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Journal Article
The effectiveness of unconventional monetary policy: the term auction facility
This paper investigates the effectiveness of one of the Federal Reserve?s unconventional monetary policy tools, the term auction facility (TAF). At issue is whether the TAF reduced the spread between the London interbank offered rate (LIBOR) rates and equivalent-term Treasury rates by reducing the liquidity premium embedded in LIBOR rates. This paper suggests that rather than reducing the liquidity premium in LIBOR rates, the announcement of the TAF increased the risk premium in financial and other bond rates because market participants interpreted the announcement by the Fed and other ...
Journal Article
The funds rate target and interest rates
Working Paper
Lifting the veil of secrecy from monetary policy: evidence from the Fed's early discount rate policy
Traditionally, monetary policy has been conducted under a veil of secrecy. In its landmark Freedom of Information Act case, the Federal Reserve argued that it needed to delay the disclosure of its policy decision, claiming that immediate disclosure would cause the market to overreact or react in a way that was inconsistent with the Fed's intentions. Based on this argument and others, the Fed was permitted to delay the release of FOMC policy decisions. Contrary to the Fed's assertion, most economists believe that market forces would work to keep equilibrium outcomes more in line with policy ...
Working Paper
Lag-length selection criteria: empirical results from the St. Louis equation
This article describes and compares six criteria for determining the lag length of finite distributed lag models. These criteria are employed to select the lag length of the distributed lag variables within the St. Louis equation using a computationally efficient procedure. The lag lengths chosen are tested against each other and against arbitrarily overfitted and underfitted specifications. The results suggest that Akaike's final prediction error criterion and Pagano and Hartley's procedure perform well relative to the other criteria considered.
Journal Article
The federal debt: too little revenue or too much spending
The rise in the national debt... is entirely a consequence of the federal government?s increase of expenditures without an offsetting increase in revenues.
Journal Article
A proposal for improving forward guidance
Our approach offers several advantages over LSAPs as a financial mechanism to enhance forward guidance.
Journal Article
Tax rates and revenue since the 1970s
Before 2000, the tax burden shifted from the lowest 80% of earners to the highest 20%; since 2000, the burden has shrunk for all groups, but more so for the highest earners.