The use of a reserve aggregate as an operating target raises questions about the interest rate effects of policy actions on the ability of the Federal Reserve to achieve a desired growth in the money stock. Open market operations affect both reserve aggregates and interest rates. Changes in interest rates, in turn, influence the portfolio decisions of banks and the public, and are believed by s...

*The views expressed here are those of the author and do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System. Shigeru Fujita is a senior economist in the Research Department of the Philadelphia Fed. This article is available free of charge at www. philadelphiafed. org/research-and-data/publications/. Labor Market Anxiety and the Downward...

In conjunction with the Committee on the Global Financial System Working Group project on foreign direct investment in emerging market financial sectors, staff of the U.S. Federal Reserve examined the market for political risk insurance (PRI) and its use by financial institutions to mitigate emerging market risks. A series of meetings were undertaken in 2003 with U.S. commercial and investment ...

Any announcement from the Federal Reserve has a huge impact on the interest rate markets. The press releases from the Federal Open Market Committee (FOMC) are major inputs to the market and the random intervention model is applied to interest rate futures transaction data to measure FOMC announcement impact. Missing prices during non-trading time periods are imputed iteratively during the estim...

Traditionally, conventional generation unit was used to provide ancillary services e.g. reactive power support, and spinning reserve. Nonetheless, with the emergence of highly penetrated distributed energy resources (DERs) systems and considering how beneficial they can be; it appears reasonable to use them as reactive power providers. Therefore, this paper introduces a new procedure for DERs t...

This paper proposes an aggregative model of total factor productivity (TFP) in the spirit of Houthakker (1955—1956). It considers a frictional labor market where production units are subject to idiosyncratic shocks and jobs are created and destroyed as in Mortensen and Pissarides (1994). An aggregate production function is derived by aggregating across micro production units in equilibrium. The...

This paper investigates the rationale for public intervention in the terrorism insurance market. It argues that government subsidies for terror insurance are aimed, in part, at discouraging self-protection and limiting the negative externalities associated with self-protection. Cautious self-protective behavior by a target can hurt public goods like national prestige if it is seen as “giving in...

Federal Reserve Bank of Atlanta E C O N O M I C R E V I E W Third Quarter 2002 I n 1998, Federal Reserve Board Chairman Alan Greenspan posed the provocative question, Is there a “new economy”? He described the new economy’s characteristics as including technological innovations that raise productivity and that have, accordingly, removed pricing power from the world’s producers on a more lasting...

onetary policy has traditionally been viewed as the process by which a central bank uses its influence over the supply of money to promote its economic objectives. For example, Milton Friedman (1959, p. 24) defined the tools of monetary policy to be those “powers that enable the [Federal Reserve] System to determine the total amount of money in existence or to alter that amount.” In fact, the v...