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A feature of U.S. postwar business cycle experience that is by now widely documented is the tendency of the spread between the respective interest rates on commercial paper and Treasury bills to widen shortly before the onset of recessions. By contrast, the paper-bill spread did not anticipate the 1990-1991 recession. Empirical work presented in this paper supports two (not mutually exclusive) explanations for this departure from past experience. First, at least part of the paper-bill spread's predictive content with respect to business cycle fluctuations stems from its role as an indicator of monetary policy, but the 1990-1991 recession was unusual in postwar U.S. experience in not being immediately precipitated by tight monetary policy. Second, movements of the spread during the few years just prior to the 1990-1991 recession were strongly influenced by changes in the relative quantities of commercial paper, bank CDs, and Treasury bills that occurred for reasons unrelated to the business cycle. This latter finding in particular sheds light on the important role of imperfect substitutability of different short-term debt instruments in investors' portfolios, and highlights the burdens associated with using relative interest rate relationships as business cycle indicators. [ABSTRACT FROM AUTHOR]

The article lists working papers, technical reports and monographs relevant to the real estate business in the United States. These include "Long Run Impact of the Fed Funds Rate on Texas Mortgage Interest Rates," by A. Anari and M. Dotzour, "Refinancing and the U.S. Economy," by A. Anari and M. Dotzour, "Directional Rates of Change Under Spatial Process Models," by S. Banerjee, A.E. Gelfand, H.-J. Kim and C. F. Sirmans, "Homeownership in the Immigrant Population," by G. Borjas and "Service With a Smile (Commercial Leasing)," by L. Bravenec.

The author comments on articles by economics Greenbaum and Haywood (G&H) and Bloch concerning the major factors that must be considered in analyzing changes in the financial sector and their resulting impact on the economy. He states that G&H argue that demand for financial assets is dependent on standard variables, income, interest rates, and more. He suggests that G&H didn't delve far enough into government policy on the financial sector and states his belief that the introduction of large quantities of U.S. Treasury Bills is the most important financial innovation from 1940-70. He states that Bloch's view of the U.S. Federal Reserve's behavior is instructive, and said that while he doesn't question Bloch's analysis, he does question if the reasons are correct.

The onset of the COVID-19 pandemic in the United States may have led investors or other individuals to expect sharp drops in output and rising prices, as well as drastic changes in fiscal and/or monetary to deal with the crisis. This paper analyses the co-movement between expected inflation and interest in the U.S. by using a battery of wavelet tools over the period from January 21, 2020 to March 28, 2022. Wavelet methods are used to examine the linkages between expected inflation and nominal interest rates of varying terms, focusing on the direction of co-movement and their sub-time horizons. Both bivariate wavelet and partial wavelet models that incorporate daily COVID-19 case counts or a financial stress variable find that the relationship holds primarily in the longer short-run (more than 6 months), with connections stronger for maturities of 5 years than for 1 year or less. The expectation related to the 'inflation–interest rate' nexus and type of bond maturity seem to be significantly shaped by the pandemic peak and anticipated duration of the disease. More precisely, the longer the anticipated duration of the pandemic is, the higher the expected inflation rate, bond yield rate, and maturity are. The interaction between expected inflation and interest seems to be very sensitive to pandemic and financial stress in terms of lead-lag status, in the very short to short-run, for 5 and 10 years bond maturity. This seems to be explained by investor hazard to a new particular unknown stimulus caused by the pandemic and its socio-economic consequences. [ABSTRACT FROM AUTHOR]

This study employs the panel vector autoregressive (PVAR) model to examine the spillover effect of US unconventional monetary policy on inflation and non-inflation targeting emerging markets post credit crunch and during COVID-19 from 2000Q1 to 2020Q4. Unlike other analyses, this paper adds to the existing body of knowledge by employing a dummy variable to represent the United States' quantitative easing. Other included control variables are equity prices, the federal reserve rate, the exchange rate, central bank assets and the short-term interest rate. This paper estimated two-panel VARs, Model one and Model two, for inflation and non-inflation targeting emerging markets, respectively. Model one consists of eight inflation-targeting markets, and Model two consists of four non-inflation-targeting countries. Other included control variables are equity prices, the federal reserve rate, the nominal effective exchange rate, and the central bank policy rate. According to the empirical results, the US unconventional monetary policy induces a surge in the exchange rate and a decrease in the central bank policy rate for both inflation and non-inflation targeting emerging markets. However, there was no significant impact on the equity prices. The empirical results are statistically significant, robust, and consistent with previous studies except for the response of equity prices. Unconventional monetary policy is effective in steering macroeconomic variables in developed economies. The monetary policymakers in emerging markets must also use the currency reserve to stabilise the macroeconomic variables in response to US unconventional monetary policy shocks. [ABSTRACT FROM AUTHOR]

This paper analyzes the effect of remittance inflows on external debt in developing countries, by identifying international reserves as a potential transmission channel. Using panel data over the period 1970–2017 and covering 50 low-and middle-income countries worldwide, we find a positive and significant effect of remittance inflows on the external debt-to-GDP ratio. We also find a negative and significant effect of international reserves on external debt. After controlling for international reserves, the effect of remittance inflows on external debt increases; it remains positive and significant. The results suggest that the role of international reserves as a self-insurance mechanism, and the Dutch disease effect related to remittance inflows are at play. In addition, we find negative and significant effects of economic growth and savings-investment gap on external debt. We also find positive and significant effects of the nominal exchange rate and the United States lending interest rate on external debt. We discuss the policy implications of these findings, while highlighting factors that policymakers should focus on for containing external debt in developing countries in the post-COVID-19. [ABSTRACT FROM AUTHOR]

This paper investigates two different interpretations of the same empirical finding that long-term market rates Granger cause policy-controlled rates. Pollin (1991) interprets the finding in the usual manner (the structural position). Moore (1991) interprets the causality relationship in reverse (the accommodative position). This paper derives the term structure of CD rates. Then, using CD rates, it provides empirical evidence that appears consistent with Moore's interpretation. In addition, the causality relationship between long-term bond yields and the federal funds rate is examined. The results are consistent with the accommodative position under the assumption of the expectations theory of the term structure. [ABSTRACT FROM AUTHOR]

The paper provides an introduction to the special issue. It shows a sense in which Visegrád and Balkan EU countries are correlated in macroeconomic performance and integrated with the global business cycles. Using inflation rate levels as a starting point to characterize when these countries began their transitions, it shows that after 1996 both real GDP growth and real interest rates move together to a significant degree both with each other and with the US. This provides a background from which to view the paths since the collapse of the Soviet Union that these transition economies have taken. In addition, comparison is made to US money and banking policy, to provide an outline of how this may impact progress in the transition region. A subsequent summary of the other articles in the issue shows an inter-relation in their themes about how Central, Eastern, and Southeast Europe have progressed since 1991, and how these paths may be affected by Western economic policy. Implications for Central European audience: The paper shows that transition regions can be impacted by international financial integration, including to possible detriment when capital markets are regulated by policy that pushes real interest rates below their natural levels. Negative real interest rate policy since the 2008-2009 financial crisis and again during the Covid crisis may hasten the rise of autocratic democracy and limit social, political, and economic freedom. [ABSTRACT FROM AUTHOR]

Focuses on the adoption of Uniform Commercial Code in the United States. Negotiations on the standards for interest rates; Referrals for liability of banks handling treasury checks; Discussions on consumer contracts.

Some observers have argued that the projections for high and rising debt pose a grave threat to the country's economic future and give the government has less fiscal space to respond to recessions or other unexpected developments, so they urge significant changes in tax or spending policies to reduce federal borrowing. In stark contrast, others have noted that interest rates on long-term federal debt are extremely low and have argued that such persistently low interest rates justify additional federal borrowing and investment, at least for the short and medium term. We analyze this controversy focusing on two main issues: the aging of the US population and interest rates on US government debt. It is generally understood that these factors play an important role in the projected path of the US debt-to-GDP ratio. What is less recognized is that these changes also have implications for the appropriate level of US debt. We argue that many-though not all- of the factors that may be contributing to the historically low level of interest rates imply that both federal debt and federal investment should be substantially larger than they would be otherwise. In conclusion, although significant policy changes to reduce federal budget deficits ultimately will be needed, they do not have to be implemented right away. Instead, the focus of federal budget policy over the coming decade should be to increase federal investment while enacting changes in federal spending and taxes that will reduce deficits gradually over time. [ABSTRACT FROM AUTHOR]

The paper by Messrs. Ho and Saunders rationalizes the determination of the Federal funds rate in the context of a micro theoretic model that is relatively rich in institutional detail. For several reasons, I believe that the line of inquiry developed in the paper is of basic significance for the study and modeling of capital markets. In the first place, because it is the closest thing to an instantaneous spot rate that we observe in the actual capital market, the (overnight) funds rate is pivotal in the term structure if expectations matter. Then too, the particular role played by the funds rate in the conduct and interpretation of monetary policy gives it a unique significance in the capital market. It is therefore important that we thoroughly understand the mechanism whereby this rate is determined. Secondly, the funds rate is typically explained in an aggregative framework—i.e., without explicit reference to the actual market in which Federal funds are traded. The funds rate is used variously, for example, to clear the aggregate "market" for bank reserves, or even the market for "money." But this type of analysis does not embody enough institutional detail to be useful for studying the relationship between the funds rate and other short-term rates or for analyzing interesting variations in monetary policy. Finally, those studies which have looked specifically at the market in which Federal funds are traded have been primarily descriptive rather than analytical in nature. Ho and Saunders are clearly aware of these shortcomings in the existing literature, and their paper represents a constructive effort to fill the gaps. [ABSTRACT FROM AUTHOR]

The underlying premise of the Tucker paper is that institutional arrangements must be made, primarily in the form of regulatory changes, such that thrift institutions can be protected from the vagaries of fluctuating interest rates. This view ignores the more fundamental issue of whether it might be desirable to allow the housing sector to continue to play its role as handmaiden to monetary policy by contracting when monetary conditions are tight and expanding when conditions ease. On this issue Gibson (1) has presented rather convincing argument against buffering the housing sector at all. A stronger case should be made for the opposing view, which seems to limit its analysis to the microeconomics of thrift institutions rather than the macroeconomics of the effectiveness of monetary policy. However, the author avoids the issue and chooses to investigate ways in which the maturity differential can be reduced. [ABSTRACT FROM AUTHOR]

This paper investigates the impacts of economic (in)stability on carbon emissions and the role of renewable energy in these effects at the crossroads of accelerated climate change and rising global economic instability. The paper hypothesizes that these implications should be examined not by direct impacts across variables, but rather via indirect effects serially mediated by renewable energy consumption and economic growth. This paper analyzes the United States from January 1980 and April 2022 using manifest structural equation modeling. The paper reaches two major conclusions. First, there are clear distinctions between (i) the direct and indirect effects of economic stability, surrogated by inflation and policy interest rate, on carbon emissions, (ii) the symmetric and asymmetric indirect effects, and (iii) the roles of aggregate renewable energy and its components, such as biomass and hydropower energy use, in mediating these symmetric and asymmetric indirect effects. Second, renewable energy significantly reduces the carbon-increasing effects of inflation and interest rates. The paper contains proper policy suggestions based on the findings. [ABSTRACT FROM AUTHOR]

The article evaluates the U.S. monetary policy and the global financial cycle (GFC) following the bankruptcy filing of investment banking firm Lehman Brothers Holdings Inc. in the U.S. in 2008. Topics discussed include the role of the U.S. monetary policy as a driver of GFC, characterization of GFC including the movements of risky asset prices, credit growth, and gross capital flows, and impact of the monetary policy on longer-term interest rates years after 2009.

From 2000 to 2003, when Ben Bernanke was a professor and then a Fed Governor, he wrote extensively about monetary policy at the zero bound on interest rates. He advocated aggressive stimulus policies, such as a money-financed tax cut and an inflation target of 3%-4%. Yet, after U.S. interest rates hit zero in 2008, the Fed under Chairman Bernanke took more cautious actions. This paper asks when and why Bernanke changed his mind about zero-bound policy. The answer, at one level, is that he was influenced by analysis from the Fed staff that was presented at the Federal Open Market Committee (FOMC) meeting of June 2003. This answer raises another question: why did the staff's views influence Bernanke so strongly? I seek answers to this question in the social psychology literature on group decision-making. [ABSTRACT FROM AUTHOR]

This articles presents comments from economists on a paper by Martin Feldstein and Lawrence Summers regarding the effect of inflation on interest rates under the U.S. tax system. According to William J. Fellner, the paper never gets rid of assumptions that eliminate the real-world properties of the problem. However, he states that the authors are right in stressing that with a nonindexed tax structure and deductible interest costs, we should reject the proposition that the money rate of interest will generally tend to rise by the number of basis points expressing the expected rate of inflation. On the other hand, Robert J. Gordon comments that the paper deals with questions of great concern for the U.S. policy. It attempts to quantify the degree of non-neutrality in the present U.S. tax system. He added that the nonneutrality of the tax system with respect to inflation points to crucial policy implications that go beyond the scope of the paper. Other comments focused on the econometric results in the latter sections of the paper. Christopher Sims insisted that the values near unity of the coefficients on expected inflation in the interest-rate equations of the second section should be considered descriptive rather than structural.

Purpose: This study purposes to measure the influencing relations between macroeconomic indicators and the prices of gold. Further study measures several factors with the gold price in the context of the United States. Design/methodology/approach: The secondary data are collected to measure relationship and fluctuation of gold prices the data collected from the website world development indicators (WDI) for the period of 31 years 1990–2019. This paper uses different econometric analysis such as analytical unit root test for stationary of data, descriptive statistical analysis for description of data, correlation coefficient test for measuring the inter correlation, and ordinary least square regression analysis for determine the impact of dependent and independents variables. In this research paper, gross domestic product (GDP), inflation rate (IR), unemployment rate (UR), real interest rate (RIR), gross national product (GNP), standard trade value (STV) are included in macroeconomic indicators and consider as independent. The gold prices are considered as dependent variable. Findings: This study's overall results show an important and optimistic association between GDP, IR and STV with the gold price. Moreover, the RIR shows negative and does not show significant relation with the gold prices. Originality/value: Since several economic crises were included during the data selection studied in this research paper, data error may be present, resulting in the instability of the overall data. However, the study still hopes to find the guiding role of these macro gold price factors in the price of gold from the limited data set. The basic scope of research is that research is limited in the United States. [ABSTRACT FROM AUTHOR]

To conduct monetary policy effectively, central banks need to understand the transmission of monetary policy into financial markets. In this paper we investigate the effects of Japanese and U.S. monetary policy shocks on their own asset markets, and the spillovers into each other's markets. Because short-term nominal interest rates have been effectively zero in Japan since January 1998 and in the United States from late 2008, however, monetary policy shocks cannot be quantified by considering observable changes in short-term market interest rates. Therefore, in our analysis we use a shadow short rate-a quantitative measure of overall conventional and unconventional monetary policy that is estimated from the term structure of interest rates. Our results suggest that the operation of monetary policy at the zero lower bound of interest rates alters the transmission of shocks. In particular, we find a limited response of exchange rates during the first episode of unconventional monetary policy in Japan but a significant impact since 2006. [ABSTRACT FROM AUTHOR]

Individuals in the United States consistently do most of their saving through financial intermediaries, but over time there have been and continue to be major shifts in people's reliance on specific kinds of intermediary institutions. This paper assesses the potential effects on interest rates, and via interest rates (and asset prices and yields more generally) on nonfinancial economic activity, of four specific shifts in saving behavior: additional pension contributions financed by individuals, additional pension contributions financed by businesses, additional purchases of life insurance by individuals, and additional deposits in thrift institutions by individuals. The paper's results indicate that such shifts, in plausible magnitudes, would have significant effects not only on interest rates and asset-liability flows but also on both the level and the composition of nonfinancial economic activity. In particular, although the specific effects differ from one shift to another, each would disproportionately stimulate capital formation in comparison to other forms of spending. [ABSTRACT FROM AUTHOR]

This paper presents the results of simulation experiments of an econometric model specifically designed to evaluate the short-run impact of these agencies. The model incorporates, in particular, four features that we feel are critical for evaluating the short-run stabilization activities of these agencies: (i) The model is monthly. To our knowledge, all previous econometric studies in this area have used quarterly or annual models. Since the relevant time span is less than a year, the timing patterns observed on a monthly basis are key. (ii) The model distinguishes carefully between the commitment and mortgage purchase activity of the agencies. We presume that the commitment activity of the agencies provides an initial and powerful stimulant to the housing market, whereas their mortgage purchase activity may substantially offset this initial stimulus. Since the time lag between commitment and purchase can be over a year, this distinction may explain why the agencies can stabilize short-run activity, but without any continuing long-run effect. (iii) The structure of the model differentiates between periods of equilibrium and disequilibrium in the mortgage market. Previous studies have observed that the mortgage interest rate may not at times adjust to clear the market, leading to credit rationing. Our model is specified to include credit rationing effects in both the mortgage and housing markets. This is important because agency interventions may be much more powerful when undertaken during disequilibrium episodes. (iv) The model allows for capital market feedback effects whereby debt issues of the agencies (to finance mortgage purchases) impact capital market interest rates. As a result, rising capital market interest rates will offset a portion of the initial positive impact of agency commitments. The agenda for the paper is as follows. Section II reviews the theoretical foundations of the model, with special emphasis on the features just listed. Section ... [ABSTRACT FROM AUTHOR]

Empirical studies employing the term structure of interest rates have generally suffered from the defect that yield curves have been used as surrogate measures of the term structure. A number of scholars and professional bond analysts have, in the past decade, called attention to the problem (Malkiel [12], Buse [2], Weingartner [21], Homer and Leibowitz [8], and most recently Carr, Halpern and McCallum [4]) that only when the yield curve is flat can it be so used, legitimately. Only McCulloch [13] and Schaefer [18] have attempted to measure the term structure directly. In this paper we summarize briefly the analytical issues; suggest some of the uses to which term structure estimates could be put; propose an estimation method and describe some preliminary results; and finally, present an empirical application of term structure estimates in a stock valuation model. Most research papers conclude with a promise of more research. To a greater than usual degree the present paper is a promissory note because of the implications of our approach (and McCulloch's [13] and Schaefer's [18] for that matter) for a wide range of topics in financial and monetary economics. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to conduct a comparative test of several of the competing theories of the determinants of term premiums, employing data on the yields of three, six, nine and twelve-month Treasury bills. The basic methodology, employed—directly or indirectly—in several recent studies of the term structure, is to invoke the rational expectations hypothesis of John F. Muth to create a series of synthetic interest rate forecasts and thus to isolate the term premiums implicit in the forward rates in the empirical term structure. As will be shown, Treasury bill data are particularly well-suited to exploit this more rigorous treatment of the mechanism by which expectations are presumed to be formed. On an a priori basis, one might expect the relative capital certainty of Treasury bills to reduce the value of the more conventional risk-return models, whose application may be more relevant to an analysis of the full spectrum of interest rate maturities. On the other hand, support for the more conventional models of the determinants of term premiums garnered from the short-end of the maturity spectrum could serve to strengthen the case for their overall validity. The study proceeds in three stages. In the first, the sue of the rational expectations hypothesis to isolate the term premiums is described. In the second, the competing theories of the determinants of term premiums are sketched briefly. In the third, the data base is described and the empirical results presented. A summary section completes the paper. The purpose of this paper is to conduct a comparative test of several of the competing theories of the determinants of term premiums, employing data on the yields of three, six, nine and twelve-month Treasury bills. The basic methodology, employed—directly or indirectly—in several recent studies of the term structure, is to invoke the rational expectations hypothesis of John F. Muth to create a series of synthetic interest... [ABSTRACT FROM AUTHOR]

The paper is a welcome contribution to comparative economic analysis. The authors conclude that (1) general credit restraint is pervasively associated with more or less severe downturns in new construction, (2) financial stringency affects residential building disproportionately compared to other major sectors of the economy such as industrial investment, and (3) cyclical declines occur "almost regardless of prevailing institutional arrangements" for the financing of housing. Thus, the contraction of new building during tight-money periods seems to be rooted in the "nature of the beast"--the particular sensitivity of housing to changes in financial conditions. We have again learned this morning how difficult it is to specify the nature of the beast more precisely and in a form that lends itself to empirical verification. The Fisher-Siegman paper points up the unresolved issue of credit availability versus cost of funds. If this problem has so far proved to be intractable in a single country--our own--, it is compounded for comparative analysis. Professor Fair's paper stresses the failure of most U.S. housing models to separate clearly demand and supply coefficients, including the financial variables operating on the demand for housing or the supply of new construction or, for that matter, on the volume and price of existing housing offered in the market. We have still some distance to travel for a fuller understanding of the interactions between the mortgage market and the housing market, and the interactions between the mortgage market and the general capital market as well. [ABSTRACT FROM AUTHOR]