Recently added articles from Economic Commentary (Cleveland):
Replacing the dollar with special drawing rights--will it work this time?
Mar 01, 2009; ... Zhou Xiaochuan, Governor of the Bank of China, wants a new international reserve currency, one that is "disconnected from economic conditions and sovereign interests of any single country." He claims that credit-based national reserve currencies, like the dollar, are inherently risky, ...
Effective practices in crisis resolution and the case of Sweden.
Feb 01, 2009; ... The current financial crisis is a painful reminder that the developed world is not yet immune to these devastating shocks. But while we haven't learned to prevent them, we have learned some lessons about what is necessary to contain them once they begin and to limit the damage that ...
Adjustable-rate mortgages and the Libor surprise.
Jan 01, 2009; ... Changes in an adjustable-rate mortgage's (ARM) interest rate result primarily from changes in the index rate on which it is based. The choice of index rate can vary from lender to lender, but prior to the recent turbulence in financial markets, the particular index used mattered little ....
A new role for the Exchange Stabilization Fund.
Aug 01, 2008; ... The U.S. Treasury acted recently to preempt problems in another area of the financial system weakened by the current crisis--U.S. money-market mutual funds. Money-market mutual funds invest in highly rated short-term securities, notably commercial paper, and allow investors to ...
Covered bonds: a new way to fund residential mortgages.
Jul 01, 2008; ... Until the summer of 2007, mortgage lenders increasingly tapped capital markets for quick and cheap funding. Through a process called securitization, they could sell the loans they had originated to the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, or to large ...
Rising relative prices or inflation: why knowing the difference matters.
Jun 01, 2008; ... Over the past year, the Federal Reserve has sharply lowered its federal funds target rate and taken other policy actions to mitigate turmoil in financial markets and the associated downside risks to economic growth. The current federal funds target rate is below the rate of inflation, a ...
Trouble ahead for student loans?
May 15, 2008; ... The market for student loans may differ in some respects from other financial markets, but private lenders are the primary source of funds. As in other markets, the incentive to lend those funds comes from the ability to make a profit. But recent turmoil in financial markets is affecting ...
Trouble ahead for student loans?
May 01, 2008; ... The market for student loans may differ in some respects from other financial markets, but private lenders are the primary source of funds. As in other markets, the incentive to lend those funds comes from the ability to make a profit. But recent turmoil in financial markets is affecting ...
Stamp scrip: money people paid to use: substitutes for government-issued money are produced and used from time to time even in countries like the United States. Understanding why people turn to these substitutes and to what degree they are successful--or not--can teach us a lot about the elements essential to a well-functioning currency.
Apr 01, 2008; ... Imagine you just want a cup of coffee. It's only $1.25, but you have no cash in your wallet. They don't take checks. They don't take credit cards. Cash only! Or ...the last bus out of town leaves in 5 minutes. You have no change for the $1.75 fare, and it's 16 miles home. Ever ...
Stamp scrip: money people paid to use: substitutes for government-issued money are produced and used from time to time even in countries like the United States. Understanding why people turn to these substitutes and to what degree they are successful--or not--can teach us a lot about the elements essential to a well-functioning currency.
Apr 01, 2008; ... Imagine you just want a cup of coffee. It's only $1.25, but you have no cash in your wallet. They don't take checks. They don't take credit cards. Cash only! Or ... the last bus out of town leaves in 5 minutes. You have no change for the $1.75 fare, and it's 16 miles home. Even ...
The Great Moderation: good luck, good policy, or less oil dependence?(ECONOMIC COMMENTARY)
Mar 01, 2008; ... Three explanations have been suggested for the moderation in real GDP and inflation that has occurred in industrialized countries since the 1980s: good luck, better monetary policy, and structural changes in the economy. Recent research finds that better monetary policy explains most of ...
Explaining apparent changes in the Phillips curve: the Great moderation and monetary policy.
Feb 01, 2008; ... Ever since it was introduced five decades ago, many monetary policymakers have turned to the Phillips curve for the information and predictions it provides about the behavior of inflation. The curve, a standard part of many macroeconomic models, attempts to capture the relationship between ...
Explaining apparent Changes in the Phillips Curve: trend inflation isn't constant.
Jan 01, 2008; ... With a dual mandate to control inflation and maintain "full employment," Federal Reserve policymakers have a keen interest in understanding the behavior of inflation. One tool many have relied on as they try to achieve tliis mandate is the Phillips curve, which depicts links between ...
A brief history of central banks.(Author abstract)
Dec 01, 2007; ... A central bank is the term used to describe the authority responsible for policies that affect a country's supply of money and credit. More specifically, a central bank uses its tools of monetary policy--open market operations, discount window lending, changes in reserve requirements--to ...
Coordination failures in the labor market.(Author abstract)
Nov 01, 2007; ... Coordinating the actions of individuals is not a trivial task. Take a simple example: Two cars arrive at an intersection. How should the drivers proceed? In most countries, there are lights or stop signs to indicate who has the right of way. If such coordination devices did not exist, it ...
Regional productivity growth and plant-level dynamics.(Author abstract)
Oct 15, 2007; ... Explaining variations in productivity growth across regions has become an important goal for economists and policymakers for several reasons: Labor productivity growth is closely tied to long-term gains in wages and living standards. At the regional level, it also gauges a region's ...
Are consumers cashing out?(Author abstract)
Oct 01, 2007; ... Ever since "automated clearing house" technology was introduced in the 1970s--enabling transactions to be handled electronically (like direct deposit payroll checks)--the demise of paper-based payment instruments has been predicted many times. Over the past few decades, rapid technological ...
Regional variation in job creation and destruction.(Author abstract)
Sep 15, 2007; ... Real market economies have always been much more turbulent than the static textbook descriptions of the competitive market equilibrium. People are perpetually adapting to new products, production technologies, and competitors. A manifestation of this economic dynamism is that at all times, ...
Prepayment penalties on subprime mortgages.
Sep 01, 2007; ... Subprime mortgages are real estate loans made to individuals with less than perfect credit. On a credit-score scale of 300 to 850, those loan applicants with a score less than 620 are usually considered subprime. (People with higher scores may also be put into this category if, for ...
Peak oil.
Aug 15, 2007; ... Is the world running out of oil? Though almost no one expects the black stuff to literally stop coming out of the ground anytime soon, some suggest that oil production, having trended upwards for the past century, will soon reach a year of maximum production--a peak--and then decline. The ...