Policy Discussion Papers
Providing you with in-depth analysis of monetary and financial policy.
2005
- No. 11
- Umbrella Supervision and the Role of the Central Bank
- Deregulation and financial consolidation have led to the development of financial holding companies-allowing commercial banking, insurance, investment banking, and other financial activities to be conducted under the same corporate umbrella-and the Federal Reserve has been named supervisor of the consolidated enterprise. This Policy Discussion Paper will show that there likely are economies of scope between the Fed’s inherent central-banking responsibilities and those of an umbrella supervisor and that these duel roles benefit both the Fed and functional regulators. (PDF)
- No. 10
- Oil Prices, Monetary Policy, and the Macroeconomy
- Every U.S. recession since 1971 has been preceded by two things: an oil price shock and an increase in the federal funds rate. Bernanke, Gertler, and Watson (1997,2004) investigated how much oil price shocks have contributed to output growth by asking the following counterfactual question: Empirically how much would we expect oil price increases to have contributed to output growth if the Fed had kept the rate constant instead of letting it increase? They concluded that, at most, half of the observed output declines can be attributed to oil price increases. Most were actually caused by funds rate increases. A problem with their empirical analysis, however, is that it implicitly assumes that the Fed can continually "fool" the public. That is, the funds rate is led constant even though the public actually expects the Fed to follow its historical policy rule of raising the funds rate in conjunction with oil price increases. We show that if the new policy rule were anticipated oil price increases would have had a much larger impact on output than suggested by Bernanke, Gertler, and Watson’s analysis. (PDF)
- No. 9
- Systemic Banking Crises
- Systemic banking crises can have devastating effects on the economies of developing or industrialized countries. This Policy Discussion Paper reviews the factors that weaken banking systems and make them more susceptible to crises. (PDF)
- No. 8
- Recent Developments in Monetary Economics: A Summary of the 2004 Workshop on Money, Banking, and Payments
- We provide a summary and an overview of the papers presented at the Federal Reserve Bank of Cleveland’s 2004 Workshop on Money, Banking, and Payments, held during the weeks of August 3-7 and August 23-27, 2004. The papers presented at the workshop are available at www.clevelandfed.org/research/confpast.cfm (PDF)