Search Results
Journal Article
Disaster zone
The economics of catastrophe risks are fundamentally different from those of risks covered by standard insurance contracts. Size alone is not necessarily the critical difference, nor is the sporadic and unpredictable nature of catastrophes. The key unconventional features needed to deal with the large, time-varying, asymmetric risks inherent in catastrophes are: - between-group trades across time, not just within-group, pay-as-you-go risk pooling; - in normal times, payments by the risk-prone group to the relatively safe group; - when catastrophe strikes, large payments to the risk-prone ...
Journal Article
As the nation's economy goes, so goes Minnesota's
Journal Article
Thoughts on the Fed's role in the payment system
This essay concerns how the Federal Reserve?s role as a payment services provider can best be aligned with its broad mission to foster the integrity, efficiency, and accessibility of the U.S. payments system. A recommended strategy involves specialization in providing services where the central bank has a comparative advantage?notably, services directly related to providing a comprehensive, secure system of accounts for interbank settlement and potentially some additional services justified by economies of scope. If markets for other payment services evolve as expected, the recommended ...
Journal Article
Credit risk data may help target foreclosure mitigation
What Ninth District areas are being especially hard hit by foreclosure?
Working Paper
The role of non-owner-occupied homes in the current housing and foreclosure cycle
Non-occupant homeowners differ from owner occupants in that they tend to have lower-risk credit characteristics, such as higher credit scores, but may also have weaker incentives to maintain mortgage payments when housing values fall. During the recent housing boom, the share of mortgage borrowing by non-occupant owners was relatively high in states where home values appreciated relatively rapidly. After the housing boom, foreclosures on non-occupant mortgages in several Midwestern and Northeastern states reflected primarily a high rate of foreclosure per mortgage, not a high volume of ...
Working Paper
Algorithms for explaining forecast revisions
Forecasts are routinely revised, and these revisions are often the subject of informal analysis and discussion. This paper argues (1) that forecast revisions are analyzed because they help forecasters and forecast users to evaluate forecasts and forecasting procedures, and (2) that these analyses can be sharpened by using the forecasting model to systematically express its forecast revision as the sum of components identified with specific subsets of new information, such as data revisions and forecast errors. An algorithm for this purpose is explained and illustrated.
Working Paper
Implementing Bayesian vector autoregressions
Report
Real effects of monetary policy in a world economy
We present a 2-country model with heterogeneous agents in which changes in a country?s monetary policy affect real interest rates, relative prices of traded and nontraded goods and real exchange rates. Nontransitory real effects of monetary policy stem solely from a friction (country-specific reserve requirements) that generates separate demands for a country?s money and bonds. Without violating the classical assumptions of individual rationality and flexible prices, the model?s implications seem qualitatively in accord with the U.S. experience of the 1980s: a monetary policy tightening ...