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.

Macroeconomic effects of government spending in China

Abstract: Government spending plays an important role in determining economic performances in China. Its macroeconomic effects are analysed in this paper. We show that government spending in China Granger‐causes output, consumption and investment booms as well as inflation, and has a multiplier larger than 1. The large multiplier effects are found not only in aggregated time‐series data but also in panel data at the provincial level. We also provide a theoretical model and Monte Carlo analysis to rationalize our empirical findings. Our theoretical and Monte Carlo analyses support the large multiplier found in China but also suggest that government spending is not necessarily a free lunch in spite of the large multiplier effects.

Creating a Policy Environment for Entrepreneurs

Abstract: This paper demonstrates that levels of entrepreneurship can be greatly affected by the general policy environment. Using a state-level panel, we estimate the effects of several policy variables on rates of entrepreneurship and find that bankruptcy exemptions, corporate tax rates, and the level of the minimum wage all affect a state's rate of entrepreneurship. For the median state, these policies reduced the level of entrepreneurship by 10.5 percent. Much of the geographic pattern of entrepreneurship can be explained by policy differences: The low-entrepreneurship states of the Great Lakes and the South tend to have relatively unfriendly policy environments, and the high-entrepreneurship states of the West tend to have relatively friendly policies. On the other hand, although New England states tend to have relatively unfriendly policy environments, they also tend to have high rates of entrepreneurship.

Combining Forecasts from Nested Models

Abstract: Motivated by the common finding that linear autoregressive models forecast better than models that incorporate additional information, this paper presents analytical, Monte Carlo, and empirical evidence on the e!e ctiveness of combining forecasts from nested models. In our analytics, the unrestricted model is true, but as the sample size grows, the data generating process converges to the restricted model. This approach captures the practical reality that the predictive content of variables of interest is often low. We derive MSE-minimizing weights for combining the restricted and unrestricted forecasts. Monte Carlo and empirical analyses verify the practical e!e ctiveness of our combination approach.

The Phillips Curve and US Monetary Policy: What the FOMC Transcripts Tell Us

Abstract: The Phillips curve framework, which includes the output gap and natural rate hypothesis, plays a central role in the canonical macroeconomic model used in analyses of monetary policy. It is now well understood that real-time data must be used to evaluate historical monetary policy. We believe that it is equally important that macroeconomic models used to evaluate historical monetary policy reflect the framework that policymakers used to formulate that policy. To that end, we use the Federal Open Market Committee (FOMC) transcripts to examine the role that the Phillips curve framework played in Fed policymaking from 1979 through 2003. The FOMC’s transcripts allow us to trace the evolution in policymakers’ discussion of the Phillips curve framework over time. Our analysis suggests that the Phillips curve was much less central to the formulation and implementation of US monetary policy than it is in models commonly used to evaluate that policy.

A spatial analysis of state banking regulation

Abstract: . We use a spatial model to investigate a state's choice of branch banking and interstate banking regimes as a function of the regime choices made by other states and other variables suggested in the literature. We extend the basic spatial econometric model by allowing spatial dependence to vary by geographic region. Our findings reveal that spatial effects have a large, statistically significant impact on state regulatory regime decisions. The importance of spatial correlation in the setting of state banking policies suggests the need to consider spatial effects in empirical models of state policies in general.