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Series:Research Working Paper  Bank:Federal Reserve Bank of Kansas City 

Working Paper
Urban Growth Shadows
Does a location's growth benefit or suffer from being geographically close to large economic centers? Spatial proximity may lead to competition and hurt growth, but it may also generate positive spillovers and enhance growth. Using data on U.S. counties and metro areas for the period 1840?2017, we document this tradeoff between urban shadows and urban spillovers. Proximity to large urban centers was negatively associated with growth from 1840 to 1920, and positively associated with growth after 1920. Using a two-city spatial equilibrium model with intra-city and inter-city commuting, we show that the secular evolution of commuting costs can account for this and other observed patterns in the data.
AUTHORS: Cuberes, David; Desmet, Klaus; Rappaport, Jordan
DATE: 2019-11-18

Working Paper
What do you expect? : imperfect policy credibility and tests of the expectations hypothesis?
The expectations hypothesis is a theory of the term structure of interest rates that describes a conventional view of the transmission mechanism of monetary policy. According to the expectations hypothesis, bond rates are related to current and expected movements in the policy-controlled rate. However, empirical rejections of the expectations hypothesis are commonplace and lead many to question this description of policy transmission. This paper argues that failure to account for imperfect policy credibility may explain empirical rejections. Empirical rejections may occur even when changing anticipations of future short rates are the primary source of variation in bond rates and the standard term structure transmission channel remains valid.
AUTHORS: Kozicki, Sharon; P.A.Tinsley
DATE: 2001

Working Paper
Borrowed reserves targeting and nominal income smoothing
AUTHORS: VanHoose, David D.
DATE: 1989

Working Paper
Tax analysis in a dynamic stochastic model: on measuring Harberger triangles and Okun gaps
AUTHORS: Greenwood, Jeremy; Huffman, Gregory W.
DATE: 1989

Working Paper
How real is the \\"real exchange rate?\\"
AUTHORS: Becketti, Sean; Hakkio, Craig S.
DATE: 1987

Working Paper
Inside money, outside money, and inflation
AUTHORS: Talbot, Kathleen E.; Boschen, John F.
DATE: 1987

Working Paper
Market makers' supply and pricing of financial market liquidity
This study models the bid-ask spread in financial markets as a function of asset price variability and order flow. The market-maker is characterized as passively accepting orders to buy and to sell a security at the market's prevailing price (plus or minus half the bid-ask spread). The bid-ask spread adjusts to cover market-makers' average costs. The bid-ask spread then varies positively with: the security's price volatility, the volatility of order flow, and the absolute value of the market-maker's net inventory position. Each of these variables increases average cost and hence is priced in the bid-ask spread. Thus market liquidity (varying inversely with the bid-ask spread) declines with increasing price and volume volatility and with increasing size of market-maker net inventory positions. The model hence provides a particularly simple explanation for declining market liquidity during periods of large price movements and trading imbalances that increase the size of market-makers' net inventory.
AUTHORS: Starr, Ross M.; Shen, Pu
DATE: 2000

Working Paper
International transmission of anticipated inflation under alternative exchange-rate regimes
This paper studies the international transmission of anticipated inflation. A two-country, two-good, two-currency, cash-in-advance model is used to examine analytically and numerically the consequences of changes in a country's inflation rate. Domestic monetary policy influences real activity at home through an inflation-tax channel. These real effects are transmitted to the foreign country via fluctuations in the real exchange rate. Under a flexible nominal exchange rate, inflation is a beggar-thy-neighbor policy. Under a fixed nominal exchange rate, each country suffers a welfare loss when one country inflates. The quantitative results are fairly insensitive to variations in the cash-credit mix used to finance investment expenditures.
AUTHORS: Rioja, Felix K.; Holman, Jill A.
DATE: 1999

Working Paper
Forecast-based monetary policy
A number of central banks use (published or unpublished) forecasts of goal variables as key ingredients in their decisions for instrument settings. This use of forecasts is modelled as a particular form of objective with the minimization of which the central bank is charged. We use an estimated optimization-based model with staggered price and wage setting to analyze the welfare properties of such objectives and their implications for the form of instrument rules. We find that stabilizing expected price inflation at a horizon of two years around target dominates policies of stabilizing inflation at shorter or longer horizons. However, stabilizing all fluctuations, not just forecastable ones, in both wage and price inflation leads to the closest approximation to the welfare-optimal rule.
AUTHORS: Laubach, Thomas; Amato, Jeffery D.
DATE: 1999

Working Paper
Cointegration: how short is the long run?
AUTHORS: Hakkio, Craig S.; Rush, Mark
DATE: 1990

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Clark, Todd E. 32 items

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