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Daily Archives: April 18, 2014

Why Is the Effective Fed Funds Rate So Low?

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Allen, Kyle D. and Griffiths, Mark D. and Hein, Scott E. and Winters, Drew B., Why Is the Effective Fed Funds Rate So Low? (April 16, 2014). Available at SSRN: http://ssrn.com/abstract=2425913

“Since December 18, 2008 when the Federal Reserve began paying 25 basis points (bps) on depository institution’s reserves, the effective federal funds rate has stayed well below 25 bps, on occasion by as much as fifteen bps. This suggests the possibility of an arbitrage opportunity. The purpose of this paper is to offer an explanation of this ongoing situation. Part of the explanation starts with the recognition that certain financial participants in the federal funds market cannot earn the 25 bps. This paper further explains other limits to arbitrage arguing that the anomaly persists, in part, due to costs associated with the Federal Deposit Insurance Corporation (FDIC) assessment on the liabilities of depository institutions and capital charges. The difference in these two interest rates also is found to increase with the Federal Reserve’s bank reserve creation associated with the quantitative easing programs.”

How Does Government Borrowing Affect Corporate Financing and Investment?

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Graham, John R. and Leary, Mark T. and Roberts, Michael R., How Does Government Borrowing Affect Corporate Financing and Investment? (April 16, 2014). Available at SSRN: http://ssrn.com/abstract=2425916 “Using a novel dataset of accounting and market information that spans most publicly traded nonfinancial firms over the last century, we find an economically large and robust negative relation… Continue Reading

The Wage Gap, State by State

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 National Women’s Law Center: “Families depend on women’s wages more than ever, but the typical woman working full time, year round is paid less than the typical full-time, year-round male worker. These disparities exist in every state. However, as indicated in the map below, the size of the disparity varies by state. Additionally, women represent nearly… Continue Reading

New GAO Reports: Maritime Infrastructure, Medicare Imaging Accreditation, Nuclear Weapons

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MARITIME INFRASTRUCTURE: Key Issues Related to Commercial Activity in the U.S. Arctic over the Next Decade, GAO-14-299: Published: Mar 19, 2014. Publicly Released: Apr 18, 2014. MEDICARE IMAGING ACCREDITATION: Effect on Access to Advanced Diagnostic Imaging Is Unclear amid Other Policy Changes, GAO-14-378: Published: Apr 18, 2014. Publicly Released: Apr 18, 2014. NUCLEAR WEAPONS: Technology Development Efforts for the Uranium Processing Facility, GAO-14-295:… Continue Reading

Coalition Urges White House to Recognize EU Opinion; End NSA Telephone Records Program

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“In a letter to the White House, a coalition of US organizations urged the Administration to recognize the recent opinion by the Court of Justice, the highest court in Europe, that ended a European data retention mandate. The European law required telephone and internet companies to retain metadata on customers for national security purposes. The European Court of Justice… Continue Reading

U.S. Foreign Aid to Israel

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CRS – U.S. Foreign Aid to Israel – Jeremy M. Sharp, Specialist in Middle Eastern Affairs, April 11, 2014 “This report provides an overview of U.S. foreign assistance to Israel. It includes a review of past aid programs, data on annual assistance, and an analysis of current issues. For general information on Israel, see CRS Report RL33476, Israel: Background and… Continue Reading