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Journal Article
Money market deposit accounts versus money market mutual funds
Working Paper
Financial innovation and monetary policy effectiveness
Journal Article
Credit effects in the monetary mechanism
Paper for a conference sponsored by the Federal Reserve Bank of New York entitled Financial Innovation and Monetary Transmission
Working Paper
What was behind the M2 breakdown?
A deterioration in the link between the M2 monetary aggregate and GDP, along with large errors in predicting M2 growth, led the Board of Governors to downgrade the M2 aggregate as a reliable indicator of monetary policy in 1993. In this paper, we argue that the financial condition of depository institutions was a major factor behind the unusual pattern of M2 growth in the early 1990s. By constructing alternative measures of M2 based on banks and thrifts capital positions, we show that the anomalous behavior of M2 in the early 1990s disappears. Specifically, after accounting for the effect of ...
Report
Is there an inflation puzzle?
This paper investigates the issue of an "inflation puzzle", or the lack of an acceleration in inflation during the current expansion. Our findings indicate that while inflation has appeared to be unusually low, we can account for this feature of the data over most of the current expansion. In particular, the results support the view that the weak increase in compensation growth during the period 1992-94 was a major contributor to the low level of inflation observed through late 1995. ; More recently, however, there is evidence of an anomaly in the behavior of inflation. The out-of-sample ...
Journal Article
Is there an inflation puzzle?
Why has U.S. inflation failed to accelerate despite six years of continuing economic expansion. The authors investigate whether compensation growth has played a role, either as a temporary restraint on inflation or as the underlying source of a new inflation regime. They offer two pieces of evidence suggesting that compensation growth has in fact acted as a temporary curb on rising prices. First, they show that the forecasting performance of a traditional Phillips curve model begins to break down in late 1993. When a measure of compensation growth is incorporated, however, the stability of ...
Journal Article
Listening to loan officers: the impact of commercial credit standards on lending and output
Over most of the last thirty-three years, the Federal Reserve has polled a small number of bank loan officers about their moves to tighten or ease commercial credit standards. Although the Senior Loan Officer Opinion Survey uses a small sample and gathers only qualitative information, it proves to be a useful tool in predicting changes in commercial lending and output. The authors find a strong correlation between tighter credit standards and slower loan growth and output, even after controlling for credit demand and other predictors of lending and output. The analysis also shows that the ...
Journal Article
The credit-output link vs. the money-output link: new evidence