Anticipation of Monetary Policy and Open Market Operations

Central banking transparency is now a topic of great interest, but its impact on the implementation of monetary policy has not been studied. This paper documents that anticipated changes in the target federal funds rate complicate open market operations. We provide theoretical and empirical evidence on the behavior of banks and the Open Market Trading Desk. We find a significant shift in demand for funds ahead of expected target rate changes and that the Desk only incompletely accommodates this shift in demand. This anticipation effect, however, does not materially affect other markets.

Money and the Transmission of Monetary Policy

The transmission mechanism of monetary policy has received extensive treatment in the macroeconomic literature. Most models currently used for macroeconomic analysis exclude money or else model money demand as entirely endogenous. Nevertheless, academic research and many textbooks continue to use the money multiplier concept in discussions of money. We explore the institutional structure of the transmission mechanism beginning with open market operations through to money and loans to document that the mechanism does not work through the standard multiplier model or the bank lending channel. Our analysis, however, does not reflect on the existence of a broader credit channelMonetary transmission mechanism, money multiplier, lending channel

Volatility, Money Market Rates, and the Transmission of Monetary Policy

We explore the effect of volatility in the federal funds market on the expectations hypothesis in money markets. We find that lower volatility in the bank funding markets market, all else equal, leads to a lower term premium and thus longer-term rates for a given setting of the overnight rate. The results appear to hold for the US as well as the Euro Area and the UK. The results have implications for the design of operational frameworks for the implementation of monetary policy and for the interpretation of the changes in the Libor-OIS spread during the financial crisisMonetary transmission mechanism, expectations hypothesis, term premium

CHARACTERIZATIONS OF LINEAR GROUND MOTION SITE RESPONSE IN THE NEW MADRID AND WABASH VALLEY SEISMIC ZONES AND SEISMICITY IN THE NORTHERN EASTERN TENNESSEE SEISMIC ZONE AND ROME TROUGH, EASTERN KENTUCKY

The central and eastern United States is subject to seismic hazards from both natural and induced earthquakes, as evidenced by the 1811-1812 New Madrid earthquake sequence, consisting of at least three magnitude 7 and greater earthquakes, and by four magnitude 5 and greater induced earthquakes in Oklahoma since 2011. To mitigate seismic hazards, both earthquake sources and their effects need to be characterized. Ground motion site response can cause additional damage to susceptible infrastructure and buildings. Recent studies indicate that Vs30, one of the primary site-response predictors used in current engineering practice, is not reliable. To investigate site response in the New Madrid Seismic Zone, ratios of surface-to-bedrock amplitude spectra, TFT, from S-wave recordings at the two deep vertical seismic arrays in the sediment-filled upper Mississippi Embayment (i.e., VSAP and CUSSO) were calculated. The mean TFT curves were compared with theoretical transfer functions; the results were comparable, indicating that TFT estimates of the empirical, linear SH-wave site responses at these sites. The suitability of surface S-wave horizontal-to-vertical spectral ratios, H/V, for estimating the empirical site transfer function was also evaluated. The results indicate that mean S-wave H/V curves are similar to TFT at low frequencies (less than the fifth natural frequencies) at both CUSSO and VSAP. SH-wave fundamental frequency, f0, and fundamental-mode amplification, A0, were evaluated as alternatives to the Vs30 proxy to estimate primary linear site-response characteristics at VSAP, CUSSO, and nine other seismic stations in the CEUS. In addition, calculated f0 and A0 were compared with the first peaks of S-wave H/V spectral ratios. The f0 and A0 were found to approximate the 1-D linear, viscoelastic, fundamental-mode responses at most stations. Also, S-wave H/V from weak-motion earthquakes can be used to measure f0. However, S-wave H/V does not reliably estimate A0 in the project area. S-wave H/V observations reveal site response within the frequency band of engineering interest from deeper, unmodeled geological structures. Because damaging or felt earthquakes induced by hydraulic fracturing and wastewater disposal have occurred in the CEUS, characterizing background seismicity prior to new large-scale subsurface fluid injection is important to identify cases of and the potential for induced seismicity. The Rogersville Shale in the Rome Trough of eastern Kentucky is being tested for unconventional oil and gas potential; production of this shale requires hydraulic fracturing, which has been linked to induced seismicity elsewhere in the CEUS. To characterize natural seismicity and to monitor induced seismicity during testing, a temporary seismic network was deployed in the Rome Trough near the locations of new, Rogersville Shale oil and gas test wells. Using the real-time recordings of this network and those of other regional seismic stations, three years of local seismicity were cataloged. Only three earthquakes occurred in the Rome Trough of eastern Kentucky, none of which was associated with the deep Rogersville Shale test wells that were stimulated during the time the network was in operation

Risk-Matching in Credit Groups: Evidence from Guatemala

With widely publicized high repayment rates, microfinance is gaining a great deal of attention. Using data from Guatemala, this paper examines risk matching in credit groups. The literature often assumes that joint-liability will lead groups to form homogeneously in risk, and that risk heterogeneity emerges only as a second-best. We find they do not, even accounting for matching frictions. Data on mutual-help within groups provides evidence consistent with the hypothesis that group lending provides insurance among borrowers. This intra-group insurance suggests that current credit contracts can be improved by incorporating insurance provisions. We discuss one possibility of such a contract briefly.

An Update of Seismic Monitoring and Research in the Vicinity of the Paducah Gaseous Diffusion Plant: January 2013–December 2017

From January 2013 to December 2017, the Kentucky Geological Survey monitored earthquakes and conducted research on seismic hazards in the vicinity of the Paducah Gaseous Diffusion Plant, a former uranium enrichment facility, in western Kentucky. Fifteen earthquakes with magnitude greater than 3.0 occurred in the area during this period, and data were collected from the Central U.S. Seismic Observatory and the vertical seismic array at the gaseous diffusion plant. This monitoring improved our understanding of seismic-wave propagation through thick sediments and ground-motion site effects, as well as fault locations in the New Madrid Seismic Zone, ground-motion attenuation, and seismic-hazard assessment. Results have been communicated through publications and presentations at workshops and conferences. The data will contribute to the development of design ground motions for western Kentucky, and specifically for buildings and facilities at the Paducah Gaseous Diffusion Plant

An Update of Seismic Monitoring and Research in the Vicinity of the Paducah Gaseous Diffusion Plant: January 2018–December 2019

From January 2018 to December 2019, the Kentucky Geological Survey monitored earthquakes and conducted research on seismic hazards in the vicinity of the Paducah Gaseous Diffusion Plant, a former uranium enrichment facility, in McCracken County, western Kentucky. Six hundred forty-four earthquakes with magnitude between 0.5 and 3.7 were recorded in the area during this period. Research focused on the influence of the thick sediments on earthquake ground motion, the so-called site response, through theoretical and data analysis of borehole seismic records. Our research has shown that the National Earthquake Hazards Reduction Program site classification, which is based on Vs30, and correction factors currently being used in earthquake engineering design and other safety evaluations are not appropriate to account for site response in the area

The \u3cem\u3eM\u3c/em\u3e\u3csub\u3ew\u3c/sub\u3e 4.2 Perry County, Kentucky, Earthquake of 10 November 2012: Evidence of the Eastern Tennessee Seismic Zone in Southeastern Kentucky

The 10 November 2012 Mw 4.2 Perry County earthquake may represent a continuation of the seismically active Eastern Tennessee seismic zone (ETSZ) farther north than previously recognized into southeastern Kentucky. The mainshock and aftershock data from regional seismic networks and EarthScope’s Transportable Array stations allowed high‐quality determinations of the source parameters. The focal mechanism, depth, and proximity of the mainshock to the New York–Alabama magnetic lineament, a subsurface, crustal‐scale structure that spatially correlates with central ETSZ seismicity, suggest that this earthquake may share the same type of causal geologic structures as the more‐active ETSZ region to the south

Site Characteristics, Instrumentation, and Recordings of the Central United States Seismic Observatory

The Central United States Seismic Observatory is a vertical seismic array in southwestern Kentucky within the New Madrid Seismic Zone. It is intended to record the effects of local geology, including thick sediment overburden, on seismic-wave propagation, particularly strong ground motion. The three-borehole array is composed of seismic sensors placed on the surface, in the bedrock, and at various depths within the 585-m-thick sediment overburden. The array\u27s deep borehole also provides a unique opportunity to describe the geology and geophysically measure the complete Late Cretaceous through Quaternary stratigraphy in the northern Mississippi Embayment. Based on the surface and borehole geophysical measurements, the thick sediment overburden and its complex heterogeneous stratigraphy have been partitioned into a seven-layer sediment velocity model overlying a bedrock half-space. The S- and P-wave sediment velocities range between 160 and 875 m/s, and 1,000 and 2,300 m/s, respectively, and bedrock velocities between 1,452 and 3,775 m/s, respectively. In addition, high-resolution seismic-reflection profiles acquired within a 1-km radius of the array have imaged a complex geologic model, including steeply dipping N30°E-striking faults that have uplifted and arched post-Paleozoic sediments in a manner consistent with a dextral transpression component of displacement. The subparallel fault strands have been traced 1.4 km between reflection profiles and are adjacent to the array. The fault deformation extends above Paleozoic bedrock, affecting the Late Cretaceous and Eocene Mississippi Embayment sediments, as well as the base of the Quaternary. The Paleozoic and Cretaceous horizons show as much as 75 and 50 m of relief, respectively, with the middle Eocene and basal Quaternary disrupted 25 and 15 m, respectively. The differential fault offsets suggest episodic activity during the post-Paleozoic, and represent the first indications of Quaternary neotectonics in this part of Kentucky. More important, these faults may be the first evidence for a hypothesized northeast extension of the strike-slip Axial Fault Zone from a through-going intersection with the left-stepover Reelfoot Fault (i.e., thrust). Seismometers and accelerometers were both installed at the surface, 30 m, 259 m, and 526 m depths, and at 2 m into bedrock in three separate boreholes. The instrumentation elevation in the boreholes was determined by the major impedance boundaries within the stratigraphic section. Although the array operation has been frequently interrupted by the large hydrostatic pressures on the deeper instrumentation, the full array has recorded weak motions from 95 earthquakes at local, regional, and teleseismic distances. Initial observations reveal a complex spectral mix of amplification and deamplification across the array, indicating the site effect in this deep-sediment setting is not simply generated by the shallowest layers. Preliminary horizontal-to-vertical spectral ratio (HV) experiments show the bedrock vertical and horizontal amplitudes are not equal, violating a required assumption for site characterization. Furthermore, there are marked differences between spectral ratios from the directly measure transfer function (HH) and HV for particular earthquakes. On average, however, the HH and HV methods yield similar results within a narrow band of frequencies ranging between 0.35 and 1.1 Hz