- Swaps and the Swaps Yield Curve
by Joseph G. Haubrich - The Curiously Different Inflation Perspectives of Men and Women
by Michael F. Bryan and Guhan Venkatu - The Demographics of Inflation Opinion Surveys
by Michael F. Bryan and Guhan Venkatu - How Well Does the Federal Funds Futures Rate Predict the Future Federal Funds Rate?
by Ed Nosal - Who Benefits from Increasing the Federal Deposit Insurance Limit?
by James B. Thomson - Productivity Gains, How Permanent?
by Paul W. Bauer, Jeffrey L. Jensen and Mark E. Schweitzer - Does Social Security Worsen Inequality?
by Jagadeesh Gokhale - From Market Failure to Market-Based Solution: Policy Lessons from Clean Air Legislation
by Eduard A. Pelz and Terry J. Fitzgerald - Money, Manufacturing, and the Strong Dollar
by Owen F. Humpage - Effective Supervision and the Evolving Financial Services Industry
by Jerry L. Jordan - On the Cost of Inflation
by Paul Gomme - Monetary Policy with Humility
by Sandra Pianalto - Fiscal Policy in an Era of Surpluses
by Jagadeesh Gokhale - Why is the Dividend Yield So Low?
by John B. Carlson - Beyond Zero: Transparency in the Bank of Japan's Monetary Policy
by Ed Stevens - Life-Cycle Income and Consumption Variability
by Peter Rupert and Chris Telmer - Perils of Price Deflations: An Analysis of the Great Depression
by Charles T. Carlstrom and Timothy S. Fuerst - Risk Management and Financial Crises
by Joseph G. Haubrich - A Retrospective on the Stock Market in 2000
by John B. Carlson and Eduard A. Pelz - Riding the S-Curve: Thriving in a Technological Revolution
by Jerry L. Jordan
Swaps and the Swaps Yield Curve top
by Joseph G. Haubrich
December 2001
Interest rate swaps have become a popular financial derivative, and market watchers and economists are paying closer attention to them and their associated yield curves. This Commentary gives a brief introduction to swaps and their relation to other interest rates.
Full text 57K in PDF
The Curiously Different Inflation Perspectives of Men and Women top
by Michael F. Bryan and Guhan Venkatu
November, 2001
That men and women occasionally see things differently is not a remarkable observation. But that the sexes could report vastly different perspectives on the rate at which prices are rising over a long period of time is astonishing. This Commentary describes the difference in inflation sentiment held by men and women—a puzzle that may hold the key to interpreting survey-based data on household inflation expectations.
Full text 69K in PDF
The Demographics of Inflation Opinion Surveys top
by Michael F. Bryan and Guhan Venkatu
October 15, 2001
In this Commentary, we document that people report very different perceptions and predictions of inflation depending upon their income, education, age, race, and gender—a strange finding that may provide an important clue to understanding how to interpret survey data of inflation expectations.
Full text 62K in PDF
How Well Does the Federal Funds Futures Rate Predict the Future Federal Funds Rate? top
by Ed Nosal
October 1, 2001
Contrary to popular belief, federal funds futures rates do not tell us precisely where the market thinks federal funds rates will be in the future. On average, futures rates overpredict future fed funds rates, and, depending on whether fed funds rates are falling or rising, the futures rate may consistently overestimate or underestimate the future fed funds rates. To obtain a reliable estimate of the future fed funds rate, one must adjust the fed funds futures rate appropriately to account for the bias and past movements of the fed funds rate.
Who Benefits from Increasing the Federal Deposit Insurance Limit? top
by James B. Thomson
September 15, 2001
Who might stand to benefit from doubling the insured-deposit limit to $200,000, and are such benefits consistent with the social objectives of federal deposit insurance?
Productivity Gains, How Permanent? top
by Paul W. Bauer, Jeffrey L. Jensen, and Mark E. Schweitzer
September 1, 2001
This Economic Commentary confirms unusually robust productivity growth of the last few years and explores reasonable assumptions about the likely future pattern of productivity growth. These assumptions can generate substantially different productivity growth paths. Government forecasts, which guide the major tax and benefit programs, have been increased in recent years yet remain cautious.
Does Social Security Worsen Inequality? top
by Jagadeesh Gokhale
August 15, 2001
Gaps between the rich and poor grow once people hit retirement. Some say privatizing Social Security will increase wealth inequality among retirees. This Economic Commentary argues it won’t and suggests that the current system may be reducing wealth mobility from one generation to the next.
From Market Failure to Market-Based Solution: Policy Lessons from Clean Air Legislation top
by Eduard A. Pelz and Terry J. Fitzgerald
August 1, 2001
How can the United States balance its need for increased energy production with national and global environmental concerns? This Economic Commentary argues that competitive markets can be used to address environmental needs without placing an excessive burden on citizens.
Money, Manufacturing, and the Strong Dollar top
by Owen F. Humpage
July 2001
U.S. firms are facing tough international competition, and the U.S. trade deficit has grown to a level that some find alarming. Why doesn’t the United States respond by easing monetary policy to lower the dollar’s exchange rate and reduce the price of U.S. goods in foreign markets? This Commentary argues that monetary policy is incapable of improving the competitive position of U.S. manufacturing through exchange rate manipulation. The temporary gains monetary easing might achieve through a nominal dollar depreciation would be offset by higher inflation and decreased foreign investment.
Effective Supervision and the Evolving Financial Services Industry top
by Jerry L. Jordan
June 2001
Technology, market consolidation, international competition, and new legislation are changing the face of the financial services industry. How are the agencies responsible for ensuring the safety and soundness of our financial system responding?
On the Cost of Inflation top
by Paul Gomme
May 15, 2001
The FOMC has two objectives: maximizing sustainable economic growth, and maintaining price stability. At times—like the past year—these goals appear to be in conflict. This Economic Commentary outlines some economic theory that suggests that in the long run the FOMC can achieve its two objectives by focusing primarily on its price stability target.
Monetary Policy with Humility top
by Sandra Pianalto
May 1, 2001
When the economy slows, monetary policymakers face pressure to deviate from their longer-term goals to address short-term problems. This Commentary argues that the Fed must stay focused on the long term--maintaining the stable purchasing power of the dollar.
Fiscal Policy in an Era of Surpluses top
by Jagadeesh Gokhale
April 15, 2001
Federal surpluses have come as a pleasant surprise, but using them to finance additional government spending would be disastrous. By the middle of the next decade, Social Security and Medicare outlays will soar beyond projected payroll taxes. While using the surpluses to offset future entitlement payments is a good idea, finding a way to do it is not so easy. This Commentary suggests it could be accomplished by paying down the national debt and combining the remaining surplus with Social Security reform.
Why is the Dividend Yield So Low? top
by John B. Carlson
April 1, 2001
The dividend yield on stocks has dropped sharply over the last decade. Is its drop reflective of irrational exuberance, as some have claimed? This Commentary assesses alternative explanations for the diminished dividend yield.
Beyond Zero: Transparency in the Bank of Japan's Monetary Policy top
by Ed Stevens
March 15, 2001
Japan's economy has problems that, undoubtedly, are more complex than monetary policy might be expected to solve. But other kinds of policy actions stand a better chance of success when monetary policy is transparent. Transparency means that market participants' anticipations of central bank actions are congruent with those of policymakers themselves. The Bank of Japan has made repeated efforts toward greater transparency since achieving independence in 1998.
Life-Cycle Income and Consumption Variability top
by Peter Rupert and Chris Telmer
March 1, 2001
By all accounts, economic inequality is growing - the rich are getting richer, and the poor are getting poorer. This Economic Commentaryexplores inequality in income and consumption and asks whether inequality is determined early in life, before individuals enter the labor market, or whether it manifests itself during the working years.
Perils of Price Deflations: An Analysis of the Great Depression top
by Charles T. Carlstrom and Timothy S. Fuerst
February 15, 2001
If a central bank adopts a zero inflation target, it would, in practice, occasionally deviate from that rate up and down, and the economy would experience episodes of mild inflation and deflation. Is deflation—a decrease in the level of prices—a cause for concern? Deflation can cause output to decline, but to what extent? This Economic Commentary explores how much of a problem deflation might be for modern economies by estimating the effect that massive price declines had on output during the Great Depression. We find that while deflation can cause output to decline, mild episodes of deflation are unlikely to be a problem.
Risk Management and Financial Crises top
by Joseph G. Haubrich
February 1, 2001
Some financial failures occur when people don't understand the risks they take. Others are simply bad luck. But the most important cases happen when private risks have an additional social aspect.
A Retrospective on the Stock Market in 2000 top
by John B. Carlson and Eduard A. Pelz
January 15, 2001
Should the end of the bull market have come as a surprise?
Riding the S-Curve: Thriving in a Technological Revolution top
by Jerry L. Jordan
January 1, 2001
The information technology revolution offers a great opportunity to leap forward in our collective prosperity. All of us stand to benefit. But some will take to the revolution more easily than others-policymakers have learned this lesson from previous economic revolutions. This Economic Commentary is adapted from a speech given by Jerry L. Jordan, president and CEO of the Federal Reserve Bank of Cleveland, to the Ohio Aerospace Institute on October 12, 2000.
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