The domestic adjusted monetary base

This paper provides a consistent, monthly measure of the amount of the U.S. adjusted monetary base that is domestically held, and of the amount held abroad. Most macroeconomic models that address the role of outside money as a determinant of the economy's aggregate price level are closed economy models, suggesting a need to accurately measure the domestic monetary base. To do so, this paper presents a new method to estimate the amount of U.S. currency held abroad, a method which exploits data on the processing of currency at the Federal Reserve's 37 cash offices. Estimates of domestic monetary aggregates, including domestic M1 and M2, also are produced. Relative to previous studies and estimates currently included in the Flow of Funds and the National Income and Product Accounts, our estimates suggest larger currency exports during the 1970s and early 1980s, and a sharp slowing of exports since 1995.Money supply ; Money ; Dollar, American

Retail sweep programs and bank reserves, 1994-1999

Since January 1994, the Federal Reserve Board has permitted depository institutions in the United States to implement so-called “retail sweep programs.” The essence of these programs is computer software that dynamically reclassifies customer deposits from transaction accounts, which are subject to statutory reserve-requirement ratios as high as 10 percent, to money market deposit accounts, which have a zero ratio. Through the use of such software, hundreds of banks have sharply reduced the amount of their required reserves. In many cases, this new lower requirement places no constraint on the bank because it is less than the amount of reserves (vault cash and deposits at the Federal Reserve) that the bank requires for its ordinary day-to-day business. In the terminology introduced by Anderson and Rasche (1996b), such deposit-sweeping activity has allowed these banks to become “economically nonbound” and has reduced to zero the economic burden (“tax”) due to statutory reserve requirements. In this analysis, we examine a large panel of U.S. banks and develop quantitative estimates of the impact of sweep software programs on the demand for bank reserves.Money supply ; Bank reserves

Defining the adjusted monetary base in an era of financial change

This paper examines how recent changes in the U.S. financial system have affected the appropriate definition, construction and interpretation of the St. Louis adjusted monetary base and adjusted reserves. Since 1990, reductions in statutory reserve requirements have significantly reduced the importance of the requirements as a constraint on the deposit and lending behavior of banks and other depository institutions. During the same period, depositories' interbank payments activities have come to determine most, if not all of their, demand for Federal Reserve Bank deposits. Our analysis suggests that measures of the monetary source base should be broadened to include all Federal Reserve deposits held by domestic depository institutions rather than just those deposits available to satisfy statutory reserve requirements, and that adjustments for the effects of changes in reserve requirements must recognize that many depositories' behavior is not affected by such requirements.Money supply ; Bank reserves

Measuring the adjusted monetary base in an era of financial change

Money supply

Construction of an estimated domestic monetary base using new estimates of foreign holdings of U.S. currency

This paper presents a new method to estimate the amount of U.S. currency held abroad. The method exploits the fact the Federal Reserve System is the major processor of currency for depository institutions. The method exploits differentials across denominations in the ratios of shipments to receipts of currency at Federal Reserve cash offices in New York City and nationwide. The method permits us to construct a new monthly time series on the domestic monetary base, M1 and M2. The method has several advantages over previous methods, including an earlier starting date (1965) and the ability to be updated easily each month from Federal Reserve currency processing data. Relative to previous studies, our estimates suggest larger currency exports during the 1970s and early 1980s, and a sharp slowing of exports since 1995. ; This paper has been replaced with working paper 2000-002, "The Domestic Adjusted Monetary Base".Money ; Dollar, American

New light on electromagnetic corrections to the scattering parameters obtained from experiments on pionium

We calculate the electromagnetic corrections needed to obtain isospin invariant hadronic pion-pion s-wave scattering lengths a^0, a^2 from the elements a_cc, a_0c of the s-wave scattering matrix for the (\pi^+ \pi^-, \pi^0 \pi^0) system at the \pi^+ \pi^- threshold. These elements can be extracted from experiments on pionium. Our calculation uses energy independent hadronic pion-pion potentials that satisfactorily reproduce the low-energy phase shifts given by two-loop chiral pertur- bation theory. We also take into account an important relativistic effect whose inclusion influences the corrections considerably.Comment: 14 pages including 3 figures. Uses elsart.cls. Some numbers have been updated and a few typos have been correcte

A revised measure of the St. Louis adjusted monetary base

Bank reserves

Electromagnetic corrections for the analysis of low energy pi-p scattering data

We calculate the electromagnetic corrections to the isospin invariant mixing angle and to the two eigenphases for the s and p-waves for low energy pi-p elastic and charge exchange scattering. These corrections have to be applied to the nuclear quantities obtained from phase shift analyses of the experimental data in order to obtain the hadronic phases. We compare our results with earlier calculations and estimate the uncertainties in the corrections.Comment: 19 pages, 5 figures. Uses elsart.cls Accepted for publication in Nuclear Physics

A revised measure of the St. Louis adjusted monetary base

The Federal Reserve Bank of St. Louis' adjusted monetary base combines in a single index Federal Reserve actions that affect the supply base money -- open market operations, discount window lending and unsterilized foreign exchange market intervention -- with actions that affect depository institutions' demand for base money -- changes in statutory reserve requirements. The adjusted monetary base equals the sum of the monetary base and a reserve adjustment magnitude (RAM) that maps changes in reserve requirements into equivalent changes in the (unadjusted) monetary base. This paper presents a revised measure of the adjusted total reserves component of the monetary base and a new RAM. The revised measure of the adjusted reserves component differs from the current measure by including the aggregate amount of depository institutions' required clearing balance contracts with the Federal Reserve. The new RAM differs from the current RAM by recognizing that, since the Monetary Control Act of 1980, an increasing number of depository institutions have not significantly changed their demand for base money (vault cash and Federal Reserve deposits) relative to transactions deposits following changes in statutory reserve requirements. The new adjusted reserves data suggest that the stance of monetary policy, measured by the growth rate of adjusted reserves, has been more volatile since 1980 then suggested by the current measure.Federal Reserve Bank of St. Louis ; Money supply