Fourth Quarter 2000
Federal Reserve Bank of Dallas

Economic and Financial Review was published from 1999 until 2001.

Evaluating the Eleventh District's Beige Book
Nathan S. Balke and Mine K. Yücel

In this study Nathan Balke and Mine Yücel ask whether the Eleventh Federal Reserve District's Beige Book description contains timely information about economic activity within the District. They examine whether the Beige Book description tracks current Texas real gross state product (GSP) growth and current Texas employment growth. They also study whether the Beige Book has information about growth not present in other regional indicators that would have been available to analysts at the time of the Beige Book's release. They find that both the Beige Book summary and the average across sectors reflect Texas GSP and employment growth very well. These two measures of the Beige Book also have predictive content for one quarter ahead GSP growth. Balke and Yücel also find that the Eleventh District's Beige Book has information content for Texas economic activity over and above other state economic indicators such as Texas employment growth, personal income, or sectoral employment growth. Because the Beige Book is released at least one month earlier than employment data and at least two years before GSP data, its timeliness makes it a good tool for current regional economic analysis.

Is There a Persistence Problem? Part 2: Maybe Not
Evan F. Koenig

In Part 1 of this two-part series, Evan Koenig explains why some economists are skeptical that staggered price adjustment can account for monetary policy's sustained effects on aggregate economic activity. In Part 2, Koenig looks at labor-market imperfections as a possible source of persistence. He concludes that persistence is much easier to obtain if either labor cannot move freely from firm to firm or wages are set in overlapping wage contracts.

Reliance, Composition, and Inflation
Joydeep Bhattacharya and Joseph H. Haslag

In this article Joydeep Bhattacharya and Joseph Haslag explore the effect of fiscal policy actions on long-run prices and the inflation rate. They study a model economy in which the central bank is not independent. Indeed, the government explicitly relies on the central bank for a predetermined amount of its revenue. Despite the absence of independence, the central bank does unilaterally control the composition of government paper. Bhattacharya and Haslag show that changes in reliance and composition have long-run impacts on prices and inflation. They conduct two separate policy experiments that suggest how a subservient central bank can retain substantial control over the inflation rate and still meet its revenue requirements set by the government.