Economic Letter

Over the past year, big banks have made a highly visible push into small business lending. Several large banks have been using new technology to reduce the cost of originating small business loans and speed the approval process.

Is current monetary policy consistent with maintaining a low rate of inflation? Would the establishment of price stability as the Fed’s sole objective hinder long-run growth prospects for the U.S. economy?

California residents flocked to other U.S. states during California’s long, deep economic downturn of the early 1990s. The departure of large numbers of Californians contrasted starkly with the longstanding norm of sizable net in-flows of population to the Golden State. Substantial numbers of foreign and domestic migrants made their way to California during the first four decades of the post-WWII period.

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 provides a new framework for welfare in the United States. The act ends the 61-year federal entitlement to public assistance for needy individuals and further shifts control over public assistance distribution and benefit levels from the federal to the state governments.

On a number of occasions this year, the Labor Department has released reports showing that employment was growing more rapidly than analysts had anticipated. For example, the economy added roughly 800,000 jobs in February and another 239,000 jobs in June.

Hong Kong is one of the great success stories of economic development. In less than fifty years Hong Kong has transformed itself from a sleepy trading village to one of the wealthiest and most dynamic cities in the world.

The Federal Reserve Board’s measures of capacity utilization for the U.S. manufacturing sector have been a useful indicator of inflationary pressures. However, some observers have claimed that the relationship between capacity utilization and inflation has broken down recently, owing to increased international trade, a shift in the share of the nation’s workforce in service-producing industries, and rapid technological change.

This November, the 18 members of the Asia Pacific Economic Cooperation Forum (APEC)–which includes the U.S.–will hold a summit in Subic Bay, the Philippines, to approve individual and collective plans to liberalize trade and investment. APEC is but one of several organizations focused on trade issues in the Pacific Basin.

In September, the Philippines announced it would issue $1.9 billion in Eurobonds to finance a repurchase of outstanding Philippine “Brady bonds,” the securities acquired by banks in the Philippines debt restructuring under the Brady Plan in 1992. The Brady Plan was a program of debt reduction partially financed by official institutions to allow highly indebted countries to repurchase debt at a discount.

Well before the merger of BankAmerica Corporation and Security Pacific Corporation in 1992, California had a “rate gap”–that is, interest rates on small denomination (retail) deposits tended to be lower at California banks than at banks nationwide. According to economic theory, an increase in banking market concentration due to, say, a large bank merger, may decrease deposit interest rates.