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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ETC (embodied technological change), etc.
Daniel Wilson
The sources of labor productivity growth in the U.S. economy have been the subject of much study. Understanding these sources is important because labor productivity growth is the key to increasing our economic standard of living.
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Profile of a Recession—The U.S. and California
Mary C. Daly
In the U.S., we spent much of last year wondering whether the economy was in recession or simply pausing after years of extraordinary growth. In California, the recession picture was even less clear, with widespread weakness in the San Francisco Bay Area, but more stable conditions in the much larger Southern California economy.
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Is There a Role for International Policy Coordination?
Paul Bergin
As the U.S. struggles with its first economic slowdown in a decade, so do most of the major industrialized countries. Japan is sliding again into recession, with third quarter GDP growth of -2.2%. Europe also seems to be slowing, with a third quarter growth rate of 0.4% for the euro area as a whole, and -0.6% for Germany in particular.
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What Is Operational Risk?
Jose A. Lopez
Financial institutions are in the business of risk management and reallocation, and they have developed sophisticated risk management systems to carry out these tasks. The basic components of a risk management system are identifying and defining the risks the firm is exposed to, assessing their magnitude, mitigating them using a variety of procedures, and setting aside capital for potential losses.
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Competition and Regulation in the Airline Industry
Gautam Gowrisankaran
The events of September 11 have had some of their worst economic effects on the airline industry, leading to a dramatic fall-off in passenger demand and substantially higher costs. But even before that day, the industry was facing bad times, with few airlines anticipating profitable performances in 2001. Some have argued that deregulation has contributed to the industry’s problems, and, furthermore, to problems for passengers.
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Subprime Mortgage Lending and the Capital Markets
Liz Laderman
Subprime mortgage lending has grown tremendously since the early 1990s and now constitutes a significant fraction of the overall mortgage market. This Economic Letter defines subprime mortgage lending, describes its growth, and presents evidence on the link between this market and the capital markets. This link should help encourage the flow of funds into subprime lending, thereby encouraging competition in this important market segment.
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Financial Modernization and Banking Theories
Simon Kwan
Financial innovation has greatly changed the business of banking. Instead of just accepting deposits and making loans the old-fashioned way, banks nowadays are increasingly active in lending without putting loans on their balance sheets, through either securitization of their asset portfolio or outright loan sales.
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The Economic Return to Health Expenditures
Charles I. Jones
“Runaway” expenditures on health in the United States and what to do about them have been a feature of congressional debate for years. In 1998, the United States spent 13.6% of its GDP on goods and services associated with health care.
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The U.S. Economy after September 11
Robert T. Parry
This Economic Letter is adapted from remarks by Robert T. Parry, President and CEO of the Federal Reserve Bank of San Francisco, delivered on November 19, 2001, to the 24th Annual Real Estate and Economics Symposium sponsored by U.C. Berkeley’s Fisher Center for Real Estate and Urban Economics.
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Financial Instruments for Mitigating Credit Risk
Jose A. Lopez
Financial derivatives have greatly enhanced the range of tools available for managing financial risks. Currently, derivatives are widely used to mitigate and reallocate the financial risk related to changes in interest rates, exchange rates, stock prices, and commodity prices.