Economic Letter
Brief summaries of SF Fed economic research that explain in reader-friendly terms what our work means for the people we serve.
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Recent Trends in Unemployment Duration
Rob Valletta
The recession that began in early 2001 probably has ended, as national output grew moderately during the first three quarters of 2002. Unemployment, however, remains a problem. Between late 2000 and early 2002, the national unemployment rate increased by about 2 percentage points, from 3.9% to about 6%; this represents about 2.8 million additional individuals looking for work.
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Riding the IT Wave: Surging Productivity Growth in the West
Mary C. Daly
U.S. productivity growth surged in the latter half of the 1990s after nearly two decades of lackluster gains. Several states in the West were among the leaders in this productivity growth surge, posting average annual increases well above the rest of the U.S.
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Productivity in the Twelfth District
Daniel Wilson
Labor productivity, that is, real output per worker (or per worker hour), is a primary determinant of our long-run standard of living. More output per worker translates into higher profits, higher wages, or lower prices—or a combination of the three.
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Stock Market Volatility
John Krainer
In recent months, it has not been unusual to see the value of major stock indexes, such as the S&P 500, change by as much as 3% in a single day. Unfortunately for many investors, the general direction of those changes has been downward.
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Learning from Argentina’s Crisis
Ramon Moreno
Since December 2001, Argentina has suspended payments on its external debt, restricted bank deposit withdrawals, and abandoned a currency board arrangement that had pegged the peso to the U.S. dollar since 1991. Argentina faces inflation of over 70% this year and an economic contraction that rivals the U.S.’s Great Depression.
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Setting the Interest Rate
Milton Marquis
The Federal Reserve’s monetary policy goals are the maintenance of low inflation and sustainable output growth. Under current operating procedures, the Fed chooses a target for a short-term interest rate—specifically, the overnight federal funds rate, which is an overnight interbank lending rate—that is believed to be consistent with those policy goals.
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Can the Phillips Curve Help Forecast Inflation?
Kevin J. Lansing
During the early 1960s, many economists and policymakers believed that monetary policy could exploit a stable trade-off between the level of inflation and the unemployment rate. One version of the hypothesized trade-off, originally described by A.W. Phillips (1958) using U.K. data from 1861-1957, implied that policymakers could permanently lower the unemployment rate by generating higher inflation.
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Japan Passes Again on Fundamental Financial Reform
Thomas Cargill
Japan’s Prime Minister Koizumi came to power in April 2001, promising to deal aggressively with the problems that underlay the country’s economic and political instability. Since then, his reform efforts have met increasing resistance, the economy and financial system have yet to improve, and his public support has fallen.
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Why Do Americans Still Write Checks?
Gautam Gowrisankaran
In Europe and other industrialized parts of the world, electronic payment mechanisms have largely replaced checks. But in the U.S., paper checks are still very common, accounting for more than 60% of retail payments.
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The Role of Fiscal Policy
Carl E. Walsh
In recent weeks, a number of signs have appeared suggesting that the recovery of the U.S. economy from the recent recession is on a bumpy path. During the second quarter of 2002, real GDP grew at an anemic annual rate of barely over 1%, well below market expectations.