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F e d e r a l R e s e r v e B a n k o f N e w Yo r k

Number 4

2006

ResearchUpdate
Research and Statistics Group

www.newyorkfed.org/research

New Model Proves Effective in Tracking Productivity Growth

E

conomists in the second half of the
1990s debated whether the productivity gains observed in that period
represented a long-term change in productivity’s underlying trend or merely a
cyclical increase. Adherents of the “new
economy” saw these gains as a shift to
permanently higher productivity growth,
while others viewed them as a transient
feature of the larger economic expansion.
It was not until 2001, when productivity
growth remained relatively strong despite
the downturn in the economy, that the
notion of a trend change won widespread
acceptance.
In a new study (“Tracking Productivity
in Real Time,” Current Issues in
Economics and Finance, vol. 12, no. 8),
authors James Kahn and Robert Rich
develop a model for monitoring productivity growth that could potentially
resolve such uncertainties in a much
more timely way. Noting that the difficulty
in identifying trend changes in productivity
stems from the volatile short-term movements of this series, the authors include
in their model two other series—real
consumption expenditure and real labor
compensation—that move together with

productivity and can thus help uncover
the trend.
The model itself is a “regime-switching”
model that, at each point in time, yields
an estimate of the probability of being in
a high-growth or a low-growth productivity
regime. Kahn and Rich first use the
model to produce retrospective assessments
of postwar trend productivity growth
based on all the information that is now
available. The model puts productivity in
a high-growth regime (nearly 3 percent)
from 1947 until 1973, a low-growth
regime (1.3 percent) from 1973 to 1996,
and a high-growth regime thereafter.
Kahn and Rich then use the model to
produce estimates of productivity growth
that are based solely on real-time
data—the data historically available at
each point in time. The extent to which
these estimates accord with the retrospective estimates provides a measure of the
model’s usefulness to policymakers, who
must make judgments about productivity
without the benefit of hindsight.
Significantly, these real-time estimates
track the retrospective assessments fairly
closely. In particular, they capture the
shift to higher trend productivity growth

RV oe ls ue ma rec h9 , U Np du amtbee r■ 2N, u2m0b0e6r 4 , 2 0 0 6

2

that occurred around 1997: “Our model
could have provided at least a preliminary
sign within a year of when the change
occurred and a conclusive signal within
two years—well before any consensus had
emerged,” the authors note.

The authors suggest that, going forward, the model provides a means of
monitoring—in real time—the risk of a
shift to lower trend productivity growth.
The model’s most recent estimates, however, show that productivity is hewing to
the high-growth path of roughly 3 percent. ■

New Titles in the Staff Reports Series

of unions increase output? This paper studies this question in a dynamic general equilibrium model with nominal frictions and
shows that these policies are expansionary
when certain “emergency” conditions
apply. Eggertsson argues that these emergency conditions—zero interest rates and
deflation—were satisfied during the Great
Depression in the United States. Therefore,
the New Deal, which facilitated monopolies
and union militancy, was expansionary,
according to the model. This conclusion is
contrary to the one reached by Cole and
Ohanian, who argue that the New Deal was

The following new Staff Reports are
available at www.newyorkfed.org/
research/staff_reports.

MACROECONOMICS
AND GROWTH
No. 264, October 2006
Was the New Deal Contractionary?
Gauti B. Eggertsson
Can government policies that increase the
monopoly power of firms and the militancy

Publications and Papers
The Research and Statistics Group produces a wide range of publications:
■

The Economic Policy Review—a policy-oriented journal focusing on economic
and financial market issues.

■

EPR Executive Summaries—online versions of selected Economic Policy Review
articles, in abridged form.

■

Current Issues in Economics and Finance—concise studies of topical economic
and financial issues.

■

Second District Highlights—a regional supplement to Current Issues.

■

Staff Reports—technical papers intended for publication in leading economic
and finance journals, available only online.

■

Publications and Other Research—an annual catalogue of our research output.

F e d e r a l R e s e r v e B a n k o f N e w Yo r k

www.newyorkfed.org/research

contractionary. The main reason for this
divergence is that the current model incorporates nominal frictions so that inflation
expectations play a central role in the
analysis.

forward-looking model incorporating these
fluctuations approximates well inflation’s
short-run dynamics.

INTERNATIONAL
No. 270, December 2006
Trend Inflation and Inflation
Persistence in the New Keynesian
Phillips Curve
Timothy Cogley and Argia M. Sbordone
Empirical research has shown that purely
forward-looking versions of the New
Keynesian Phillips curve (NKPC) generate
too little inflation persistence. This study
offers a resolution of the persistence problem. Hypothesizing that inflation is highly
persistent because of drift in trend inflation, Cogley and Sbordone derive a version
of the NKPC as a log-linear approximation
around a time-varying inflation trend and
examine whether it explains deviations of
inflation from that trend. The authors estimate the NKPC parameters jointly with
those that define the inflation trend by estimating a vector autoregression with drifting
coefficients and volatilities; the autoregressive parameters are constrained to satisfy
the restrictions imposed by the NKPC. The
authors find that trend inflation has historically been quite volatile and that a purely

No. 267, December 2006
Deflationary Shocks and Monetary
Rules: An Open-Economy
Scenario Analysis
Douglas Laxton, Papa N’Diaye,
and Paolo Pesenti
This paper considers the macroeconomic
transmission of demand and supply shocks
in an open economy under alternative
assumptions about whether the zero interest rate floor (ZIF) is binding. It uses a twocountry simulation model calibrated to the
Japanese economy relative to the rest of the
world. Negative demand shocks have more
prolonged and conspicuous effects on the
economy when the ZIF is binding than
when it is not binding. Positive supply
shocks extend the period of time over
which the ZIF may be expected to bind.
Economies that are more open hit the ZIF
for a shorter time, and with less harmful
effects. The implications of deflationary
supply shocks depend on whether the
shocks are concentrated in the tradables or
the nontradables sector.

Website News
■

The Research Group’s Productivity Data and Analysis web page is a source of timely
information on productivity. The page features articles and papers by New York Fed
economists, data and charts on productivity growth, and links to key resources outside the Bank.
In addition, the page now offers regular updates of a real-time productivity trend
model developed by economists James Kahn and Robert Rich. The model provides
the latest five-year forecast of nonfarm productivity growth as well as the latest
assessment of whether the U.S. economy is currently in a high- or low-growth regime.
www.newyorkfed.org/research/national_economy/nationalproductive.html

Research and Statistics Group

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Number 4, 2006

No. 268, December 2006
Would Protectionism Defuse Global
Imbalances and Spur Economic
Activity? A Scenario Analysis
Hamid Faruqee, Douglas Laxton,
Dirk Muir, and Paolo Pesenti

foreign direct investment (FDI) assets than
on U.S. FDI liabilities, ongoing borrowing
may well overwhelm this favorable rate of
return, pushing the U.S. net income balance more deeply into deficit.

In the evolving analysis of global imbalances, the possibility that countries will
resort to increased protectionism is often
mentioned but rarely analyzed. This study
attempts to fill that gap, examining the
macroeconomic implications of a shift to
protectionist policies through the lens of a
dynamic general equilibrium model of the
world economy that encompasses four
regional blocs. Simulation exercises are
carried out to assess the consequences of
imposing uniform and discriminatory tariffs
on trading partners as well as the consequences of tariff retaliation. The authors
also discuss a scenario in which a “globalization backlash” lowers the degree of
competition in import-competing sectors,
and compare the implications of higher
markups in the product and labor markets.

MICROECONOMICS

No. 271, December 2006
Borrowing without Debt?
Understanding the U.S. International
Investment Position
Matthew Higgins, Thomas Klitgaard,
and Cédric Tille
Sustained large U.S. current account
deficits have prompted concerns that future
current account adjustment could occur
through a sudden depreciation of the dollar and a sharp drop in consumption. Two
factors that, to date, have offset such concerns are the stability of U.S. net external
liabilities and the minimal net income payments made by the nation on these liabilities. The authors show that the stability of
the external position reflects sizable capital
gains from strong foreign equity markets
and a weaker dollar—conditions that could
be reversed in the future. They also show
that while minimal net income payments
reflect a much higher rate of return on U.S.

F e d e r a l R e s e r v e B a n k o f N e w Yo r k

No. 269, December 2006
Disagreement and Learning in
a Dynamic Contracting Model
Tobias Adrian and Mark M. Westerfield
Adrian and Westerfield present a dynamic
contracting model in which the principal
and the agent disagree about the resolution
of uncertainty, and illustrate the contract
design in an application with Bayesian
learning. The disagreement creates gains
from trade that the principal realizes by
transferring payment to states that the
agent considers relatively more likely.
The principal’s value function is convex in
the underlying belief differences because
the more optimistic the agent, the greater
the incentives and the smaller the agent’s
required compensation. Under risk neutrality, selling the firm to the agent does not
implement the first-best outcome, because
it precludes state-contingent trades.

BANKING AND FINANCE
No. 262, October 2006
Price Discovery in the Foreign
Currency Futures and Spot Market
Joshua V. Rosenberg and Leah G. Traub
Rosenberg and Traub compare price discovery in the foreign exchange futures and
spot markets during a period in which the
spot market was less transparent but had
higher volume than the futures market.
They develop a foreign exchange futures
order flow measure that is a proxy for the
order flow observed by Chicago Mercantile
Exchange pit traders and find that both
foreign currency futures and spot order
flow contain unique information relevant to

www.newyorkfed.org/research

exchange rate determination. When the
authors measure contributions to price discovery, they obtain results consistent with
their order flow findings. Taken together,
their evidence suggests that the amount of
information contained in currency futures
prices is much greater than one would
expect based on relative market size.
No. 263, October 2006
Payment Networks in a Search
Model of Money
Antoine Martin, Michael Orlando,
and David Skeie
In a simple search model of money, the
authors study a special kind of memory
that gives rise to an arrangement resembling a payment network. Specifically, they
assume that agents can pay a cost to access
a central database that tracks payments
made and received. Incentives must be
provided to agents to access the central
database and to produce when they participate in this arrangement. Martin, Orlando,
and Skeie also study policies that can
loosen these incentive constraints. In particular, they show that a “no-surcharge”
rule has good incentive properties. Finally,
they compare their model with that of
Cavalcanti and Wallace.
No. 265, October 2006
Empirical Evaluation of Asset Pricing
Models: Arbitrage and Pricing Errors
over Contingent Claims
Zhenyu Wang and Xiaoyan Zhang
In a 1997 paper, Hansen and Jagannathan
develop two pricing error measures for
asset pricing models. The first measure is
the maximum pricing error on given test

assets, and the second measure is the maximum pricing error over all possible contingent claims. Wang and Zhang develop a
simulation-based Bayesian inference of the
pricing error measures. Although linear
time-varying and multifactor models are
widely reported to have small pricing errors
on standard test assets, the authors demonstrate that these models can have large
pricing errors over contingent claims
because their stochastic discount factors
are allowed to be negative and thus offer
arbitrage opportunities.
No. 266, November 2006
Y2K Options and the Liquidity
Premium in Treasury Bond Markets
Suresh Sundaresan and Zhenyu Wang
Financial institutions around the world
expected the millennium date change to
cause an aggregate liquidity shortage.
Responding to concerns about this liquidity
shortage, the Federal Reserve Bank of
New York auctioned Y2K options to primary dealers. The options gave the dealers
the right to borrow from the Fed at a predetermined interest rate. The implied
volatilities of Y2K options and the aggressiveness of demand for these instruments
reveal that the Fed’s action eased the fears
of bond dealers, contributing to a drop in
the liquidity premium of Treasury securities. The authors’ analysis shows the link
between the microstructure of government
debt prices and the central bank’s provision of liquidity. Y2K options and their
effects on liquidity premiums broadly conform to the economic theory and practice
of the public provision of private liquidity. ■

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Number 4, 2006

Recently Published
Leonardo Bartolini. 2006. “Cross-Country
Differences in Monetary Policy
Execution and Money Market Rates’
Volatility,” with Alessandro Prati. European
Economic Review 50, no. 2: 349-76.
Nicola Cetorelli and Linda Goldberg. 2006.
“Risks in U.S. Bank International
Exposures.” In Gerard Caprio, Jr., Douglas
D. Evanoff, and George G. Kaufman, eds.,
Cross-Border Banking: Regulatory
Challenges, 65-86. Chicago: World Scientific
Publishing Company.

6
Gauti Eggertsson. 2006. “The Mistake of
1937: A General Equilibrium Analysis,”
with Benjamin Pugsley. Special issue,
Monetary and Economic Studies 24, no. S-1
(December): 151-207. Proceedings of the
Bank of Japan’s 13th International
Conference on Financial Markets and the
Real Economy in a Low Interest Rate
Environment.
Linda Goldberg and Cédric Tille. 2006.
“The International Role of the Dollar
and Trade Balance Adjustment.” Group
of Thirty Occasional Papers, no. 71.
Andrew Haughwout. 2006. “Tax Policy and
the Fiscal Cost of Disasters: New York
and 9/11,” with Howard Chernick. National
Tax Journal 59, no. 3 (September): 561-78.
Papers and Proceedings of the National Tax
Association Symposium.

F e d e r a l R e s e r v e B a n k o f N e w Yo r k

Antoine Martin. 2006. “Currency
Competition: A Partial Vindication of
Hayek,” with Stacey Schreft. Journal of
Monetary Economics 53, no. 8 (November):
2085-111.
Antoine Martin. 2006. “Suboptimality
of the Friedman Rule in Townsend’s
Turnpike and Limited Communication
Models of Money: Do Finite Lives and
Initial Dates Matter?” with Joydeep
Bhattacharya and Joseph H. Haslag. Journal
of Economic Dynamics and Control 30,
no. 5 (May): 879-97.
Jonathan McCarthy and Charles Steindel.
2006. “Housing Activity, Home Values,
and Consumer Spending.” In Innovations
in Real Estate Markets: Risks, Rewards, and
the Role of Regulation, 78-89. Proceedings
of the Federal Reserve Bank of Chicago’s
42nd Annual Conference on Bank Structure
and Competition.
Hamid Mehran. 2006. “An Introduction to
the Governance and Taxation of Not-forProfit Organizations,” with Patrick Bolton.
Journal of Accounting and Economics 41,
no. 3 (September): 293-305.
Donald Morgan. 2006. “The Credit Cycle
and the Business Cycle: New Findings
Using the Loan Officer Opinion
Survey,” with Cara Lown. Journal of
Money, Credit, and Banking 38, no. 6
(September): 1575-97.

www.newyorkfed.org/research

Stavros Peristiani. 2006. “Financial Sector
Weakness and the M2 Velocity Puzzle,”
with Cara Lown and Kenneth Robinson.
Economic Inquiry 44, no. 4 (October):
699-715.

Asani Sarkar. 2006. “Fifteen Minutes of
Fame? The Market Impact of Internet
Stock Picks,” with Peter Antunovich.
Journal of Business 79, no. 6 (November):
3209-51.

Paolo Pesenti. 2006. “Deflationary Shocks
and Monetary Rules: An Open-Economy
Scenario Analysis,” with Douglas Laxton
and Papa N’Diaye. Journal of the Japanese
and International Economies 20, no. 4
(December): 665-98.

Cédric Tille. 2006. “On the Distributional
Effects of Exchange Rate Fluctuations.”
Journal of International Money and
Finance 25, no. 8 (December): 1207-25.

João Santos. 2006. “Why Firm Access
to the Bond Market Differs over the
Business Cycle: A Theory and Some
Evidence.” Journal of Banking and
Finance 30, no. 10 (October): 2715-36.

Joseph Tracy. 2006. “Using Home
Maintenance and Repairs to Smooth
Variable Earnings,” with Joseph Gyourko.
Review of Economics and Statistics 88, no. 4
(November): 736-47. ■

Other New Publications
■

The Research Group of the Federal Reserve Bank of New York: This online
guide, updated for 2006-07, offers economists interested in joining the Group a fuller
understanding of our activities, our research and policy work, and our staff,
structure, and functions.
www.newyorkfed.org/research/research_group/index.html

■

Publications and Other Research: The 2006 edition of our catalogue lists all of
the papers published in our research series as well as many papers published by
our economists in economic and finance journals, conference volumes, and
scholarly books.
www.newyorkfed.org/research/publication_annuals/por2006.pdf

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Number 4, 2006

Papers Presented by Economists in the Research and Statistics Group
“Monetary Tightening Cycles and the
Predictability of Economic Activity,”
Tobias Adrian. Conference on the Relation
between Monetary Policy and Financial
Markets, cosponsored by the Deutsche
Bundesbank and the ZEW, Mannheim,
Germany, November 24.
“Monetary Policy,” Roc Armenter. la Caixa
Research Center seminar, Barcelona, Spain,
December 17. With Martin Bodenstein.

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“Of Nutters and Doves,” Roc Armenter.
Universitat Autònoma de Bellaterra
seminar, Barcelona, Spain, December 13.
With Martin Bodenstein.
“Monetary Policy under Sudden Stops,”
Vasco Curdia. Seventh Annual Bank of
Finland—Centre for Economic Policy
Research Conference, Helsinki, Finland,
November 3.
“Personal Bankruptcy and Credit Market
Competition,” Astrid Dick. INSEAD
Business School seminar, Fontainebleau,
France, November 27. Also presented at an
HEC School of Management seminar,
Jouy-en-Josas, France, November 29.
“Great Expectations and the End
of the Depression,” Gauti Eggertsson.
Econometric Society Summer Meeting,
Minneapolis, Minnesota, June 22.
“A Tale of Two Countries: Fiscal
Multipliers and Policy Coordination,”
Gauti Eggertsson. NBER Japan Project,
Tokyo, Japan, September 15.
“Was the New Deal Contractionary?”
Gauti Eggertsson. University of Tokyo, Tokyo,
Japan, September 11. Also presented at a
Rutgers University seminar, New Brunswick,
New Jersey, October 2.

F e d e r a l R e s e r v e B a n k o f N e w Yo r k

“Fiscal and Monetary Rules for a Currency
Union,” Andrea Ferrero. European Commission
conference, Brussels, Belgium, October 13.
“The Global Economy, Dollar Depreciation,
and Implications for the U.S. Economy,”
Linda Goldberg. Universidad del Sagrado
Corazon conference, Puerto Rico, October 20.
“Commitment and Equilibrium Bank Runs,”
Todd Keister. 2006 Latin American Meeting
of the Econometric Society, Mexico City,
Mexico, November 4. With Huberto Ennis.
Also presented at a University at Albany
(SUNY) Department of Economics seminar,
November 10.
“Liquidity Saving Mechanisms,” Antoine
Martin and James McAndrews. University
of Rome, European Workshop in Monetary
Theory, Rome, Italy, October 28. Also presented at a Bank of Canada conference,
Ottawa, Canada, November 17.
“Financial Visibility and the Decision to
Go Private,” Hamid Mehran and Stavros
Peristiani. London Business School
accounting symposium, London, England,
July 22. Also presented at MIT’s Sloan
School of Management, Cambridge,
Massachusetts, October 4, and the Center
for Research in Security Prices, CRSP
Forum 2006, Chicago, Illinois, October 30.
“Bankruptcy Abuse Prevention and the
Consumer Protection Act: Means-Testing
or Mean Spirited?” Donald Morgan.
University of Kansas, Lawrence, Kansas,
November 17. With Adam Ashcraft and
Astrid Dick. Also presented at the Norwegian
School of Management, Oslo, Norway,
November 22, and the Norwegian School of
Economics and Business Administration,
Bergen, Norway, November 23.

www.newyorkfed.org/research

“The Global Economy Model (GEM):
Theoretical Framework,” Paolo Pesenti.
International Monetary Fund workshop,
Washington, D.C., October 20.
“Would Protectionism Defuse Global
Imbalances and Spur Economic Activity?
A Scenario Analysis,” Paolo Pesenti.
Conference on International Macroeconomics, cosponsored by the University
of Houston and the Federal Reserve Bank
of Dallas, Houston, Texas, November 4.
With Hamid Faruqee, Douglas Laxton,
and Dirk Muir.
“The Information Content of FOMC
Minutes,” Joshua Rosenberg. NBER
Market Microstructure Meeting, Boston,
Massachusetts, October 6. With Ellyn
Boukus. Also presented at the Securities
and Exchange Commission, November 30.
“Firms and Flexibility,” Ay egül ahin.
University of Virginia Department of
Economics seminar, Charlottesville,
Virginia, November 28.
“Does Banks’ Corporate Control Benefit
Firms? Evidence from U.S. Banks’
Control over Firms’ Voting Rights,”
João Santos. Conference on Corporate
Finance of Financial Intermediaries, cosponsored by the Review of Financial Studies
and the Wharton School, Philadelphia,
Pennsylvania, September 29. With Kristin
Wilson. Also presented at the Conference
on Bank Regulation and Corporate
Finance, cosponsored by the Journal of
Financial Intermediation and the World
Bank, Washington, D.C., October 27.

“The Informativeness of Customer
Order Flow following Macroeconomic
Announcements,” Asani Sarkar. Conference
on the Microstructure of Equity and FX
Markets, cosponsored by the Bank of
Canada and Norges Bank, Ottawa, Canada,
October 20. With Albert Menkveld and
Michel van der Wel.
“Liquidity Spillovers and CrossAutocorrelations,” Asani Sarkar. Center for
Research in Security Prices, CRSP Forum
2006, Chicago, Illinois, October 30. With
Tarun Chordia and Avanidhar Subrahmanyam.
“Inflation Persistence: Alternative
Interpretations and Policy Implications,”
Argia Sbordone. Carnegie Mellon—Rochester
University Conference on Public Policy,
Pittsburgh, Pennsylvania, November 10.
“Evolving Complexity of the Financial
System,” Til Schuermann. Bank for
International Settlements, Financial
Stability Institute Risk Management
Conference, Basel, Switzerland,
November 8.
“Firm Heterogeneity and Credit Risk
Diversification,” Til Schuermann.
University of Pennsylvania Econometrics
Workshop, Philadelphia, Pennsylvania,
November 27. With Samuel G. Hanson
and M. Hashem Pesaran.
“The Nexus of Market and Credit Risk:
Liquidity Risk,” Til Schuermann. Risk
Magazine, Risk USA 2006 Conference,
New York City, November 14.

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Number 4, 2006

“Money and Modern Banking without
Bank Runs,” David Skeie. Conference on
Bank Regulation and Corporate Finance,
cosponsored by the Journal of Financial
Intermediation and the World Bank,
Washington, D.C., October 26.

“How Do Financial Frictions Shape the
Product Market? Evidence from the Market
for Home Mortgages,” James Vickery.
University of New South Wales, Australian
Finance and Banking conference, Sydney,
Australia, December 7.

“International Capital Flows with
Incomplete Markets,” Cédric Tille.
International Monetary Fund seminar,
Washington, D.C., October 10.

“Recent Trends in the U.S. Mortgage
Market,” James Vickery. Australian
Prudential Regulatory Authority, Sydney,
Australia, December 5. ■

“Place of Work and Place of Residence:
Informal Hiring Networks and Labor
Market Outcomes,” Giorgio Topa.
Fifty–Third Annual North American
Meetings of the Regional Science Association
International, Toronto, Canada, November 16.
With Patrick Bayer and Stephen L. Ross.

F e d e r a l R e s e r v e B a n k o f N e w Yo r k

www.newyorkfed.org/research

Research and Statistics Group
Publications and Papers:
October-December 2006
Publications are available at
www.newyorkfed.org/research/
publication_annuals/index.html.

ECONOMIC POLICY REVIEW
Forthcoming
The Emergence of “Regular and
Predictable” as a Treasury Debt
Management Strategy
Kenneth D. Garbade

Financial Sector FDI and Host
Countries: New and Old Lessons
Linda S. Goldberg

CURRENT ISSUES IN ECONOMICS
AND FINANCE, VOL. 12
No. 7, October 2006
Twin Deficits, Twenty Years Later
Leonardo Bartolini and Amartya Lahiri
No. 8, November 2006
Tracking Productivity in Real Time
James A. Kahn and Robert W. Rich
No. 9, December 2006
Recycling Petrodollars
Matthew Higgins, Thomas Klitgaard,
and Robert Lerman

STAFF REPORTS
No. 262, October 2006
Price Discovery in the Foreign
Currency Futures and Spot Market
Joshua V. Rosenberg and Leah G. Traub
No. 263, October 2006
Payment Networks in a Search
Model of Money
Antoine Martin, Michael Orlando,
and David Skeie

No. 264, October 2006
Was the New Deal Contractionary?
Gauti B. Eggertsson
No. 265, October 2006
Empirical Evaluation of Asset Pricing
Models: Arbitrage and Pricing Errors
over Contingent Claims
Zhenyu Wang and Xiaoyan Zhang
No. 266, November 2006
Y2K Options and the Liquidity
Premium in Treasury Bond Markets
Suresh Sundaresan and Zhenyu Wang
No. 267, December 2006
Deflationary Shocks and Monetary
Rules: An Open-Economy
Scenario Analysis
Douglas Laxton, Papa N’Diaye,
and Paolo Pesenti
No. 268, December 2006
Would Protectionism Defuse Global
Imbalances and Spur Economic Activity?
A Scenario Analysis
Hamid Faruqee, Douglas Laxton,
Dirk Muir, and Paolo Pesenti
No. 269, December 2006
Disagreement and Learning in
a Dynamic Contracting Model
Tobias Adrian and Mark M. Westerfield
No. 270, December 2006
Trend Inflation and Inflation
Persistence in the New Keynesian
Phillips Curve
Timothy Cogley and Argia M. Sbordone
No. 271, December 2006
Borrowing without Debt?
Understanding the U.S. International
Investment Position
Matthew Higgins, Thomas Klitgaard,
and Cédric Tille

The views expressed in the publications and papers summarized in Research Update are those of the authors and
do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System.

Research and Statistics Group

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