The Australian money market and the operations of the Reserve Bank of Australia: a comparative analysis
This article provides a comparative analysis of central bank operating procedures in Australia and the United States. It also examines the effect that the structure of overnight money markets, reserve requirements, and central bank lending procedures have on monetary control in both countries. Evidently the Australian financial structure is such that an interest rate instrument provides superior control of money, a result that may not hold in the United States.
Oil shocks, monetary policy, and economic activity
Various reasons have been given to explain downturns in U.S. economic activity since World War II. Romer and Romer (1989) argued that these recessions were primarily associated with monetary contractions, while Hamilton (1983) and others attributed them to oil price increases. We investigate these competing hypotheses and find that when measures of oil prices are included, the Romers measure of monetary policy does not significantly explain economic downturns. However, alternative measures of monetary policy, specifically the federal funds rate the spread between the ten-year Treasury rate ...
Japanese monetary policy, a comparative analysis
An abstract for this article is not available
Reforming deposit insurance: lessons from the savings and loan crisis
A history of the collapse of the savings and loan industry. The authors contend that FSLICs institutional structures, established decades ago, made a thrift crisis inevitable. Poorly designed incentive structures strongly encouraged regulators and thrift managers to delay proper action when thrifts became insolvent. The authors present recommendations to prevent a recurrence of the crisis.
An investigation of cash management practices and their effects on the demand for money
The observed shift in statistical demand-for-money relationships during the mid-1970s was once thought to reflect an unexplainable change in behavior. More recently, economists have recognized that the conventional regressions inadequately represented the demand for money. Specifically, the standard models overpredicted money demand during the 1970s since they failed to capture the effects of sophisticated cash management techniques. In An Investigation of Cash Management Practices and Their Effects on the Demand for Money, Michael Dotsey examines ways of augmenting the conventional models to ...
Controversy over the federal budget deficit : a theoretical perspective
Recently, the Office of Management and Budget projected that the fiscal 1985 federal budget deficit would exceed $200 billion and that out-year reductions would be gradual at best. These prospects have engendered a debate concerning the economic effects of government deficits and the attendant high level of government borrowing. In this article, Michael Dotsey investigates this topic theoretically using alternative macroeconomic models. Dotsey first examines a standard Keynesian model and finds that its prediction of a depressing future effect of government borrowing stems from its ...
Monetary policy and operating procedures in New Zealand
The Reserve Bank of New Zealand operates in a highly deregulated financial environment which lacks any interest rate regulation or reserve requirements. Yet the Reserve Bank has been able to implement effective monetary policy through a quantity-based procedure. This article analyzes the operating procedures of the Reserve Bank of New Zealand and the relatively small financial costs imposed by these procedures.
An examination of implicit interest rates on demand deposits
An abstract for this article is not available.
Rational expectations business cycle models: a survey
Development of rational expectations models of the business cycle has been the central issue in macroeconomics over the last 15 years. The postulate that expectations are rational imposes considerable discipline on business cycle analysis. In this essay we review the current literature on rational expectations models of business cycles with specific attention focused on the extent to which the rational expectations perspective has generated a new understanding of economic fluctuations.
An examination of international trade data in the 1980s
This article examines three competing hypotheses and their ability to explain events in international financial markets during the 1980s. The rival hypotheses view the trade deficit as caused alternatively by large U.S. budget deficits, by tight U.S. monetary policy, or by real shocks to investment resulting from changes in the U.S. tax code. While no entirely consistent explanation emerges, the real-shock hypothesis seems to match the data best.