NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Peter Hooper

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Working Papers

August 2013Crunch Time: Fiscal Crises and the Role of Monetary Policy
with David Greenlaw, James D. Hamilton, Frederic S. Mishkin: w19297
Countries with high debt loads are vulnerable to an adverse feedback loop in which doubts by lenders lead to higher sovereign interest rates which in turn make the debt problems more severe. We analyze the recent experience of advanced economies using both econometric methods and case studies and conclude that countries with debt above 80% of GDP and persistent current-account deficits are vulnerable to a rapid fiscal deterioration as a result of these tipping-point dynamics. Such feedback is left out of current long-term U.S. budget projections and could make it much more difficult for the U.S. to maintain a sustainable budget course. A potential fiscal crunch also puts fundamental limits on what monetary policy is able to achieve. In simulations of the Federal Reserve’s balance sheet...
July 2010Financial Conditions Indexes: A Fresh Look after the Financial Crisis
with Jan Hatzius, Frederic S. Mishkin, Kermit L. Schoenholtz, Mark W. Watson: w16150
This paper explores the link between financial conditions and economic activity. We first review existing measures, including both single indicators and composite financial conditions indexes (FCIs). We then build a new FCI that features three key innovations. First, besides interest rates and asset prices, it includes a broad range of quantitative and survey-based indicators. Second, our use of unbalanced panel estimation techniques results in a longer time series (back to 1970) than available for other indexes. Third, we control for past GDP growth and inflation and thus focus on the predictive power of financial conditions for future economic activity. During most of the past two decades for which comparisons are possible, including the last five years, our FCI shows a tighter li...

Published: U.S. Monetary Policy Forum: “Financial Conditions Indexes: A Fresh Look After the Financial Crisis,” (with Jan Hatzius, Peter Hooper, Frederic Mishkin, Kermit L. Schoenholtz and Mark W. Watson) U.S. Monetary Policy Forum (Chicago: Chicago Booth Initiative on Global Markets, 2010) pp. 3-59.

August 1991International Economic Transactions: Issues in Measurement and Empirical Research
with J. David Richardson: w3805
This paper summarizes a forthcoming book that describes issues and recent innovations in the measurement of international transactions. A number of distinguished authors assess data measuring trade in merchandise, services, and foreign-direct investment claims. Others assess international prices and data measuring comparisons of inputs and outputs internationally. (International financial data are not assessed.) The chapters in many cases tabulate the data and illustrate their application to recent research questions. U.S. international data are emphasized, but those of other countries are frequently highlighted as well. Growing international interdependence and structural and technological change raise a number of important theoretical and measurement issues that are explored here with re...

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