Journal of Money, Credit & Banking

Reports major findings in the study of financial institutions, financial markets, monetary and fiscal policy, credit markets, money and banking.

Articles from Vol. 40, No. 2-3, March-April

Are Bank Holding Companies a Source of Strength to Their Banking Subsidiaries?
IN RESPONSE TO THE BANKING CRISIS of the late 1980s, Congress enacted two important reforms of bank holding company (BHC) regulation. The cross-guarantee authority granted to the Federal Deposit Insurance Corporation (FDIC) in 1989 through the Financial...
Data Revisions Are Not Well Behaved
MOST MACROECONOMIC VARIABLES are substantially revised by statistical agencies in the months after their initial announcements. These revisions generally reflect the arrival of new information that was not available at the time of the initial announcement....
Differences in Interest Rate Policy at the ECB and the Fed: An Investigation with a Medium-Scale DSGE Model
SINCE THE INTRODUCTION of the euro in January 1999, the European Central Bank (ECB) has moved its policy rate much less frequently than the Federal Reserve (Fed). Over the period from January 1999 to January 2006, the ECB has changed its main refinancing...
Discipline and Liquidity in the Interbank Market
DEPOSITORY INSTITUTIONS ARE subject to a variety of unpredictable liquidity shocks that determine their needs for short-term funding, and these shocks can impose real costs when they result in reserve shortfalls or overdrafts in Federal Reserve accounts....
How Do People Cope with Natural Disasters? Evidence from the Great Hanshin-Awaji (Kobe) Earthquake in 1995
IN THE EARLY hours of January 17, 1995, the Hanshin (Kobe) area of Japan was hit by a major earthquake. Home to more than 4 million people, the area is densely populated and forms part of the second largest industrial cluster in Japan. The earthquake...
Hyperbolic Discounting and the Phillips Curve
IN THIS PAPER, we show that if households have hyperbolic preferences and face staggered nominal wage contracts, inflation (via money growth) has significant long run effects on output and employment. With our baseline calibration, which takes the...
Model Uncertainty and Delegation: A Case for Friedman's K-Percent Money Growth Rule?
DURING THE LAST 15 years in many countries, monetary policy has been formulated with an objective to stabilize inflation directly, a regime known as inflation targeting. Thus, many central banks, with perhaps the prominent exception of the European...
Monetary Policy Choices in Emerging Market Economies: The Case of High Productivity Growth
IN THE LAST 40 years, the relationship between economic growth and real exchange rate has been explored extensively in the literature. One of the most popular explanations for long-term movements of the real exchange rate is the Balassa-Samuelson (B-S)...
Monitoring and Forecasting Currency Crises
FINANCIAL CRISES ARE A RECURRENT PHENOMENON. Latin American currency crises characterized the late 1970s and early 1980s, the European Exchange Rate Mechanism collapsed in the early 1990s, and the Mexican and East-Asian crises characterized the late...
Private Sector Influences on Monetary Policy in the United States
RESEARCH ON POLITICAL business cycles, the time inconsistency problem of monetary policy, and the "new political economy" suggests that monetary policy may be subject to influence from governmental and private sector pressure groups. Consistent with...
Re-Examining the Consumption-Wealth Relationship: The Role of Model Uncertainty
TEXTBOOK WISDOM SUGGESTS that the size of the wealth effect (i.e., the change in consumption induced by a $1 increase in wealth) should be approximately 5 cents. However, recent events that caused large changes in wealth without commensurately large...
Relative Prices as Aggregate Supply Shocks with Trend Inflation
THE EMPIRICAL CORRELATION between the first and second moments of the distribution of price changes has long been recognized. Vining and Elwertowski (1976) and Parks (1978) provide evidence of this phenomenon in the United States; Domberger (1987)...
Testing Commitment Models of Monetary Policy: Evidence from OECD Economies
A KEY FEATURE OF INFLATION in many industrialized economies in recent decades was the substantial run-up of inflation in the late 1960s and 1970s, followed by an equally substantial dis-inflation in the 1980s and 1990s. In the United States, the period...
The Structural Dynamics of U.S. Output and Inflation: What Explains the Changes?
THERE IS CONSIDERABLE EVIDENCE SUGGESTING that the U.S. economy has fundamentally changed over the last 35 years. For example, Blanchard and Simon (2000), McConnell and Perez Quiroz (2001), Sargent and Cogley (2001), and Stock and Watson (2002) have...
Venture-Capital Investment in Minority Business
IN 1992, THE ROPER ORGANIZATION POLLED 472 black-owned businesses to gauge how they viewed their own firms, as well as black businesses generally. Asked why there were so few black-owned firms in the nation, 84% responded that "Black-owned businesses...
Why Do Bank Runs Look like Panic? A New Explanation
EVEN THOUGH MOST empirical studies conclude that bank runs are associated with adverse information about banks (see Mishkin 1991, Hasan and Dwyer 1994, Saunders and Wilson 1996, Schumacher 2000, Calomiris and Mason 1997, 2003), the view that bank runs...