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Journal Article
Stable prices, stable economy: keeping inflation in check must be No. 1 goal of monetary policymakers
Conventional wisdom holds that if policymakers are too focused on controlling inflation, then employment, output growth and financial stability will suffer. But the conventional wisdom is wrong, according to the data.
Journal Article
Big banks in small places: are community banks being driven out of rural markets?
The shares of total U.S. banking assets and deposits held by the very largest banking organizations have increased markedly over the past 25 years, while the shares held by small ?community? banks have declined. Advances in information technology may have reduced the advantages of small scale, close proximity, and local ties that traditionally have given small, community-focused banks a competitive advantage in lending to small businesses and other ?informationally opaque? borrowers. This article examines trends in deposit shares of banks of different sizes in rural U.S. counties. If the ...
Working Paper
Regional disparities in the spatial correlation of state income growth
This paper presents new evidence of spatial correlation in U.S. state income growth. We extend the basic spatial econometric model used in the growth literature by allowing spatial correlation in state income growth to vary across geographic regions. We find positive spatial correlation in income growth rates across neighboring states, but that the strength of this spatial correlation varies considerably by region. Spatial correlation in income growth is highest for states located in the Northeast and the South. Our findings have policy implications both at the state and national level, and ...
Journal Article
The FOMC in 1998: can it get any better than this?
The U.S. economy turned in another solid performance during 1998, with faster real growth and employment gains, and lower inflation, than many observers had expected. From the standpoint of monetary policy, the year's pivotal point occurred in August, when the Russian government defaulted on its domestic debt and devalued the ruble. Before August, policymakers focused on whether an explicit policy tightening would be needed to slow domestic demand enough to prevent an increase in inflation. Financial market upset triggered by the Russian government's actions, coupled with ongoing concern ...
Working Paper
Regulation and bank failures: new evidence from the agricultural collapse of the 1920's
This article examines the contribution of government policies to the high number of bank failures in the United States during the l920s. I consider the state of Kansas, which had a system of voluntary deposit insurance and where branch banking was strictly prohibited, and find that bank failure rates were highest in counties suffering the greatest agricultural distress and where deposit insurance system membership was the highest. The evidence for Kansas illustrates how prohibitions on branch banking caused unit banks to be especially susceptible to local economic shocks, and suggests that, ...
Working Paper
The lender of last resort: lessons from the Fed’s first 100 years
We review the responses of the Federal Reserve to financial crises over the past 100 years. The authors of the Federal Reserve Act in 1913 created an institution that they hoped would prevent banking panics from occurring. When this original framework did not prevent the banking panics of the 1930s, Congress amended the Act and gave the Federal Reserve considerably greater powers to respond to financial crises. Over the subsequent decades, the Federal Reserve responded more aggressively when it perceived that there were threats to financial stability and ultimately to economic activity. We ...
Working Paper
Government policy and banking instability: \"overbanking\" in the 1920s
Excess capacity, or ?overbanking,? was cited by contemporaries as leading cause of bank failure during the 1920s. Many states that had high numbers of banks per capita in 1920 had high bank failure rates subsequently. This article finds that the number of banks per capita was highest in states that provided deposit insurance, set low minimum capital requirements, and restricted branching. Banks per capita declined the most over the 1920s in states where branching expanded, and in those suffering high failure rates because of falling incomes or instability caused by deposit insurance. Deposit ...
Journal Article
The real population problem: too few working, too many retired
It's not the total number of people that should be causing worry, but the number of retired people relative to those still working. Across the world, the ranks of retirees are swelling and the ranks of those working - and paying taxes to support retirees - are not keeping up.
Journal Article
Changing the rules: state mortgage foreclosure moratoria during the Great Depression
Many U.S. states imposed temporary moratoria on farm and nonfarm residential mortgage foreclosures during the Great Depression. This article describes the conditions that led some states to impose these moratoria and other mortgage relief during the Depression and discusses the economic effects. Moratoria were more common in states with large farm populations (as a percentage of total state population) and high farm mortgage foreclosure rates, although nonfarm mortgage distress appears to help explain why a few states with relatively low farm foreclosure rates also imposed moratoria. The ...