Third Quarter 2016

In This Edition

  • A Taylor Rule for Public Debt

    Public debt is an important source of liquidity in economies facing shortages of private credit. It is also a bubble whose current price depends on expectations of what it will buy at future dates.


  • Monetary Policy in an Oil-Exporting Economy

    The sudden collapse of oil prices poses a challenge to inflation-targeting central banks in oil-exporting economies. In this article, the authors illustrate this challenge and conduct a quantitative assessment of the impact of changes in oil prices in a small open economy in which oil represents an important fraction of its exports.


  • Sales of Distressed Residential Property: What Have We Learned from Recent Research?

    During the housing bust many homeowners found themselves "underwater""”the amount they owed on their mortgages exceeded the value of the associated property"”and they either could not or possibly chose not to stay current on their mortgage payments. As a consequence, sales of so-called distressed properties, often after a foreclosure, became commonplace.


  • The Visible Hand: The Role of Government in China's Long-Awaited Industrial Revolution

    One of the key strategies behind the creation and nurturing of a continually growing market in China is based on this premise: The free market is a public good that is very costly for nations to create and support. Market creation requires a powerful "mercantilist" state and the correct sequence of developmental stages; China has been successfully accomplishing its industrialization through these stages, backed by measured, targeted reforms and direct participation from its central and local governments.