Search Results
Showing results 1 to 4 of approximately 4.
(refine search)
Briefing
A Small Contribution to Measuring the Lags in Monetary Policy Transmission
From May 2022 to July 2023, holdings of small CDs have risen from virtually nothing to more than $900 billion. While this is a dramatic increase, it has come on the heels of a sharp increase in interest rates, and the increase in CDs did not begin until well after interest rates started rising. In this article, I provide some historical perspective for the recent increase in CDs and retail money market mutual fund (MMMF) balances. What is the typical lag between market interest rate increases and increases in CD and MMMF balances? Is the recent increase unusually large, or does history ...
Journal Article
The Outlook for Farmland Values amid Higher Interest Rates
In 2018, the spread between returns to farmland owners and benchmark interest rates narrowed to its lowest level in more than a decade in the Tenth Federal Reserve District. At the same time, farmland sales increased in some states for the first time in several years. Together, the reduced spread and indications of increased sales in some regions suggest the potential for lower farmland values moving forward.
Working Paper
Negative Nominal Interest Rates Can Worsen Liquidity Traps
Can central banks use negative nominal interest rates to overcome the adverse effects of the zero lower bound? I show that negative rates are likely to be counterproductive in an expectations-driven liquidity trap. In a liquidity trap, firms expect low demand and cut prices, which leads the central bank to reduce nominal rates to their lower bound. If the resulting decline in real rates is not enough to stabilize demand, then the pessimism of price setters is fulfilled. Theoretically, the effect of a negative nominal rate is non-monotonic: a marginally negative rate is not enough to escape ...
Discussion Paper
The Transformation of Banking: Tying Loan Interest Rates to Borrowers' Credit Default Swap Spreads
Banks? practice of tying loan interest rates to borrowers? credit default swap (CDS) spreads constitutes one of the most recent financial innovations. In this post, I discuss evidence from a research project, undertaken with Ivan Ivanov and Thu Vo, showing that this practice has lowered the cost of bank credit. I also discuss some potential drawbacks of this innovation.