Profits and balance sheet developments at U.S. commercial banks in 2004

U.S. commercial banks continued to be highly profitable in 2004. Return on assets and return on equity declined moderately, but the economy's continued expansion and supportive financial conditions helped keep bank profits in the elevated range that has prevailed since the mid-1990s. Profits were trimmed a bit by a narrowing of banks' net interest margins as the yield curve flattened and competition put pressure on loan spreads. In addition, gains in non-interest income were less pronounced than in 2003, and non-interest expenses increased. However, the continued improvement in the overall credit quality of business and household loans allowed banks to reduce their provisioning for loan and lease losses, and delinquency and charge-off rates for all loan categories trended down. Bank balance sheets also expanded. A robust housing sector and generally low interest rates supported residential mortgage lending, and increases in demand along with an easing of lending standards and terms throughout the year boosted commercial and industrial loans. Banks also reported easing their standards and terms on commercial real estate loans, and such loans increased despite soft conditions in some markets. Still-low interest rates supported the continued growth of core deposits, but the greater rise in bank assets required banks to rely more heavily on managed liabilities, which rose strongly last year.Banks and banking ; Bank profits ; Bank assets

The macroeconomic effects of inflation targeting

Macroeconomics ; Inflation (Finance)

Explicit inflation objectives and macroeconomic outcomes

We find evidence that adopting an explicit inflation objective plays a role in anchoring long-run inflation expectations and in reducing the intrinsic persistence of inflation. For the period 1994-2003, private-sector long-run inflation forecasts exhibit significant correlation with lagged inflation for a number of industrial economies, including the United States. In contrast, this correlation is largely absent for the five countries that maintained explicit inflation objectives over this period, indicating that these central banks have been reasonably successful in delinking expectations from realized inflation. We also show that the null hypothesis of a random walk in core CPI inflation can be clearly rejected for four of these five countries, but not for most of the other industrial countries. Finally, we provide some evidence concerning the initial effects of the adoption of explicit inflation objectives in a number of emerging-market economies. JEL Classification: E31, E52, E58Consensus Forecasts, inflation expectations, inflation persistence

External Constraints on Monetary Policy and the Financial Accelerator

We develop a small open economy macroeconomic model where financial conditions influence aggregate behavior. We use this model to explore the connection between the exchange rate regime and financial distress. We show that fixed exchange rates exacerbate financial crises by tying the hands of the monetary authorities. We then investigate the quantitative significance by first calibrating the model to Korean data and then showing that it does a reasonably good job of matching the Korean experience during its recent financial crisis. In particular, the model accounts well for the sharp increase in lending rates and the large drop in output, investment and productivity during the 1997-1998 episode. We then perform some counterfactual exercises to illustrate the quantitative significance of fixed versus floating rates both for macroeconomic performance and for welfare. Overall, these exercises imply that welfare losses following a financial crisis are significantly larger under fixed exchange rates relative to flexible exchange rates

The Athena X-ray Integral Field Unit: a consolidated design for the system requirement review of the preliminary definition phase

The Athena X-ray Integral Unit (X-IFU) is the high resolution X-ray spectrometer studied since 2015 for flying in the mid-30s on the Athena space X-ray Observatory. Athena is a versatile observatory designed to address the Hot and Energetic Universe science theme, as selected in November 2013 by the Survey Science Committee. Based on a large format array of Transition Edge Sensors (TES), X-IFU aims to provide spatially resolved X-ray spectroscopy, with a spectral resolution of 2.5 eV (up to 7 keV) over a hexagonal field of view of 5 arc minutes (equivalent diameter). The X-IFU entered its System Requirement Review (SRR) in June 2022, at about the same time when ESA called for an overall X-IFU redesign (including the X-IFU cryostat and the cooling chain), due to an unanticipated cost overrun of Athena. In this paper, after illustrating the breakthrough capabilities of the X-IFU, we describe the instrument as presented at its SRR (i.e. in the course of its preliminary definition phase, so-called B1), browsing through all the subsystems and associated requirements. We then show the instrument budgets, with a particular emphasis on the anticipated budgets of some of its key performance parameters, such as the instrument efficiency, spectral resolution, energy scale knowledge, count rate capability, non X-ray background and target of opportunity efficiency. Finally, we briefly discuss the ongoing key technology demonstration activities, the calibration and the activities foreseen in the X-IFU Instrument Science Center, touch on communication and outreach activities, the consortium organisation and the life cycle assessment of X-IFU aiming at minimising the environmental footprint, associated with the development of the instrument. Thanks to the studies conducted so far on X-IFU, it is expected that along the design-to-cost exercise requested by ESA, the X-IFU will maintain flagship capabilities in spatially resolved high resolution X-ray spectroscopy, enabling most of the original X-IFU related scientific objectives of the Athena mission to be retained. The X-IFU will be provided by an international consortium led by France, The Netherlands and Italy, with ESA member state contributions from Belgium, Czech Republic, Finland, Germany, Poland, Spain, Switzerland, with additional contributions from the United States and Japan.The French contribution to X-IFU is funded by CNES, CNRS and CEA. This work has been also supported by ASI (Italian Space Agency) through the Contract 2019-27-HH.0, and by the ESA (European Space Agency) Core Technology Program (CTP) Contract No. 4000114932/15/NL/BW and the AREMBES - ESA CTP No.4000116655/16/NL/BW. This publication is part of grant RTI2018-096686-B-C21 funded by MCIN/AEI/10.13039/501100011033 and by “ERDF A way of making Europe”. This publication is part of grant RTI2018-096686-B-C21 and PID2020-115325GB-C31 funded by MCIN/AEI/10.13039/501100011033

The Athena X-ray Integral Field Unit: a consolidated design for the system requirement review of the preliminary definition phase

The Athena X-ray Integral Unit (X-IFU) is the high resolution X-ray spectrometer, studied since 2015 for flying in the mid-30s on the Athena space X-ray Observatory, a versatile observatory designed to address the Hot and Energetic Universe science theme, selected in November 2013 by the Survey Science Committee. Based on a large format array of Transition Edge Sensors (TES), it aims to provide spatially resolved X-ray spectroscopy, with a spectral resolution of 2.5 eV (up to 7 keV) over an hexagonal field of view of 5 arc minutes (equivalent diameter). The X-IFU entered its System Requirement Review (SRR) in June 2022, at about the same time when ESA called for an overall X-IFU redesign (including the X-IFU cryostat and the cooling chain), due to an unanticipated cost overrun of Athena. In this paper, after illustrating the breakthrough capabilities of the X-IFU, we describe the instrument as presented at its SRR, browsing through all the subsystems and associated requirements. We then show the instrument budgets, with a particular emphasis on the anticipated budgets of some of its key performance parameters. Finally we briefly discuss on the ongoing key technology demonstration activities, the calibration and the activities foreseen in the X-IFU Instrument Science Center, and touch on communication and outreach activities, the consortium organisation, and finally on the life cycle assessment of X-IFU aiming at minimising the environmental footprint, associated with the development of the instrument. Thanks to the studies conducted so far on X-IFU, it is expected that along the design-to-cost exercise requested by ESA, the X-IFU will maintain flagship capabilities in spatially resolved high resolution X-ray spectroscopy, enabling most of the original X-IFU related scientific objectives of the Athena mission to be retained. (abridged).Comment: 48 pages, 29 figures, Accepted for publication in Experimental Astronomy with minor editin