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Author:Wolman, Alexander L. 

Journal Article
Federal Reserve Interdistrict Settlement

The Interdistrict Settlement Account (ISA) tracks financial flows across Federal Reserve Banks. This article provides an introduction to the ISA and traces its behavior, along with some other components of Reserve Bank balance sheets during the great recession and the financial crisis. We also discuss two important ways in which ISA differs from TARGET2, Europe's analogue to the combination of ISA and the Fedwire funds transfer system.
Economic Quarterly , Issue 2Q , Pages 117-141

Working Paper
Discretionary monetary policy in the Calvo model

We study discretionary equilibrium in the Calvo pricing model for a monetary authority that chooses the money supply. The steady-state inflation rate is above eight percent for a baseline calibration, and it varies non-monotonically with the degree of price stickiness. If the initial condition involves inflation higher than steady state, discretionary policy generates an immediate drop in inflation followed by a gradual increase to the steady state. Unlike the two-period Taylor model, discretionary policy in the Calvo model does not accommodate predetermined prices in a way that inevitably ...
Research Working Paper , Paper RWP 10-06

Journal Article
Staggered price setting and the zero bound on nominal interest rates

Economic Quarterly , Issue Fall , Pages 1-24

Working Paper
Discretionary monetary policy in the Calvo model

We study discretionary equilibrium in the Calvo pricing model for a monetary authority that chooses the money supply. The steady-state inflation rate is above 8 percent for a baseline calibration, but it varies substantially with alternative structural parameter values. If the initial condition involves inflation higher than steady state, discretionary policy generates an immediate drop in inflation followed by a gradual increase to the steady state. Unlike the two-period Taylor model, discretionary policy in the Calvo model does not accommodate predetermined prices in a way that inevitably ...
Working Paper , Paper 11-03

Conference Paper
Inflation targeting in a St. Louis model of the 21st century

Proceedings , Volume 78 , Issue May , Pages 83-107

Journal Article
The Decline in Currency Use at a National Retail Chain

We bring new evidence to bear on the contributions of changing transaction sizes and changing demographics to the decline in cash payments at a national retail chain. On average, across the thousands of store locations in our study, the share of cash transactions fell by 8.6 percentage points from February 2011 to February 2015. Our statistical model attributes approximately 1.3 percentage points of that decline to increasing transaction sizes. Changes in demographic and other location-specific variables contribute between 0.5 and 1.3 percentage points, so our analysis attributes ...
Economic Quarterly , Issue 2Q , Pages 53-77

Working Paper
Does state-dependent pricing imply coordination failure?

The analysis in Ball and Romer [1991] suggests that models with fixed costs of changing price may be rife with multiple equilibria; in their static model price adjustment is always characterized by strategic complementarity, a necessary condition for multiplicity. We extend Ball and Romer's analysis to a dynamic setting. In steady states of the dynamic model, we find only weak complementarity and no evidence of multiplicity, although nonexistence of symmetric steady state with pure strategies does arise in a small number of cases.
Working Paper , Paper 99-05

Briefing
Excess reserves and the new challenges for monetary policy

Interest on reserves allows the Federal Reserve to pursue an appropriate monetary policy even with a high level of excess reserves. However, a banking system flush with excess reserves can raise the risk of monetary policy getting behind the curve.
Richmond Fed Economic Brief , Issue Mar

Journal Article
Trend inflation, firm-specific capital, and sticky prices

Economic Quarterly , Volume 91 , Issue Fall , Pages 57-83

Working Paper
Inflation and real activity with firm-level productivity shocks

In the last ten years there has been an explosion of empirical work examining price setting behavior at the micro level. The work has in turn challenged existing macro models that attempt to explain monetary nonneutrality, because these models are generally at odds with much of the micro price data. In response, economists have developed a second generation of sticky-price models that are state dependent and that include both fixed costs of price adjustment and idiosyncratic shocks. Nonetheless, some ambiguity remains about the extent of monetary nonneutrality that can be attributed to costly ...
Working Papers , Paper 13-35

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