The 1950s are often pointed to as a decade in which the Federal Reserve operated a particularly
successful monetary policy. The present paper examines the evolution of Federal Reserve monetary
policy from the mid-1930s through the 1950s in an effort to understand better the apparent success of
policy in the 1950s.
A model of money, credit, and banking is constructed in which the differential pledgeability of collateral and the scarcity of collateralizable wealth lead to a term premium — an upward-sloping nominal yield curve.
Event studies show that Fed unconventional announcements of forward guidance and large scale
asset purchases had large and desired effects on asset prices but do not tell us how long such
In 2005, bankruptcy laws were reformed significantly, making personal bankruptcy substantially
more costly to file than before. Shortly after, the US began to experience its most severe
recession in seventy years.
This paper examines the stimulative effect of central bank forward guidance—the promise
to keep future policy rates lower than its policy rule suggests—when the short-term nominal
interest rate is stuck at its zero lower bound (ZLB).
Mortgage loans are a striking example of a persistent nominal rigidity. As a result, under
incomplete markets, monetary policy affects decisions through the cost of new mortgage
borrowing and the value of payments on outstanding debt.
The consensus in monetary policy circles that the Fed’s large-scale asset purchases, known as quantitative easing (QE), have significantly reduced long-term yields is due in part to event studies, which show that long-term yields decline on QE announcement days.
The nature of the business cycle appears to have changed. Prior to the 1990s, recoveries
from recessions were quick and steep; after the past three recessions, however, recoveries were
weak and prolonged.
We study the use of intermediated assets as media of exchange in a neo-
classical growth model. An intermediary is delegated control over productive
capital and finances itself by issuing claims against the revenue generated by
We use a general equilibrium finance model that features explicit government purchases
of private debts to shed light on some of the principal working mechanisms of the Federal
Reserve’s large-scale asset purchases (LSAP) and their macroeconomic effects.
We develop a theory of labor quality based on (i) the division of the labor force
between unskilled and skilled workers and (ii) investments in skilled workers. In our
theory, countries differ in two key dimensions: talent and total factor productivity
This paper deals with a classic development question: how can the process of economic
development – transition from stagnation in a traditional technology to industrialization
and prosperity with a modern technology – be accelerated?
This paper uses several methods to study the interrelationship among Divisia monetary aggregates, prices, and income, allowing for nonstationary, nonlinearities, asymmetries, and time-varying relationships among the series.
Policymakers often use measures of tax incidence (generational accounts) as criteria for policy selection. We use a quantitative model of optimal intergenerational policy to evaluate the ability of the tax incidence metric to capture the identity of recipients and contributors and the magnitudes transferred.
Most empirical studies based on U.S. data suggest that the fiscal multiplier is less
than 1 (e.g., Barro and Redlick, 2011). However, Keynes argued that the multiplier
would be the largest when markets have failed to the greatest extent in coordinating
economic activities (such as during the Great Depression with rampant unemployment
and low capacity utilization).
We construct a model to capture the Keynesian idea that production and employment
decisions are based on expectations of aggregate demand driven by sentiments and
that realized demand follows from the production and employment decisions of firms.