September/October 2004

In This Edition

  • Asymmetric Effects of Monetary Policy in the United States

    Using M1, economists Morten Ravn and Martin Sola achieve results that match previous findings on the size and sign of monetary policy shocks: Positive shocks have larger real effects. Using the federal funds rate, however, they find that only small negative shocks affect real aggregate activity.

  • Free Trade: Why Are Economists and Noneconomists So Far Apart?

    Free Trade Has Costs, but Who Really Wins and Loses? There's a wide gap between economists' and the public's opinions of free trade: The vast majority of economists is for it, while a strong majority of the general public is against it. Bank president Bill Poole explains the gap and how diligent journalists can help close it.

  • Testing the Expectations Hypothesis: Some New Evidence for Japan

    The EH in Japan. Deregulation of financial markets in Japan has prompted several investigations of the expectation hypothesis (EH) of the term structure of interest rates. Daniel Thornton expands this literature by estimating a general VAR of the long- and short-term rates and testing restrictions implied by the EH under alternative assumptions about the stationarity of interest rates. He also considers the implications of nonstationarity of interest rates for the EH itself.

  • Trends in the Efficiency of Federal Reserve Check Processing Operations

    The Challenges of Checks. 17.1 billion: That's how many checks the Federal Reserve processed in 1999. But that number continues to decline as electronic payments increase. David Wheelock and Paul Wilson report new information about the Fed's efficiency and how to estimate it.



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