Jackson, the Bank War, and the Legacy of the Second Bank of the United States

By Peter L. Rousseau

AEA Papers and Proceedings, May 2021

President Jackson vetoed the bill to recharter the Second Bank of the United States on July 10, 1832. I describe events leading to the veto and through the bank's dissolution in 1836 using private correspondence and official government documents. These ...

Leaning against the Wind and Crisis Risk

By Moritz Schularick, Lucas ter Steege, and Felix Ward

American Economic Review: Insights, June 2021

Can central banks defuse rising stability risks in financial booms by leaning against the wind with higher interest rates? This paper studies the state-dependent effects of monetary policy on financial crisis risk. Based on the near-universe of advanced e...

Urban Sprawl

By Thomas J. Nechyba and Randall P. Walsh

Journal of Economic Perspectives, Fall 2004

We begin with an overview of the causes and consequences of urban sprawl in the twentieth century, focusing in particular on lower transportation costs and self-sorting of the population. By sprawl, we will mean the tendency toward lower city densities as...

The Transmission of Monetary Policy Shocks

By Silvia Miranda-Agrippino and Giovanni Ricco

American Economic Journal: Macroeconomics, July 2021

Commonly used instruments for the identification of monetary policy disturbances are likely to combine the true policy shock with information about the state of the economy due to the information disclosed through the policy action. We show that this sign...

Mortgage Prepayment and Path-Dependent Effects of Monetary Policy

By David Berger, Konstantin Milbradt, Fabrice Tourre, and Joseph Vavra

American Economic Review, September 2021

How much ability does the Fed have to stimulate the economy by cutting interest rates? We argue that the presence of substantial debt in fixed-rate, prepayable mortgages means that the ability to stimulate the economy by cutting interest rates depends not...

A Natural Experiment in Monetary Policy Covering Three Episodes of Growth and Decline in the Economy and the Stock Market

By Milton Friedman

Journal of Economic Perspectives, Fall 2005

The third of three episodes in a major natural experiment in monetary policy that started more than 80 years ago is just now coming to an end. The experiment consists in observing the effect on the economy and the stock market of the monetary policies fol...

What's in a Surname? The Effects of Surname Initials on Academic Success

By Liran Einav and Leeat Yariv

Journal of Economic Perspectives, Winter 2006

In this paper, we focus on the effects of surname initials on professional outcomes in the academic labor market for economists. We begin our analysis with data on faculty in all top 35 U.S. economics departments. Faculty with earlier surname initials are...

Markets: Beer in Germany and the United States

By William James Adams

Journal of Economic Perspectives, Winter 2006

Between 1950 and 2000, the four-firm producer-concentration ratio for beer increased from 22 to 95 in the United States; and Anheuser-Busch's share of domestic output ballooned from 6 to 54 percent. In Germany, concentration has risen, but it remains low....

An Analysis of the Literature on International Unconventional Monetary Policy

By Saroj Bhattarai and Christopher J. Neely

Journal of Economic Literature, June 2022

This paper evaluates the literature on international unconventional monetary policies (UMPs). Introducing market segmentation, limits-to-arbitrage, and time-consistent policy in standard models permits a theoretical role for UMP. Empirical studies provide...

Monetary Policy with Opinionated Markets

By Ricardo J. Caballero and Alp Simsek

American Economic Review, July 2022

We build a model in which the Fed and the market disagree about future aggregate demand. The market anticipates monetary policy "mistakes," which affect current demand and induce the Fed to partially accommodate the market's view. The Fed expects to imple...

Learning by Sharing: Monetary Policy and Common Knowledge

By Alexandre N. Kohlhas

American Economic Journal: Macroeconomics, July 2022

A common view states that central bank releases decrease central banks' own information about the economy and are harmful if about inefficient disturbances, such as cost-push shocks. This paper shows how neither is true in a microfounded macroeconomic mod...

What Is Wrong with Taylor Rules? Using Judgment in Monetary Policy through Targeting Rules

By Lars E. O. Svensson

Journal of Economic Literature, June 2003

It is argued that inflation targeting is best understood as a commitment to a targeting rule rather than an instrument rule, either a general targeting rule (explicit objectives for monetary policy) or a specific targeting rule (a criterion for the foreca...

The Subjective Inflation Expectations of Households and Firms: Measurement, Determinants, and Implications

[Symposium: Inflation Expectations]

By Michael Weber, Francesco D'Acunto, Yuriy Gorodnichenko, and Olivier Coibion

Journal of Economic Perspectives, Summer 2022

Households' and firms' subjective inflation expectations play a central role in macroeconomic and intertemporal microeconomic models. We discuss how subjective inflation expectations are measured, the patterns they display, their determinants, and how the...

Meltzer's History of the Federal Reserve

By David Laidler

Journal of Economic Literature, December 2003

This review argues that Allan Meltzer's account of the Federal Reserve between 1913 and 1951 complements Friedman and Schwartz's in their Monetary History. Meltzer emphasizes policy making within the system, rather than the evolution of the money supply a...

A Theory of One-Size-Fits-All Recommendations

By Doron Levit and Anton Tsoy

American Economic Journal: Microeconomics, November 2022

One-size-fits-all recommendations are common in many contexts, including those with a widespread heterogeneity. We propose a model that rationalizes this phenomenon. An expert recommends publicly to two agents whether to adopt a policy. The expert is priv...

Larry Ball's The Fed and Lehman Brothers: A Review Essay

By V. V. Chari

Journal of Economic Literature, December 2022

Laurence Ball argues that the Federal Reserve (the Fed) could—and should—have bailed out Lehman Brothers so that it did not have to declare bankruptcy. He presents compelling evidence that it could have. I argue that the view that the Fed should not b...

The Voice of Monetary Policy

By Yuriy Gorodnichenko, Tho Pham, and Oleksandr Talavera

American Economic Review, February 2023

We develop a deep learning model to detect emotions embedded in press conferences after the Federal Open Market Committee meetings and examine the influence of the detected emotions on financial markets. We find that, after controlling for the Federal Res...

Monetary Policy When the Central Bank Shapes Financial-Market Sentiment

[Symposium: Monetary Policy]

By Anil K Kashyap and Jeremy C. Stein

Journal of Economic Perspectives, Winter 2023

Recent research has found that monetary policy works in part by influencing the risk premiums on both traded financial-market securities and intermediated loans. Research has also shown that when risk premiums are compressed, there is an increased likelih...

Landings, Soft and Hard: The Federal Reserve, 1965–2022

[Symposium: Monetary Policy]

By Alan S. Blinder

Journal of Economic Perspectives, Winter 2023

"Soft landings," that is, cases in which the central bank tightens monetary policy to fight inflation but does not cause a recession (which would be a "hard landing"), are thought to be difficult to achieve and extremely rare. According to the conventiona...

An Alternative Explanation for the "Fed Information Effect"

By Michael D. Bauer and Eric T. Swanson

American Economic Review, March 2023

Regressions of private-sector macroeconomic forecast revisions on monetary policy surprises often produce coefficients with signs opposite to standard macroeconomic models. The "Fed information effect" argues these puzzling results are due to monetary pol...