Research

Monetary policy influences state and local borrowing costs; municipal bond yields respond less than Treasury yields and these responses vary across locations and bond characteristics. Using a model of localities as small open economies, the paper shows how those responses influence the transmission of monetary policy shocks to the economy. 

We introduce, discuss, and forecast two measures describing the relationship between changes in federal fiscal policy and economic growth.

In the U.S., transfers from federal to state governments respond more strongly to aggregate cycles than state-level cycles. Therefore, more independent U.S. states engage in more precautionary savings. 

This paper provides a theoretical model and conditions for governments in a federation to optimally implement a binding minimum wage. We highlight the trade-offs of decentralized verse centralized minimum wage setting with interregional spillovers. In a simple example, a U.S.-style tiered system is weakly preferred to either decentralized or centralized minimum wage policy setting. 

In standard models of fiscal federalism, tax competition among subnational jurisdictions depresses government expenditures. If, however, the central government has greater market power than constituent jurisdictions, then centralization may be associated with reduced government spending. Whether centralization or decentralization provides more public goods depends on the relative strengths of tax competition and market power. 

The anonymity of Bitcoin prevents analysis of its users. We collect Google Trends data to examine determinants of interest in Bitcoin. Computer programming and illegal activity search terms are positively correlated with Bitcoin interest, while Libertarian and investment terms are not.