Search Results
Working Paper
Is bank supervision central to central banking?
Recently, several central banks have lost their bank supervisory responsibilities, in part because it has not been shown that supervisory authority improves the conduct of monetary policy. This paper finds that confidential bank supervisory information could help the Board staff more accurately forecast important macroeconomic variables and is used by FOMC members to guide monetary policy. These findings suggest that the complementarity between supervisory responsibilities and monetary policy should be an important consideration when evaluating the structure of the central bank.
Working Paper
Inflation dynamics when inflation is near zero
This paper discusses the likely evolution of U.S. inflation in the near and medium term on the basis of (1) past U.S. experience with very low levels of inflation, (2) the most recent Japanese experience with deflation, and (3) recent U.S. micro evidence on downward nominal wage rigidity. Our findings question the view that stable long-run inflation expectations and downward nominal wage rigidity will provide sufficient support to prices such that deflation can be avoided. We show that an inflation model fitted on Japanese data over the past 20 years, which accounts for both short- and ...
Working Paper
Does the Federal Reserve have an informational advantage? you can bank on it
Even in a world with rational expectations, it has been well established theoretically that if the central bank possesses information superior to that available to the public, there is room for effective and socially beneficial countercyclical monetary policy. This paper tests whether confidential information from bank supervisors could be one source of any such informational advantage. In particular, we examine whether information gained from bank supervision activities could substantially improve the forecasts of macroeconomic variables important for guiding monetary policy. We find that ...
Journal Article
Are district presidents more conservative than board governors?
It is widely believed that the Federal Open Market Committee policy votes of Federal Reserve Bank presidents are more "conservative" than those of their Board governor counterparts. In both academia and Congress, the suspicion runs deep that the political appointment procedure exercised over Federal Reserve Board governors-nomination by the President and confirmation by the Senate-results in monetary policy that is more concerned with output and less concerned with inflation than the policy produced by the more politically independent District Bank presidents. ; This article examines the ...
Working Paper
Is banking supervision central to central banking?
Whether central banks should play an active role in bank supervision and regulation is being debated both in the United States and abroad. While the Bank of England has recently been stripped of its supervisory responsibilities and several proposals in the United States have advocated removing bank supervision from the Federal Reserve System, other countries are considering enhancing central bank involvement in this area. Many of the arguments for and against these proposals hinge on the effect this change would have on the ability of the central bank to conduct monetary policy. We find that ...
Working Paper
Discrimination, redlining, and private mortgage insurance
The existence of discrimination and/or redlining in mortgage lending has been debated intensively for years. Traditionally, the lender's role in credit availability has been scrutinized. Yet other institutions, specifically mortgage insurers, often help determine whether a mortgage is granted; if the behavior of the mortgage insurers is not accounted for, their actions could be attributed to the lenders. This paper examines the determinants of the private mortgage insurance decision. Specifically, the roles of the applicant's race and of the racial characteristics of the neighborhood in which ...
Working Paper
Redlining in Boston: do mortgage lenders discriminate against neighborhoods?
Historically, lenders have been accused of "redlining" minority neighborhoods as well as refusing to lend to minority applicants. Considerable bank regulation is designed to prevent both actions. However, the strong correlation between race and neighborhood makes it difficult to distinguish the impact of geographic discrimination from the effects of racial discrimination. Previous studies have failed to untangle these two influences, in part, because of severe omitted variable bias. The data set in this paper allows the distinct effects of race and geography to be identified, and it shows ...
Journal Article
Purchasing power parity within the United States
Economics has many articles of faith. One of the most dearly held is Purchasing Power Parity, which posits that the price of the same good in different regions should be equivalent when no barriers to arbitrage exist. Because Purchasing Power Parity (PPP) is an important assumption in much of international economic theory, this article examines empirical evidence testing this proposition. ; Instead of analyzing international data, this study analyzes PPP between regions of the United States. By comparing regions within a country, it eliminates many of the hypotheses offered to explain the ...
Speech
Some unpleasant stabilization arithmetic: remarks at the Federal Reserve Bank of Boston's 62nd Economic Conference, \\"What are the Consequences of Long Spells of Low Interest Rates?\\", Boston, Massachusetts, September 8, 2018
These slides represent the combined thoughts of President Rosengren and his co-presenters, Joe Peek and Geoffrey M. B. Tootell.
Journal Article
How natural is the natural rate of unemployment in Europe?
European economic performance has been disappointing in the 1980s. High unemployment has been a dominant policy issue, but in order to react properly, government authorities had to determine the causes of this unemployment. If inadequate aggregate demand were the source, expansionary fiscal or monetary policy could help to solve the problem; on the other hand, if movements in labor supply were to blame, traditional macro policy would be ineffective. European officials clearly leaned toward the labor supply explanation, as aggregate deman policy remained conservative throughout the decade. ; ...