Federal Reserve System

About: Federal Reserve System is a other organization based out in Washington D.C., District of Columbia, United States. It is known for research contribution in the topics: Monetary policy & Inflation. The organization has 2373 authors who have published 10301 publications receiving 511979 citations.

Are There Cultural Effects on Saving? Some Cross-Sectional Evidence

Abstract: Why are there such large differences in saving rates across countries? Conventional economic analyses have not been successful in explaining international saving differences, so economists have sometimes suggested that national saving differences may be explained by cultural differences. This paper tests the hypothesis that cultural factors influence saving by comparing saving patterns of immigrants to Canada from different cultures. Using data from the Canadian Survey of Family Expenditures, we find no evidence of cultural effects on saving.

When Does Capital Account Liberalization Help More than It Hurts

Abstract: Introduction The literature on the effects of capital mobility falls under two headings, reflecting the traditional divide between the two branches of international economics. While work on the effects of capital movements in models of the real economy is well advanced, due in no small part to the important contributions of Assaf Razin, the same cannot be said of research in international finance on the effects of capital account liberalization and international capital flows. There are two explanations for the contrast, one having to do with theory, the other reflecting the limitations of existing empirics. On the theoretical side there are reasons to think that the imperfect nature of the information environment does more to complicate the effects and consequently the analysis of financial than nonfinancial transactions. Information asymmetries are endemic in financial markets. In particular, it is unrealistic to assume that agents on both sides of a financial transaction have the same information. This is especially true of international financial transactions, in whose case information flows must travel additional physical and cultural distance. It is well understood that these imperfections in the information environment are a distortion in whose presence inward foreign financial investment can be welfare reducing. But the difficulty of characterizing the information asymmetry and therefore the incidence of the distortion means that there is no consensus on precisely when and where such immiserizing effects may take place.

Central Bank Independence and Transparency: Evolution and Effectiveness

Abstract: While central banks have existed since the seventeenth century, their purpose, functions, and operations have evolved over time. Over the past two decades, the pace of reforms in terms of institutional independence and transparency has been particularly brisk. This paper examines the current level of central bank independence (CBI) and transparency in a broad sample of countries using newly constructed measures, and looks at the evolution in both measures from an earlier time period. The legal independence of central banks (measured using an index first constructed by Cukierman, Webb, and Neyapti, 1992) has increased markedly since the 1980s, while the rise in transparency since the late 1990s (measured using an index based upon the work of Eijffinger and Geraats, 2006) has been less impressive. Increases in CBI have tended to occur in more democratic countries and in countries with high levels of past inflation. More independent central banks in turn tend to be more transparent, while transparency is also positively correlated with measures of national institutional quality. Exploiting the time dimension of our data to eliminate country fixed effects and using instrumental variable estimation to overcome endogeneity concerns, we present robust evidence that greater CBI is associated with lower inflation. We also find that enhanced transparency practices are associated with the private sector making greater use of information provided by the central bank, consistent with a simple signal extraction model in which the public signal becomes more precise as our transparency measure increases.

Distributions of error correction tests for cointegration

Abstract: Summary This paper provides densities and finite sample critical values for the singleequation error correction statistic for testing cointegration. Graphs and response surfaces summarize extensive Monte Carlo simulations and highlight simple dependencies of the statistic’s quantiles on the number of variables in the error correction model, the choice of deterministic components, and the sample size. The response surfaces provide a convenient way for calculating finite sample critical values at standard levels; and a computer program, freely available over the Internet, can be used to calculate both critical values and p-values. Two empirical applications illustrate these tools.