John S. Lapp

Relative Agricultural Prices and Monetary Policy

An imperfect information, rational expectations model of relative price determination is presented. This model provides an econometric specification for testing for a causal relationship between money and the relative prices of agricultural commodities. Test results indicate that variations in the growth rate of the nominal money supply (whether anticipated or unanticipated) have not been an important influence on the average level of prices received by farmers relative to other prices in the economy over the period 1951–85.

Neutrality of inflation in the agricultural sector

Abstract The paper considers the effect of inflation on the relative prices of products traded in auction markets. Prices of US agricultural products are used for the period 1951–1981. Since agricultural products are widely traded, the real forces of supply and demand specific to agriculture are represented by foreign agricultural prices. The exchange rate is entered as a separate variable influencing domestic agricultural prices. Trade between the USA and the ten countries included in the Federal Reserve Boards trade-weighted dollar is considered. The empirical results are consistent with the hypothesis that inflation did not alter relative agricultural prices, when the real forces of supply and demand and the exchange rate are held constant.

Aggregate Sources of Relative Price Variability Among Agricultural Commodities

A measure of relative price variability among forty-seven agricultural commodities is developed for the period 1962 to 1987. Econometric models are used to explore the effects of macroeconomic instability on relative price variability within the agricultural sector. The results show that these relative prices are more variable when actual and unanticipated inflation rates are higher. They may also be more variable during periods when real shocks to the macroeconomy are relatively large. Thus, monetary and fiscal events are not neutral with respect to the agricultural sector because macroeconomic instability appears to create instability and increased uncertainty in agricultural markets.

Does a Bias in FOMC Policy Directives Help Predict Intermeeting Policy Changes

Since 1984 the FOMC has issued directives indicating a bias toward easing or tightening. This paper investigates the information content of these asymmetric directives for the likelihood of inter-meeting changes in policy during the Greenspan chairmanship. If policy is measured by the change in the average daily federal funds rate after a directive is issued, the results indicate that a bias predicts a significant change in the average funds rate. If policy is measured qualitatively by whether the target for the federal funds rate changed, a bias significantly affects the probability that the target will be changed.

The Predictability of FOMC Decisions: Evidence from the Volcker and Greenspan Chairmanships

This paper examines whether there is a systematic relationship between FOMC decisions and publicly available data that would potentially allow the public to anticipate FOMC policy changes. We characterize each FOMC decision as a move to tighten, ease, or leave policy unchanged and use ordered probit to estimate models of the probabilities of each choice. We find a statistically significant relationship between FOMC decisions and measures of inflation and real activity, but this relationship does not accurately predict the directions of FOMC decisions. While short-term interest rate changes prior to FOMC meetings have predictive power, suggesting that the financial market can anticipate FOMC decisions somewhat, other financial variables such as stock price movements appear unrelated to FOMC policy changes. Overall, FOMC decisions are not highly predictable using publicly available data, and adding the private information contained in the FOMCs Greenbook does not significantly increase the predictive accuracy.

Credibility and Transparency of FOMC Decisions: Evidence from the Volcker and Greenspan Chairmanships

This paper studies the credibility and transparency of monetary policy. We characterize each FOMC meeting as a decision to ease, maintain, or tighten monetary policy and model decisions with ordered probit reaction functions. Policy is credible if the estimated models are significant functions of variables commonly assumed to shape monetary policy. If these estimates accurately predict changes in policy, we consider policy to be transparent. We only use data that were publicly available at the time of each FOMC meeting. Results show some evidence of credibility. Policy was less transparent in the Greenspan sample than in the Volcker period.

The secular behavior of aggregate retirement flows

Summary and ConclusionsThis paper has presented estimated time-series of retirement flows from the labor force for men and women aged 55–64 and 65 and over. These results are a useful addition to labor force participation rates as a means of studying secular trends of aggregate labor market behavior of older workers. Because retirement rates are independent of people who have not been in the labor force, they are better suited to secular studies of aggregate retirement behavior than are labor force participation rates.These estimated time-series have been used to look for aggregate influences on the rates of retirement from the labor force over the period 1948–1977. While there are some tentative indications that macroeconomic conditions affect retirement flows, the important results concern the influence of Social Security retirement benefits. The results reported here clearly indicate that increased coverage and benefits have tended to increase retirement rates over the sample period. Elasticity estimates are large enough to suggest that the older labor force responds at a significant rate to changes in the Social Security program.