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Recent St. Louis Fed Banking and Economic Research

Monday, October 1, 2012

Too Big To Fail: The Pros and Cons of Breaking Up Big Banks
St. Louis Fed economist David C. Wheelock breaks down the arguments for and against breaking up the biggest banks—those that are considered “too big to fail”—including whether reduction in size would increase costs of providing banking services, in the October 2012 Regional Economist

Understanding Poverty Measures and the Call to Update Them
Does the increase in the poverty rate mean more Americans fall short of a desired standard of living?  Or does the increase mean more people lack the resources necessary for basic needs?  To be able to answer these questions, the authors argue for a better understanding of the poverty threshold in this Regional Economist article.

Household Financial Stability: Who Suffered the Most from the Crisis?
Economist William Emmons and research analyst Bryan Noeth of the St. Louis Fed look into which demographics were hit hardest during the financial crisis and recession.  In this Regional Economist article, the authors use three demographic dimensions of population diversity (race and/or ethnicity, age and college-degree status) to study household financial outcomes. 

Monetary Policy and the Expected Adjustment Path of Key Variables
In an Economic Synopses essay, St. Louis Fed President James Bullard discusses the notion that the Fed is “missing on both sides of its dual mandate,” which often implies that current monetary policy is far away from an ideal or optimal policy.  However, Bullard argues, the notion that one can easily infer something about the sub-optimality of policy by observing current levels of inflation and unemployment is imprecise.  In fact, observing that the Fed is “missing on both sides of the mandate” says little or nothing about the appropriateness of current policy.

Beyond Our Means:  Why America Spends While the World Saves
This Bridges article explores why American savings are so low when compared with European and East Asian nations.  Those nations promote saving and attempt to protect their citizens from over-indebtedness, while Americans save little, spend much and borrow excessively.

Prime and Subprime Hybrid Mortgages
The financial crisis shed light on several financial products introduced in the years before the crisis.  One such product was the hybrid adjustable-rate mortgage or the hybrid ARM.  Although similar in many ways, subprime hybrids were really different from prime hybrids, as explored in this Economic Synopses.