The standard supply-and-demand model is typically an economist’s most important analytical tool, but in some situations it does not capture the features of interest. For example, during “happy hour,” bars near workplaces sell a higher-than-usual quantity of alcoholic beverages at a...

The yield curve, or the term structure of interest rates, plays a central role in the economy. Monetary policy is conducted by targeting rates at the short end of the curve, and longer-term yields reflect expectations of future changes in short rates. ; This article presents a model of the term...

The yield curve shows how the yield on a government bond depends on the bond's maturity. Monetary policymakers and observers pay special attention to the shape of the yield curve as an indicator of the economic impact of current and future monetary policy. Without the proper analytical tools,...

Transactions involving repurchase agreements (known as repos and reverses) are important tools the Federal Reserve uses in implementing monetary policy. By undertaking such transactions with primary dealers, the Fed can temporarily increase or decrease the quantity of reserves in the banking...