suggest that hysteresis should be a more present concern now than it has been during previous periods of economic recovery in the United States. We go on to argue that a significant portion of the recent damage to the supply side of the economy plausibly was endogenous to the weakness in aggregate demand—contrary to the conventional view that policymakers must simply accommodate themselves to aggregate supply conditions. Endogeneity of supply with respect to demand provides a strong motivation for a vigorous policy response to a weakening in aggregate demand, and we present optimal-control simulations showing how monetary policy might respond to such endogeneity in the absence of other considerations. We then discuss how other considerations--such as increased risks of financial instability or inflation instability--could cause policymakers to exercise restraint in their response to cyclical weakness. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2013-77&r=cba |
| By: | Neville Francis; Laura E. Jackson; Michael T. Owyang |
| Abstract: | The nature of the business cycle appears to have changed. Prior to the 1990s, recoveries from recessions were quick and steep; after the past three recessions, however, recoveries were weak and prolonged. We consider the effect of a number of countercyclical policies intended to shorten recessions and speed recoveries. Our innovation is to analyze the duration of the recoveries of various U.S. states, which gives us a cross-section of both state- and national- level policies. Because we study multiple recessions for the same state and multiple states for the same recession, we can control for differences in the economic conditions preceding the recessions and the causes of the recessions when evaluating various policies. We find that expansionary monetary policy at the national level helps to stimulate the exit of individual states from recession. We also find certain factors extend expected recovery times: other states in the same region suffering from recession around the same time, the length of the preceding recession, and shocks to oil prices at the peak. |
| Keywords: | Business cycles ; Recessions |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2013-032&r=cba |
| By: | Richard W. Fisher |
| Abstract: | Hearing on "Examining How the Dodd–Frank Act Could Result in More Taxpayer-Funded Bailouts", Washington, D.C., June 26, 2013 ; "I implore the members of this important committee and the Congress to not succumb merely to the illusion of hope. Don't listen to the siren song of the megabanks and their lobbyists. Take action to deal with the unfair advantages that these institutions enjoy… Leveling the playing field is a just cause for 99.8 percent of American banks and for all Americans." |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddsp:133&r=cba |
| By: | Alqatawni, Tahsen |
| Abstract: | The Dodd-Frank Act is single longest bill ever passed by the U.S… The Dodd-Frank Act passed in reply to the latest financial meltdown, which applies to prevent further fraud and abuse in the markets, also geared toward protecting consumers with regulations like keeping borrowers from abusive lending conditions and mortgage practices by lenders. Dodd-Frank regulatory requirements set too many restrictions on local lenders and appraisers and that the Act created for large banks "too-big-to-fail”. However, the small banks, which do not fit neatly into standardized financial modeling, will face unintended consequences, as increased operations costs, which lead to reduced income and limited potential growth. The Act created enormous difficulties on small banks, which has little to do with the financial crisis. |
| Keywords: | Dodd-Frank Act , Law and Compliance , financial regulation |
| JEL: | G00 G33 G38 K2 K22 K23 K40 |
| Date: | 2013–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:51109&r=cba |
| By: | Chen, Yongmin; Gu, Dingwei; Yao, Zhiyong |
| Abstract: | Credit rating agencies play a crucial role in financial markets. There are two competing views regarding their behavior: some argue that they engage in rating inflation, while others suggest that they deflate ratings. This article offers a rationale that reconciles the two opposite arguments. We find that both rating inflation and rating deflation can occur in equilibrium. Furthermore, we show that credit rating is procyclical: rating inflation is more likely to happen in a boom while rating deflation is more likely to happen in a recession. |
| Keywords: | rating inflation, rating deflation, procyclical rating |
| JEL: | D82 G10 G24 |
| Date: | 2013–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:51159&r=cba |
| By: | Tomas Havranek; Roman Horvath; Petra Valickova |
| Abstract: | We analyze 1334 estimates from 67 studies that examine the effect of financial development on economic growth. Taken together, the studies imply a positive and statistically significant effect, but the individual estimates vary widely. We find that both research design and heterogeneity in the underlying effect play a role in explaining the differences in results. Studies that do not address endogeneity tend to overstate the effect of finance on growth. While the effect seems to be weaker in less developed countries, the effect decreases worldwide after the 1980s. Our results also suggest that studies using stock-market-oriented measures as a proxy for financial development tend to report larger positive effects on growth. We find little evidence of publication bias in the literature. |
| Keywords: | Development, finance, growth, meta-analysis. |
| JEL: | C83 G10 O40 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:cnb:wpaper:2013/05&r=cba |
| By: | Greene, William H.; Gillman, Max; Harris, Mark N.; Spencer, Christopher |
| Abstract: | We propose a Tempered Ordered Probit (TOP) model. Our contribution lies not only in explicitly accounting for an excessive number of observations in a given choice category - as is the case in the standard literature on inflated models; rather, we introduce a new econometric model which nests the recently developed Middle Inflated Ordered Probit (MIOP) models of Bagozzi and Mukherjee (2012) and Brooks, Harris, and Spencer (2012) as a special case, and further, can be used as a specification test of the MIOP, where the implicit test is described as being one of symmetry versus asymmetry. In our application, which exploits a panel data-set containing the votes of Bank of England Monetary Policy Committee (MPC) members, we show that the TOP model affords the econometrician considerable flexibility with respect to modeling the impact of different forms of uncertainty on interest rate decisions. Our findings, we argue, reveal MPC members. asymmetric attitudes towards uncertainty and the changeability of interest rates. |
| Keywords: | Monetary policy committee, voting, discrete data, uncertainty, tempered equations |
| JEL: | C3 E50 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hitcei:2013-04&r=cba |