Does the yield curve have the ability to predict output and recessions? At some times and in certain places, of course! But many details are matters of dispute: When and where does the yield curve predict successfully, which aspects of the curve matter most, and which economic forces account for...

A primer on how collateralized mortgage obligations (CMOs) work, looking at both their advantages and disadvantages and explaining how some seasoned market participants got into trouble by investing in these interest-rate-sensitive financial instruments.

In the United States, the Federal Reserve has responsibility for both monetary policy and bank supervision. Other countries separate these functions to varying degrees. What lies behind this global diversity? Should a central bank be charged with conducting monetary policy and regulating banks,...

Several recent proposals aim to restore market discipline to the banking sector by forcing banks to issue debt that is not guaranteed by the government, termed subordinated debt. This Commentary examines the reasoning behind such proposals and assesses the likelihood of their success.

Experience has taught economic forecasters to expect a recession when the yield on short-term Treasury securities rises above the yield on longer-term securities—a situation known as a yield-curve inversion. But some economists suspect the yield curve might not be as reliable a predictor of...

The author finds that because the level of excess reserves depends directly on the Federal Reserve's monetary policy stance, this measure is generally a poor indicator of credit availability.

Should central bankers be free to decide what policy actions they will take and when they will take them, or should they agree to an explicit policy rule and stick to it? The discretion versus rules debate is an old one; unfortunately, it has rarely addressed the fact that the benefits of moving...

An examination of the problems surrounding the current corporate tax system, including a detailed look at several reform proposals from the Treasury Department.