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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Rising Junk Bond Yields: Liquidity or Credit Concerns?
Simon Kwan
Economists and other analysts look for signs of the economy’s current and future performance in many places, including the bond market. One recent signal from that market that may prove useful involves the spread in the yields between junk bonds and other long-term debt instruments.
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Information Technology and Growth in the Twelfth District
Mary C. Daly
The Twelfth District includes the nine westernmost states and has some of the nation’s leading technology centers. Over the past several years, robust growth among information technology (IT) firms has fueled gains in output, employment, and earnings and helped the District economy expand more rapidly than the rest of the nation.
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Quantitative Easing by the Bank of Japan
Mark Spiegel
In the wake of continued weakness in the Japanese economy and recent market turbulence due to the terrorist attacks in the U.S., the Bank of Japan (BOJ) recently increased the intensity of its quantitative easing program, which it had begun in March of this year. The BOJ initially switched from the usual approach to expansionary monetary policy—namely, a reduction in the target short-term interest rate—to quantitative easing because by that time it had been pursuing a target very close to zero (0.15%).
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Banking and the Business Cycle
John Krainer
The banking industry performed exceptionally well during the strong economic expansion of the past five years. Strong demand for loans and banking services and the strong supply of quality customers helped boost bank earnings.
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Has a Recession Already Started?
Glenn D. Rudebusch
Recession fears greatly intensified after the terrorist attack of September 11, 2001. In a Blue Chip survey of business economists taken one week later, 82% answered yes to the question “Is the U.S. economy currently in a recession?”
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Unemployment and Productivity
Bharat Trehan
During the latter half of the 1990s, productivity grew at almost twice the pace of the preceding ten years. Widely attributed to developments in the information technology sector, this surge in productivity was accompanied by an unemployment rate that dropped to unusually low levels.
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Natural Vacancy Rates in Commercial Real Estate Markets
John Krainer
With the slowing economy, vacancy rates in commercial real estate markets have risen sharply over the last two quarters. Nowhere is this more evident than in the Twelfth District, where vacancy rates in the key high-tech markets (San Francisco, San Jose, and Seattle) have increased four-fold since the fourth quarter of 2000.
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Transparency in Monetary Policy
Carl E. Walsh
The title of a popular 1987 book by William Greider on the Federal Reserve said it all: Secrets of the Temple conjured up an image of the high priests of monetary policy hidden away behind marble walls in Washington, D. C., making mysterious decisions that affected the lives of all Americans. While the Fed’s policymaking body, the Federal Open Market Committee (FOMC), would eventually release minutes of its meetings, and the Chairman did testify twice a year before Congress and would frequently give public speeches, that image of secrecy was one that central bankers often seemed to enjoy cultivating.
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Capital Controls and Emerging Markets
Ramon Moreno
The financial crises in the 1990s resurrected the debate on whether emerging markets should stay open to foreign capital or impose capital controls. The stakes are high.
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Recent Research on Sticky Prices
Bharat Trehan
Broadly speaking, the papers at the conference were concerned with modeling the effects of policy in an economy with nominal rigidities—that is, with prices and wages that are relatively inflexible, or “sticky.” One set of papers focused on determining the characteristics that a model economy would require to plausibly reproduce the observed behavior of key macroeconomic variables such as output and inflation, especially in response to a monetary policy shock.