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Working Paper
Are household surveys like tax forms: evidence from income underreporting of the self-employed
There is a large literature showing that the self-employed underreport their income to tax authorities. In this paper, we quantify the extent to which the self-employed also systematically underreport their income in U.S. household surveys. To do so, we use the Engel curve describing the relationship between income and expenditures of wage and salary workers to infer the actual income, and thus the reporting gap, of the self-employed based on their reported expenditures. We find that the self-employed underreport their income by about 30 percent. This result is remarkably robust across data ...
Speech
Financial stability and economic growth
Remarks at the 2011 Bretton Woods Committee International Council Meeting, Washington, D.C.>
Report
Central bank transparency and the crowding out of private information in an experimental asset market
Central banks have become increasingly communicative. An important reason is that democratic societies expect more transparency from public institutions. Central bankers, based on empirical research, also believe that sharing information has economic benefits. Communication is seen as a way to improve the predictability of monetary policy, thereby lowering financial market volatility and contributing to a more stable economy. However, a potential side-effect of providing costless public information is that market participants may be less inclined to invest in private information. Theoretical ...
Report
FOMC communication policy and the accuracy of Fed Funds futures
Over the last two decades, the Federal Open Market Committee (FOMC), the rate-setting body of the United States Federal Reserve System, has become increasingly communicative and transparent. According to policymakers, one of the goals of this shift has been to improve monetary policy predictability. Previous academic research has found that the FOMC has indeed become more predictable. Here, I contribute to the literature in two ways. First, instead of simply looking at predictability before and after the Fed?s communication reforms in the 1990s, I identify three distinct periods of reform and ...
Journal Article
Informational easing: improving credit conditions through the release of information
Economist Matthew Pritsker of the Board of Governors of the Federal Reserve System offers a theoretical view on how regulators can reduce uncertainty in the financial markets by improving the availability of information.
Report
Central bank transparency, the accuracy of professional forecasts, and interest rate volatility
Central banks worldwide have become more transparent. An important reason is that democratic societies expect more openness from public institutions. Policymakers also see transparency as a way to improve the predictability of monetary policy, thereby lowering interest rate volatility and contributing to economic stability. Most empirical studies support this view. However, there are three reasons why more research is needed. First, some (mostly theoretical) work suggests that transparency has an adverse effect on predictability. Second, empirical studies have mostly focused on average ...
Speech
U.S. experience with bank stress tests
Based on remarks at the Group of 30 plenary meeting, Bern, Switzerland.
Speech
Three issues in learning and monetary policy
Presented at Adaptive Learning in Macroeconomics. Sponsored by the Centre for International Macroeconomics and Finance (CIMF) and the Faculty of Economics of the University of Cambridge.
Report
Corporate governance of financial institutions
We identify the tension created by the dual demands of financial institutions to be value-maximizing entities that also serve the public interest. We highlight the importance of information in addressing the public?s desire for banks to be safe yet innovative. Regulators can choose several approaches to increase market discipline and information production. First, they can mandate information production outside of markets through increased regulatory disclosure. Second, they can directly motivate potential producers of information by changing their incentives. Traditional approaches to bank ...