This paper examines the potential effects of the Dodd-Frank Act of 2010 on banks' noninterest expenses. Using data on U.S. bank holding companies from 1995 through 2016, we test whether noninterest expenses increase following the passage of the Dodd-Frank Act or in relation to the number of...

We use a simple model to illustrate that nominal GDP targeting might produce a suboptimal equilibrium if there is a growth-maximizing rate of inflation. Following a shock, we find that targeting nominal GDP might result in lower real GDP growth than the economy could sustainably produce given...

Many economists, including former Fed chairman Ben Bernanke, believe that the gold standard generates poor economic outcomes including output volatility, price instability, financial panics, the spread of recessions via the exchange rate, and speculation-induced collapse. These problems,...

This issue brief discusses the potential causes of the post-crisis decline in bank lending. First, it compares bank lending to several measures of economic activity. Second, it discusses two other factors that affect lending: regulation and changes in the Fed's monetary policy. The evidence...

Most depositors love the security offered by the Federal Deposit Insurance Corporation (FDIC), but few realize the true costs of deposit insurance. Since government deposit insurance is not priced at “actuarially fair” rates, it raises the costs of insurance for depositors and encourages...

This paper considers the effects of changing expectations under macroeconomic policies that rely on targeting nominal variables, such as NGDP targeting. These proposals, in line with a dynamic conception of the equation of exchange, argue that the monetary authority can achieve any dynamic...

Current money matching models employ either random matching or endogenous matching processes, both of which oversimplify the problem. We maintain that although most economic interactions are intentional, randomness still exists in consumption preferences. We offer an endogenous matching model of...

This paper evaluates the effectiveness of risk-based capital (RBC) regulation and challenges some evidence from the well-known study by Haldane and Madouros (2012). We reconsider the evidence on the relationship between RBC ratios and failures of US banks from Haldane and Madouros (2012) and...

How has the impact of wars affected our historical understanding of U.S. economic performance? While most economists believe the Federal Reserve has improved performance, the existing literature fails to account for exogenous shocks such as periods of war. This paper compares U.S. economic...

Risk-based capital (RBC) ratios are an important component of US banking regulation, yet empirical evidence on the effectiveness of RBC regulation has been mixed. Avery and Berger (1991) find that the RBC ratio improves upon the standard capital ratio of equity over assets. This paper identifies...