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Economic Research

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Recent Publications

Term Structures of Asset Prices and Returns

The authors examine the question of whether the documented failure of representative agent models comes from an equilibrium pricing kernel, cash flow specification, or both. They develop a methodology that enables them to consider this question in a unified fashion, accounting for term structure and cross-sectional effects at the same time.

By David Backus, Nina Boyarchenko, and Mikhail Chernov, Staff Reports 774, April 2016

The Federal Reserve and Market Confidence

The recent experience of monetary policy at the zero lower bound for interest rates has reignited the debate on the efficacy of monetary policy to impact real outcomes. The authors provide evidence that monetary policy can have an impact—even at the zero lower bound—by acting through the aggregate risk premium. 

By Nina Boyarchenko, Valentin Haddad, and Matthew C. Plosser, Staff Reports 773, April 2016

Organizational Complexity and Balance Sheet Management in Global Banks

The authors provide evidence that the organizational complexity of a bank’s corporate family is a fundamental driver of the business model of the bank itself. They show that the balance sheet management strategies of banks are very much determined by the structure of the organizations they belong to.

By Nicola Cetorelli and Linda S. Goldberg, Staff Reports 772, March 2016

International Shocks and Domestic Prices: How Large Are Strategic Complementarities?

When setting prices, do firms mostly respond to their own costs or changes in the prices of their competitors? The authors develop a general framework and an empirical identification strategy to estimate the elasticities of a firm’s price response, in particular to international shocks such as exchange rate movements.

By Mary Amiti, Oleg Itskhoki, and Jozef Konings, Staff Reports 771, March 2016