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Working Paper
Central bank responsibility, seigniorage, and welfare
Historically, countries have relied on seigniorage. In this paper, we explore a set of features in which a benevolent government will rely on seigniorage. We use a simple overlapping generations model with return-dominated money. Money is valued because of a reserve requirement. The government has to raise a fixed amount of revenue solely for the purposes of making transfers to the old. It has two revenue-generating options: lump-sum taxes (money creation) under the control of the treasury (central bank). We restrict the amount of seigniorage collected to be nonnegative and require that the ...
Working Paper
Is money still useful for policy in East Asia?
Since the East Asian crises of 1997, a number of East Asian economies have allowed greater exchange rate flexibility and abandoned monetary targets in favor of inflation targeting, apparently because the perceived usefulness of money as a predictor of inflation, i.e. the information content of money, has fallen. In this paper, we discuss factors that are likely to have influenced the stability of the relationship between money and inflation, particularly in the 1990s, and then assess this relationship in a set of East Asian economies. We focus on (1) the stability of the behavior of the ...
Newsletter
China up close: understanding the Chinese economy and financial system (special issue)
In March 2007, the authors paid a weeklong visit to Beijing and Shanghai, China. In this article, they summarize some of the most striking impressions from their visit concerning the Chinese economy and financial system.
Journal Article
Central bank dollar swap lines and overseas dollar funding costs
In the decade prior to the financial crisis, foreign banks? exposure to U.S.-dollar-denominated assets rose dramatically. When the crisis hit in 2007, the banks? access to dollar funding came under severe duress, with potentially dire consequences for global financial markets that could also spread to U.S. markets. The Federal Reserve responded in December 2007 by establishing temporary reciprocal currency swap lines, or facilities, with foreign central banks designed to ameliorate dollar funding stresses overseas. Drawing on rigorous analysis of the swaps, as well as insights of other ...
Journal Article
International banking, risk, and U.S. regulatory policies
Working Paper
The poor performance of foreign bank subsidiaries: were the problems acquired or created?
We examine foreign acquisitions of United States banks around the time of the ownership change to determine whether the observed poor performance of foreign subsidiaries is the result of changes in business strategy or the preexisting characteristics of the target bank. We find that many of the problems were already present at the time of acquisition. However, changes in business strategy by the foreign owners were generally not successful in raising the banks's performance level to that of its domestic peers.
Journal Article
Recent activities of foreign branches of U.S. banks
Working Paper
Challenges and choices in post-crisis East-Asia: simulations of investment policy reform in an intertemporal, global model
The East Asian financial crisis exposed the problems of excessive government intervention in credit allocation and poor supervision of the banking system. We argue that the crisis is an opportunity to reformulate the strategies of growth by way of eliminating politicized intervention on investment. In an intertemporal general equilibrium model, we examine the adjustment processes of the crisis-hit region and the world economies, and investigate the removal of the investment subsidies. Our results suggest that the immediate impact of the crisis on the Asian economies is a contraction of GDP ...