Creator: Dahl, David S. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 052 Description:
Second cover page indicates report dated February 12, 1976.
Keyword: State government, Local government, Ninth district economy, and Expenditures Subject (JEL): H50 - National Government Expenditures and Related Policies: General and H72 - State and Local Budget and Expenditures
Creator: Kaatz, Ronald and Nelson, Clarence W. (Clarence Walford), 1924- Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 000 Description:
This paper was published with no issue number.
Keyword: Asset pricing, Capital spending, Investments, and Expenditures Subject (JEL): G31 - Capital Budgeting; Fixed Investment and Inventory Studies; Capacity, E58 - Central Banks and Their Policies, and E22 - Investment; Capital; Intangible Capital; Capacity
Creator: Boyd, John H. and Gertler, Mark Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 531 Abstract:
This paper reexamines the conventional wisdom that commercial banking is an industry in severe decline. We find that a careful reading of the evidence does not justify this conclusion. It is true that on-balance sheet assets held by commercial banks have declined as a share of total intermediary assets. But this measure overstates any drop in banking, for three reasons. First, it ignores the rapid growth in commercial banks' off-balance sheet activities. Second, it fails to take account of the substantial growth in off-shore C&I lending by foreign banks. Third, it ignores the fact that over the last several decades financial intermediation has grown rapidly relative to the rest of the economy. We find that after adjusting the measure of bank assets to account for these considerations there is no clear evidence of secular decline. To corroborate these findings, we also construct an alternative measure of the importance of banking, using data from the National Income Accounts. Again, we find no clear evidence of a sustained declined. At most the industry may have suffered a slight loss of market share over the last decade. But as we discuss, this loss may reflect a transitory response to a series of adverse shocks and the phasing in of new regulatory requirements, rather than the beginning of a permanent decline.
Keyword: Lending, Bank assets, Banking, Intermediation, and Commercial banks Subject (JEL): G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Creator: Braun, R. Anton and Christiano, Lawrence J. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 529 Abstract:
The money demand literature presents much conflicting evidence on this question. For example, Lucas (1988) reports unrestricted money demand regressions which seem to imply that long-run money demand elasticities are highly unstable across subsamples. At the same time, he also presents evidence from money demand regressions with the income elasticity restricted to unity which seem to suggest stability. We conduct a formal analysis which weighs these apparently conflicting facts to determine which hypothesis is more plausible; the hypothesis that money demand is stable, or the hypothesis that money demand is unstable. We find that the stability hypothesis is the more plausible one. Thus, according to our data set, the answer to the question in the title is "yes".
Keyword: M1, Money supply, Money demand, Regression analysis, and Money demand regressions Subject (JEL): E41 - Demand for Money and E51 - Money Supply; Credit; Money Multipliers
Working Papers are early drafts of academic research papers written by economists affiliated with the Minneapolis Fed. Working Papers are often preprints of articles that are published in scholarly journals. Many Working Papers later become Staff Reports. The Research Database is the official location for this series, but you can also find them on the Minneapolis Fed website, IDEAS/RePEc, and in EconLit.
Creator: Diba, Behzad and Oh, Seonghwan Series: Business analysis committee meeting Abstract:
This paper reports some empirical evidence on the relation between the expected real interest rate and monetary aggregates in postwar U.S. data. We find some evidence against the hypothesis, implied by the Real Business Cycle model of Litterman and Weiss (1985), that the expected real interest rate follows a univariate autoregressive process, not Granger-caused by monetary aggregates. Our findings, however, are consistent with a more general bivariate model--suggested by what Barro (1987, Chapter 5) refers to as "the basic market-clearing model"--in which the real rate depends on its own lagged values and on lagged output. Taking this bivariate model as our null hypothesis, we find no evidence that money-stock changes have a significant liquidity effect on the expected real interest rate.
Subject (JEL): E51 - Monetary policy, central banking, and the supply of money and credit - Money supply ; Credit ; Money multipliers, E32 - Prices, business fluctuations, and cycles - Business fluctuations ; Cycles, and E43 - Money and interest rates - Determination of interest rates ; Term structure of interest rates
Creator: Kehoe, Timothy Jerome, 1953- and Prescott, Edward C. Series: Staff Report (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 418 Abstract:
Three of the arguments made by Temin (2008) in his review of Great Depressions of the Twentieth Century are demonstrably wrong: that the treatment of the data in the volume is cursory; that the definition of great depressions is too general and, in particular, groups slow growth experiences in Latin America in the 1980s with far more severe great depressions in Europe in the 1930s; and that the book is an advertisement for the real business cycle methodology. Without these three arguments — which are the results of obvious conceptual and arithmetical errors, including copying the wrong column of data from a source — his review says little more than that he does not think it appropriate to apply our dynamic general equilibrium methodology to the study of great depressions, and he does not like the conclusion that we draw: that a successful model of a great depression needs to be able to account for the effects of government policy on productivity.
In 2008, Peter Temin wrote a review of the book that appeared in the Journal of Economic Literature. This staff report and accompanying data file are in response to the review.
Citation for review: Temin, Peter. 2008. "Real Business Cycle Views of the Great Depression and Recent Events: A Review of Timothy J. Kehoe and Edward C. Prescott's Great Depressions of the Twentieth Century." Journal of Economic Literature, 46 (3): 669-84. DOI: https://doi.org/10.1257/jel.46.3.669