Search Results
Briefing
How Speculation Affects the Market and Outcome-Based Values of Innovation
nnovation booms often coincide with speculative bubbles. Using data on over 1 million patents, we document two ways in which speculation creates a disconnect between the market valuation of innovation and its actual economic impact. First, an innovation during bubbles raises the stock price of its creator by 40 percent more than is justified by future outcomes. Next, competitors' stock prices move little during bubbles despite their profits suffering. We present a theory of investor disagreement about which firms will succeed that reconciles both facts. Policymakers should account for the ...
Journal Article
OTC Derivatives—A Primer on Market Infrastructure and Regulatory Policy
In this article, we discuss some recent developments relating to the regulation of derivatives markets, specifically the Group of Twenty (G-20) mandates, and examine the infrastructure that supports derivatives markets (including both the trade execution and post-trade clearing and settlement processes). Then we identify some of the policy issues raised by the G-20 market structure mandates. To provide a foundation for that discussion, first we explain some key concepts and terms.
Speech
Monetary policymaking in today’s environment: finding “policy space” in a low-rate world: remarks at the 33rd Annual Cornelson Distinguished Lecture at Davidson College, Davidson, North Carolina, April 15, 2019
Now is a good time to reflect on the Federal Reserve?s monetary policy framework. The U.S. and many developed economies are likely to be challenged by the implications of a low interest rate environment for their ability to offset recessions. The reality of limited monetary policy space provides important context for why the Federal Reserve should broadly consider its current policies and their likely outcomes. While I would currently prefer moving to an inflation range, I look forward to future discussions. A key matter for me will be considering whether the possible changes to the Fed?s ...
Journal Article
Market Reactions to Tariff Announcements
Financial markets repriced assets across a wide range of sectors following the U.S. trade policy announcement on April 2, 2025. Analysis suggests that market participants interpreted tariffs to have direct effects not only on companies in the sectors involved but also indirect effects on overall demand. Investors expected declines in corporate profits to be persistent both in the United States and abroad. The U.S. dollar depreciated against other safe-haven currencies, which points to investors reallocating their portfolios away from the United States and toward other markets.
Working Paper
Foreign Reserve Management and U.S. Money Market Liquidity: A Cost of Exorbitant Privilege
We show theoretically and empirically that the dollar’s status as the global reserve currencycan lead to economically significant changes in U.S. money market liquidity. We develop amodel in which U.S. money market spreads respond to foreign central banks’ exchange-ratemanagement decisions. Foreign central banks remove liquidity from U.S. money markets andcause spreads to widen by selling Treasuries to supply liquidity to their financial systems.Our analysis focuses on the major oil exporting countries with fixed exchange rates becausetheir foreign-exchange market interventions are ...
Speech
Risk management in monetary policymaking: remarks to the National Association of Corporate Directors, New England Chapter, Boston, Massachusetts, March 5, 2019
Eric Rosengren, the Boston Fed president, offered up a ?relatively strong forecast? for the economy in 2019: growth somewhat above 2 percent, inflation close to the Fed?s 2 percent target, and a labor market that continues to tighten. However, ?risks to that outlook have increased recently,? he said, in a talk focused on assessing and managing those risks.
Journal Article
Leveraging New Resources by Acknowledging Market Failures While Exploring Market Opportunities
At Enterprise Community Partners, our mission is to create opportunity for low- and moderate-income people through the creation and preservation of affordable housing in diverse, thriving communities. We?ve done this work for more than 35 years, bringing together national know-how, partners, policy leadership, and investment to multiply the impact of local affordable housing development. Over that time, we have invested more than $36 billion through public-private partnerships, resulting in more than half a million healthy, well-designed affordable homes, critical community assets like ...
Working Paper
Credit Guarantee and Fiscal Costs
This paper studies the effectiveness of government-backed credit guarantees to the infrastructure sector, a policy tool adopted by a range of countries during recessions. We proposea two-sector model with financial intermediary frictions so that infrastructure producers relyon bank loans to finance their risky production. Governments can intervene in the credit market by providing a partial guarantee on those bank loans. We find that a credit guaranteeincreases infrastructure production, leading to a high fiscal multiplier in the longer run. In thenear term, however, higher wages in the ...
Speech
Market Intelligence and the Monetary Policy Process
Remarks at the Deutsche Bundesbank – Representative Office New York, New York City.
Speech
Perspectives on monetary policy and market volatility: remarks to The Boston Economic Club, Federal Reserve Bank of Boston, Boston, Massachusetts, January 9, 2019
Federal Reserve Bank of Boston President Eric Rosengren spoke about the economy?s outlook, recent stock-market volatility, and the implications for the Fed?s monetary policy. In his talk, Rosengren contrasts the pessimism reflected in financial markets with the relatively optimistic outlooks of professional forecasters and Fed policymakers.