Search Results
Working Paper
Does the Federal Reserve possess an exploitable informational advantage?
This paper provides evidence that the Federal Reserve has an informational advantage over the public that can be exploited to improve activist monetary policy. The informational advantage derives from the Fed?s role as a bank supervisor, and it is shown to be of sufficient duration to be effective in guiding activist monetary policy, even in simple rational expectations models. The informational superiority does not result from the Fed having earlier access to publicly released data about the financial condition of banks. Instead, this informational advantage is generated by confidential ...
Working Paper
Redlining in Boston: do mortgage lenders discriminate against neighborhoods?
Historically, lenders have been accused of "redlining" minority neighborhoods as well as refusing to lend to minority applicants. Considerable bank regulation is designed to prevent both actions. However, the strong correlation between race and neighborhood makes it difficult to distinguish the impact of geographic discrimination from the effects of racial discrimination. Previous studies have failed to untangle these two influences, in part, because of severe omitted variable bias. The data set in this paper allows the distinct effects of race and geography to be identified, and it shows ...
Working Paper
Inflation dynamics when inflation is near zero
This paper discusses the likely evolution of U.S. inflation in the near and medium term on the basis of (1) past U.S. experience with very low levels of inflation, (2) the most recent Japanese experience with deflation, and (3) recent U.S. micro evidence on downward nominal wage rigidity. Our findings question the view that stable long-run inflation expectations and downward nominal wage rigidity will provide sufficient support to prices such that deflation can be avoided. We show that an inflation model fitted on Japanese data over the past 20 years, which accounts for both short- and ...
Journal Article
Issues in economics: what is the cost of deflation?
A steady decline in the core rate of inflation over the past few years has prompted the question: What are the economic consequences when the inflation rate drops below zero?
Speech
Some unpleasant stabilization arithmetic: remarks at the Federal Reserve Bank of Boston's 62nd Economic Conference, \\"What are the Consequences of Long Spells of Low Interest Rates?\\", Boston, Massachusetts, September 8, 2018
These slides represent the combined thoughts of President Rosengren and his co-presenters, Joe Peek and Geoffrey M. B. Tootell.
Journal Article
Globalization and U.S. inflation
Estimates of the Phillips curve suggest that the low level of unemployment over the last few years should have produced a fairly significant increase in the rate of inflation, yet inflation has continued to fall. Some take this occurrence as evidence that the NAIRU has declined. Others argue that social factors, such as recent movements of employee health coverage to health maintenance organizations have temporarily masked inflation. Perhaps the most widely cited explanation for the surprisingly good inflation performance of late concerns the increasing sensitivity of the U.S. economy to ...
Working Paper
Is banking supervision central to central banking?
Whether central banks should play an active role in bank supervision and regulation is being debated both in the United States and abroad. While the Bank of England has recently been stripped of its supervisory responsibilities and several proposals in the United States have advocated removing bank supervision from the Federal Reserve System, other countries are considering enhancing central bank involvement in this area. Many of the arguments for and against these proposals hinge on the effect this change would have on the ability of the central bank to conduct monetary policy. We find that ...
Working Paper
Does Fed policy reveal a ternary mandate?
This paper examines the role of financial instability in setting monetary policy. The paper begins with a model that examines the interaction of monetary and regulatory policy. It then empirically tests whether financial instability has affected monetary policy. One important innovation is to construct a measure of financial instability directly related to the FOMC financial instability concerns expressed in FOMC meeting transcripts. We find that, even after controlling for forecasts of inflation and unemployment, the word counts of terms related to financial instability do correlate with ...
Journal Article
Purchasing power parity within the United States
Economics has many articles of faith. One of the most dearly held is Purchasing Power Parity, which posits that the price of the same good in different regions should be equivalent when no barriers to arbitrage exist. Because Purchasing Power Parity (PPP) is an important assumption in much of international economic theory, this article examines empirical evidence testing this proposition. ; Instead of analyzing international data, this study analyzes PPP between regions of the United States. By comparing regions within a country, it eliminates many of the hypotheses offered to explain the ...