Tag Archives: federal reserve bank

The Fed and Interest Rates: Biased Toward the GOP?

ANN ARBOR — With the elections less than a week away, it’s worth considering that the party of the president influences the policy behavior of the Federal Reserve Bank, according to a new University of Michigan study.

The Federal Reserve Bank increases interest rates before the presidential elections when Democrats are in office, but lowers the rates when Republicans control the White House. The independent bank finds it easier to accomplish its policy goals when Republicans control the White House than when Democrats do, the researchers say. (more…)

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Rich Country, Poor Country: Economists say Financial Sector Key Driver of Economic Growth

Economists have long suspected that one reason developing countries struggle to emerge from poverty is that they lack robust financial sectors, especially when compared to wealthier nations.

Although it may seem obvious that a weak financial sector would stifle growth within a developing country, few economists until now have tried to determine just how this phenomenon occurs. This has made it difficult for policymakers and investors to understand how financial markets may be failing and to create effective solutions to correct them.

Economists Francisco J. Buera of UCLA and the Federal Reserve Bank of Minneapolis, Joseph Kaboski of the University of Notre Dame, and Yongseok Shin of Washington University in St. Louis present important insights into this phenomenon in a paper recently published in the journal American Economic Review. (more…)

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