#2009-047A "Indirect Taxation and the Welfare Effects of Altruism on the Optimal Fiscal Policy"
by Carlos Garriga, and Fernando Sánchez-Losada
September 2009

This paper analyzes the welfare effects of altruism on the optimal fiscal policy. The existence of positive bequests links present and future generations in the economy. More...

PUBLISHED: Economic Modelling, November 2009, 26(6), pp. 1365-74

#2009-046A "Money and Capital as Competing Media of Exchange in a News Economy"
by David Andolfatto, and Fernando M. Martin
September 2009

Conventional theory suggests that fiat money will have value in capital-poor economies. We demonstrate that fiat money may also have value in capital-rich economies, if the price of capital is excessively volatile. More...

#2009-045B "Saving and Growth under Borrowing Constraints: -- Explaining the “High Saving Rate” Puzzle"
by Yi Wen
September 2009
Revised October 2009

Empirical evidence suggests that fast-growing economies tend to have not only high saving rates but also low interest rates. This evidence is difficult to reconcile with standard explanations about the positive linkages between saving and growth. More...

#2009-044A "Essential Interest-Bearing Money"
by David Andolfatto
September 2009

I examine optimal monetary policy in a Lagos and Wright [A unified framework for monetary theory and policy analysis, J. Polit. Econ. 113 (2005) 463—484] model where trade is centralized and all exchange is voluntary. More...

FORTHCOMING: Journal of Economic Theory

#2009-043A "The Role of Location in Evaluating Racial Wage Disparity"
by Dan A. Black, Natalia Kolesnikova, Seth G. Sanders, and Lowell J. Taylor
September 2009

A standard object of empirical analysis in labor economics is a modified Mincer wage function in which an individual's log wage is specified to be a function of education, experience, and an indicator variable identifying race. More...

#2009-042A "What happened to the US stock market? Accounting for the last 50 years"
by Michele Boldrin, and Adrian Peralta-Alva
August 2009

The extreme volatility of stock market values has been the subject of a large body of literature. Previous research focused on the short run because of a widespread belief that, in the long run, the market reverts to well understood fundamentals. More...

PUBLISHED: Federal Reserve Bank of St. Louis Review, November/December 2009, 91(6), pp. 627-46

#2009-041A "Cross-Border Lobbying in Preferential Trading Agreements: Implications for External Tariffs"
by Subhayu Bandyopadhyay, Sajal Lahiri, and Howard J. Wall
August 2009

This paper examines the effect of cross-border lobbying on domestic lobbying and on external tariffs in both Customs Union (CU) and Free Trade Area (FTA). More...

#2009-040A "Sources of Exchange Rate Fluctuations: Are They Real or Nominal?"
by Luciana Juvenal
August 2009

I analyze the role of real and monetary shocks on the exchange rate behavior using a structural vector autoregressive model of the US vis-à-vis the rest of the world. More...

#2009-039A "Incidence of an Outsourcing Tax on Intermediate Inputs"
by Subhayu Bandyopadhyay
August 2009

The paper uses a Hecksher-Ohlin-Samuelson type general equilibrium framework to consider the incidence of an outsourcing tax on an economy in which the production of a specific intermediate input has been fragmented and outsourced. More...

#2009-038A "How Did We Get to Inflation Targeting and Where Do We Go Now? A Perspective From the U.S. Experience"
by Daniel L. Thornton
August 2009

This paper advances the hypothesis that the transition from there-is-little-central-banks-can-do-to-control-inflation to inflation targeting occurred because central banks, especially the Federal Reserve, demonstrated that central banks can control inflation rather than a consequence of marked improvement in the professions understanding of how monetary policy controls inflation. More...

FORTHCOMING: Inflation Targeting Twenty Years On: Past Lessons and Future Prospects. David Cobham, Øyvind Eitrheim, Stefan Gerlach and Jan Qvigstad, (ed.) Cambridge University Press