Federal Reserve Bank of St. Louis

About: Federal Reserve Bank of St. Louis is a other organization based out in St Louis, Missouri, United States. It is known for research contribution in the topics: Monetary policy & Inflation. The organization has 203 authors who have published 1650 publications receiving 46084 citations.

Keep the Leverage Ratio for Large Banks to Limit the Competitive Effects of Implementing Basel II Capital Requirements

Abstract: In October 2005, the agencies that supervise U.S. depository institutions proposed changes in the Basel I capital requirements that will apply to the banks that will not be subject to the new Basel II capital requirements. An objective of the U.S. bank supervisors for proposing changes in Basel I capital requirements is to mitigate any competitive inequalities created by implementing Basel II capital requirements. This paper explains why the proposed changes in Basel I capital requirements would not mitigate such competitive inequalities for many of the banks that will continue to be subject to the Basel I capital requirements. In addition, this paper argues that an important means of limiting competitive effects from implementing Basel II capital requirements is to maintain the leverage ratio as one of the capital requirements for the banks that adopt Basel II capital requirements.

An international perspective on the recent behavior of inflation

Abstract: Several commentators have been concerned about the possibility that the euro area may be experiencing disinflation with the risk of deflation. However, the euro area is not the only economy navigating the risky waters of low inflation. Several other advanced economies have recently experienced below-target inflation as well as some actual deflation. In this article, the authors collect data for nine advanced economies and document several facts about the behavior of inflation during the 2002-14 period. First, they show that the relationship between inflation rates and short-term rates displays similar changes across advanced economies—with and without central bank programs designed to increase the size of their balance sheets (e.g., large-scale asset purchases). Second, they describe recent indications that headline and core inflation are below target for individual countries. They then discuss various explanations for this trend (global factors, output gaps, and changes in inflation expectations), showing there is some important heterogeneity across countries. Finally, they show that while output has become even more synchronized across countries since 2008, the cross-country correlation of inflation is no longer higher than the cross-country correlation of output.

Credit Shocks and Macroeconomic Fluctuations in Emerging Markets

Abstract: In this paper, we examine the role of global and domestic credit supply shocks in macroeconomic fluctuations for Emerging Markets. For this purpose, we impose a set of zero and sign restrictions within a medium-scale Bayesian Vector Auto-Regressive model. Quarterly data from South Africa and G-7 countries in 1985-2010 show that credit supply shocks impact significantly on macroeconomic aggregates in these economies. However, credit supply shocks have played, on average, a less important role than credit demand shocks. Moreover, shocks originating from G7-countries are the main drivers of real activity in South Africa, although they played a marginal role in the 1996-1999 South African recession.

Institutions Do Not Rule: Reassessing the Driving Forces of Economic Development

Abstract: We use cross-country data and instrumental variables widely used in the literature to show that (i) institutions (such as property rights and the rule of law) do not explain industrialization and (ii) agrarian countries and industrial countries have entirely different determinants for income levels. In particular, geography, rather than institutions, explains the income differences among agrarian countries, while institutions appear to matter only for income variations in industrial economies. Moreover, we find it is the stage of economic development (or the absence/presence of industrialization) that explains a country's quality of institutions rather than vice versa. The finding that institutions do not explain industrialization but are instead explained by industrialization lends support to the well-received view among prominent economic historians -- that institutional changes in 17th and 18th century England did not cause the Industrial Revolution.