Both the Board of Governors and the Federal Reserve Bank of St. Louis calculate monetary base and total reserve series, adjusted for changes in reserve requirement ratios. Many analysts apparently believe there is little measurable difference in these series. This hypothesis is empirically...

Paying interest on required reserves is considered in an overlapping generations model in which the return to capital dominates the return to flat money. As Smith (1991) showed, financing interest on reserves benefits the initial old at the expense of future generations. We show that the...

There is ample empirical evidence suggesting that countries with high inflation tend to grow slower than countries with low inflation. Based on the regression evidence, the inflation-rate effect is fairly large; on average, per-capita real GDP grows between $71 and $76 percentage points slower in...

This paper examines the phenomenon of "Fed watching" within the context of a macroeconomic policy game. Following A. Cukierman and A. H. Meltzer's 1986 article, the policymaker's preferences are private information and noisy monetary control causes past observations of money growth to be a noisy...

The tax treatment of commercial banks as investors in municipal securities changed dramatically with the loss of interest expense deductibility for municipal carrying costs under the Tax Reform Act of 1986. Competing theories of relative yield determination suggest that the lost deductions and...

Does an increase in the federal debt cause inflation? Gerald P. Dwyer (1982), us ing a par value measure of debt, finds no such causal link. W. Michae l Cox (1985), using a market value measure, finds that increases in d ebt produce higher inflation rates. The authors reconcile these resul ts by...