The Economic Research Department The mission of the Research Department is to conduct innovative economic research on monetary policy and other issues of importance to the Bank and the Federal Reserve System and to communicate the results of this research to policymakers, other researchers, and the general public.

Economic Research News

Second Quarter Economic Review
	The Efficacy of Large-Scale Asset Purchases at the Zero Lower Bound Can purchasing assets on a large scale effectively lower long-term interest rates? This article by Taeyoung Doh uses a preferred-habitat model that explicitly considers the zero bound for nominal interest rates to answer this question. What Is the Effect of Financial Stress on Economic Activity? In this article, Troy Davig and Craig Hakkio find that financial stress has a strong effect on the real economy when the economy is distressed--but also plays a role in eventually tipping a strong economy into a distressed one. Taylor Rule Deviations and Financial Imbalances Did monetary policy leading up to the recent financial crisis inadvertently exacerbate the economy's financial imbalances? This article by George Kahn explores whether policy actions leaned against or contributed to the building imbalances. The Changing Nature of U.S. Card Payment Fraud: Industry and Public Policy Options How serious is payment card fraud in the United States--and can the card payment industry limit fraud by developing its own standards and procedures? In this article, Richard J. Sullivan provides an overview of card payment fraud in the United States.

Research Working Papers:

The Creditworthiness of the Poor: A Model of the Grameen Bank By Michal Kowalik and David Martinez-Miera Poor borrowers with limited access to banking services may have greater incentives to repay their loans because they attach a higher value to maintaining the relationship with their bank. (April 2010) Distortionary Fiscal Policy and Monetary Policy Goals By Klaus Adam and Roberto Billi Can conservative monetary policy impose discipline on fiscal policy? (March 2010) 'Unfunded Liabilities' and Uncertain Fiscal Financing By Troy Davig, Eric M. Leeper and Todd B. Walker How must future monetary and fiscal policies change to address future fiscal shortfalls in the U.S.? (March 2010)

Central bank forecasting workshop

On October 14-15, 2010, the Federal Reserve Bank of Kansas City will host a research workshop on central bank forecasting.

Kansas City Financial Stress Index
	The KCFSI suggests financial stress declined further in February, moving close to its long-run average.