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Working Paper
Construction of an estimated domestic monetary base using new estimates of foreign holdings of U.S. currency
This paper presents a new method to estimate the amount of U.S. currency held abroad. The method exploits the fact the Federal Reserve System is the major processor of currency for depository institutions. The method exploits differentials across denominations in the ratios of shipments to receipts of currency at Federal Reserve cash offices in New York City and nationwide. The method permits us to construct a new monthly time series on the domestic monetary base, M1 and M2. The method has several advantages over previous methods, including an earlier starting date (1965) and the ability to ...
Working Paper
Retail sweep programs and bank reserves, 1994--1999
Since January 1994, the Federal Reserve Board has permitted depository institutions in the United States to implement so-called retail sweep programs. The essence of these programs is computer software that dynamically reclassifies customer deposits between transaction accounts, which are subject to statutory reserve requirement ratios as high as 10 percent, and money market deposit accounts, which have a zero ratio. Through the use of such software, hundreds of banks have sharply reduced the amount of their required reserves. In some cases, this new level of required reserves is less than ...
Journal Article
Energy resources and potential GNP
Working Paper
STLS/US-VECM6.1: a vector error-correction forecasting model of the U. S. economy
Any research or policy analysis exercise in economics must be consistent with the time-series properties of observed macroeconomic data. This paper discusses in detail the specification of a six-variable vector error-correction forecasting model. We test for cointegration among those variables: the CPI, the implicit price deflator for GDP, real money balances (M1), the federal funds rate, the yield on long-term (10-year) government bonds, and real GDP. We also examine the estimated dynamic parameters of the vector error correction structure, and analyze the properties of the model residuals ...
Working Paper
The reform of October 1979: how it happened and why
This study offers a historical review of the monetary policy reform of October 6, 1979, and discusses the influences behind it and its significance. We lay out the record from the start of 1979 through the spring of 1980, relying almost exclusively upon contemporaneous sources, including the recently released transcripts of Federal Open Market Committee (FOMC) meetings during 1979. We then present and discuss in detail the reasons for the FOMC's adoption of the reform and the communications challenge presented to the Committee during this period. Further, we examine whether the essential ...
Working Paper
The remarkable stability of monetary base velocity in the United States, 1919-1999
This analysis examines the long-run demand for the adjusted monetary base in the United States, 1919-1999. When the "price"of the base is measured by the inverse of the yield on long-term, high-quality corporate bonds and an appropriate functional form is selected, the quantity of base money demanded is found to be a stable function "...of a small number of variables."
Working Paper
The great inflation: did the shadow know better?
The Shadow Open Market Committee was formed in 1973 in response to rising inflation and the apparent unwillingness of U.S. policymakers to implement policies necessary to maintain price stability. This paper describes how the Committee's policy views differed from those of most Federal Reserve officials and many academic economists at the time. The Shadow argued that price stability should be the primary goal of monetary policy, and favored gradual adjustment of monetary growth to a rate consistent with price stability. The paper evaluates the Shadow's policy rule in the context of the New ...