This paper presents an extensive analysis of the consequences for global equilibrium determinacy in flexible-price open economies of implementing active interest rate rules, i.e., monetary rules where the nominal interest rate responds more than proportionally to inflation. The authors show that conditions under which these rules generate aggregate instability by inducing liquidity traps, [...]
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Posted on May 20th, 2012
Posted on May 15th, 2012
For decades U.S. housing policy has focused on promoting homeownership. This study shows that the set of policies designed to further homeownership has been ineffective and expensive and that homeownership as a public policy goal is not well supported. The author documents that homeownership rates have remained roughly constant over the past 40 years. [...] Posted on May 15th, 2012
This new CRL report shows that losses on credit cards in the current downturn mounted faster at banks engaging in unfair, deceptive practices. High-cost penalty fees and interest rates didn’t mitigate risk—as credit card issuers claimed—but instead were the risk that pushed consumers into hardship and default. The same holds true for high-cost [...] Posted on May 13th, 2012
Because they engage in maturity transformation, a steepening of the yield curve should, all else equal, boost bank profitability. This paper re-examines this conventional wisdom by estimating the reaction of bank intraday stock returns to exogenous fluctuations in interest rates induced by monetary policy announcements. The authors construct a new measure of the [...] Posted on May 1st, 2012
This paper conducts a comparative analysis of the diverse methods for estimating the Japanese government bond (JGB) zero coupon yield curve (hereafter, zero curve) according to the criteria that estimation methods should meet. Previous studies propose many methods for estimating the zero curve from the market prices of coupon-bearing bonds. In estimating [...] 42 pages
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