Showing papers by "Carl E. Walsh published in 1983"

Monetary Policy Regimes, Expected Inflation, and the Response of Interest Rates to Money Announcements

Abstract: This paper examines the response of the term structure of interest rates to weekly money announcements Estimated responses for both the pre- and post-October 1979 periods are first presented Then, two competing hypotheses involving the policy anticipations and expected inflation effects are formally specified and compared to the estimated responsesBoth hypotheses are found to be consistent with the responses, but they have sharply different implications about the Federal Reserve's short-run monetary policy The expected inflation hypothesis implies that weekly money surprises should have persistent effects on the level of the money stock, reflecting shifts in the Federal Reserve's long-run target In contrast, the policy anticipations hypothesis implies that the effectof money surprises should diminish over time, reflecting the Federal Reserve's desire to offset deviations from target Additional empirical results reported in the paper support this latter description of the money stock process

Monetary Policy Regimes, Expected Inflation, and the Response of Interest Rates to Money Announcements

Abstract: This paper examines the response of the term structure of interest rates to weekly money announcements. Estimated responses for both the pre- and post-October 1979 periods are first presented. Then, two competing hypotheses involving the policy anticipations and expected inflation effects are formally specified and compared to the estimated responses.Both hypotheses are found to be consistent with the responses, but they have sharply different implications about the Federal Reserve's short-run monetary policy. The expected inflation hypothesis implies that weekly money surprises should have persistent effects on the level of the money stock, reflecting shifts in the Federal Reserve's long-run target. In contrast, the policy anticipations hypothesis implies that the effectof money surprises should diminish over time, reflecting the Federal Reserve's desire to offset deviations from target. Additional empirical results reported in the paper support this latter description of the money stock process.

Taxation of Interest Income, Deregulation and the Banking Industry

Abstract: Removing interest rate ceilings on bank deposits or reducing the tax rate applicable to the interest earned on such deposits are alternative means of increasing the after-tax return to depositors. These alternatives, however, have differing impacts on the structure of a competitive banking industry. This paper develops a model which focuses on a bank's choice between paying an explicit interest rate on its deposits and paying a return in the form of services. The model allows banks to differ in their production technologies and depositors in their marginal tax rates and preferences for services. The effects of tax rate changes and a ceiling on the explicit deposit interest rate are analyzed. COINCIDING WITH THE RISE in market interest rates to levels significantly above regulation ceiling rates on bank and savings and loan deposits has been a move to reduce the level of taxation on interest income. General proposals to reduce the tax on interest income seem to have gained support as a means of increasing after-tax rates of return in order to increase aggregate savings, while proposals to allow banks and savings and loans to offer tax-free savings certificates are supported as a means of reducing the cost of funds for such thrift institutions. For example, the tax exempt all-savers certificates were designed to yield higher after-tax rates of return for some individuals while simultaneously lowering the cost of funds to the issuing institutions. As a means of providing a higher return to depositors, an obvious alternative to reducing the tax on interest income would be to speed the removal of interest rate ceilings which apply to deposits at banks and savings and loans. Tax changes and deregulation would both affect the banking industry by leading to changes in the after-tax interest rate on deposits. The composition of deposit return between explicit, taxable interest payments and the provision at below cost of nontaxable services might also be affected, along with the optimum level of deposits for an individual bank and the size of the banking industry. Unfortunately, none of these implications, all of which are relevant for analyzing recent tax and deregulation proposals, have been studied within the framework of a model of the banking industry. This paper develops a model which focuses on the bank's choice between paying an explicit interest rate on its deposits and paying a return in the form of services. Previous models have often ignored this choice, assuming that only the total return, and not its composition, mattered to the bank (Kareken [11], Klein

Saving in Primitive Economies

Abstract: Rogers, M. J. 1936 Yuman Pottery Makers. San Diego Museum Papers 2. (w) Roth, K. 1935 Pottery Making in Fiji. Journal of the Royal Anthropological Institute 65: 217-234. (x) Rye, Owen S. 1976 Keeping Your Temper Under Control: Materials and the Manufacture of Papuan Pottery. Archaeology and Physical Anthropology of Oceania 11:106-137. 1981 Pottery Technology. Taraxacum Manuals in Archaeology, Vol. 4. Washington, D.C.: Taraxacum. Smith, Marion F., Jr. 1980 Archaeological Ceramics as Vessels: Relating Morphology to Utilitarian Function. Paper presented at the annual meeting of the Society for American Archaeology, Philadelphia. 1981 Vessel and Sherd Morphology as Indicators of Cultural Use. Paper presented at the annual meeting of the Society for American Archaeology, San Diego. n.d. Toward an Economic Interpretation of Ceramics: Relating Vessel Size and Shape to Use. Manuscript submitted for publication in Measurement and Explanation of Ceramic Variation: Some Current Ex-