Federal Reserve Bank of Dallas

About: Federal Reserve Bank of Dallas is a other organization based out in Dallas, Texas, United States. It is known for research contribution in the topics: Monetary policy & Inflation. The organization has 196 authors who have published 994 publications receiving 35508 citations.

Can the Standard International Business Cycle Model Explain the Relation Between Trade and Comovement

Abstract: Recent empirical research finds that pairs of countries with stronger trade linkages tend to have more highly correlated business cycles. The authors assess whether the standard international business cycle framework can replicate this intuitive result. They employ a three-country model with transportation costs, and they simulate the effects of increased goods market integration under two asset market structures: complete markets and international financial autarky. The main finding is that under both asset market structures the model can generate stronger correlations for pairs of countries that trade more, but the increased correlation falls far short of the empirical findings. Even when the authors control for the fact that most country pairs are small with respect to the rest of the world, the model continues to fall short. They also conduct additional simulations that allow for increased trade with the third country or increased TFP shock comovement to affect the country pair's business cycle comovement. These simulations are helpful in highlighting channels that could narrow the gap between the empirical findings and the predictions of the model.

Assessing Changes in the Monetary Transmission Mechanism: A VAR Approach

Abstract: A paper presented at the April 2001 conference "Financial Innovation and Monetary Transmission," sponsored by the Federal Reserve Bank of New York.

Low-frequency movements in stock prices: a state-space decomposition

Abstract: Previous analyses have concluded that expectations of future excess stock returns rather than future real dividend growth or real interest rates are responsible for most of the volatility in stock prices. In this paper, we employ a state-space model to model the dynamics of the log price-dividend ratio along with long-term and short-term interest rates, real dividend growth, and inflation. The advantage of the state-space approach is that we can parsimoniously model the low-frequency movements present in the data. We find that, if one allows permanent changes, even though very small, in real dividend growth, real interest rates, and inflation-but not excess stock returns-then expectations of real dividend growth and real interest rates become significant contributors to fluctuations in stock prices. However, we also show that stock price decompositions are very sensitive to assumptions about which unobserved market fundamentals have a permanent component. When we allow excess stock returns to have a perma...

Deficits, Democrats, and Distributive Benefits: Congressional Elections and the Pork Barrel in the 1980s

Abstract: In this study, we examine the extent to which legislators receive elec toral benefits from altering the geographic distribution of federal outlays. Although there are both theoretical and anecdotal reasons to believe in the existence of such benefits, previous empirical work has largely failed to verify the connection between pork barreling and reelection. We ex amine House incumbents during the 1980s, when budget deficits were allegedly forcing legislators to end the acquisition of distributive benefits, and we discover that legislators did in fact reap electoral benefits from pork barreling in the 1980s. We further discover that there is a sharp partisan difference in the marginal effects of federal outlays: additional federal monies strongly affect Democratic reelection margins but barely impact the electoral fortunes of Republicans. This conclusion has impor tant implications for current debates about Congress, divided govern ment, and the recent Republican takeover of Congress.

Empirical Studies of Financial Innovation: Lots of Talk, Little Action?

Abstract: This paper reviews the extant empirical studies of financial innovation. Adopting broad criteria, the authors found just two dozen studies, over half of which (fourteen) had been conducted since 2000. Since some financial innovations are examined by more than one study, only fourteen distinct phenomena have been covered. Especially striking is the fact that only two studies are directed at the hypotheses advanced in many broad descriptive articles concerning the environmental conditions (e.g., regulation, taxes, unstable macroeconomic conditions, and ripe technologies) spurring financial innovation. The authors offer some tentative conjectures as to why empirical studies of financial innovation are comparatively rare. Among their suggested culprits is an absence of accessible data. The authors urge financial regulators to undertake more surveys of financial innovation and to make the survey data more available to researchers.