Economic Impacts of a National Deposit Law: Cost Estimates and Policy Questions

This paper uses available evidence to project the impacts of national mandatory deposit legislation for beverage containers. Container litter should decline by 70 percent with 70 percent of redeemed containers recycled. This comes at an estimated cost of over $3 billion annually. Due to these high costs, alternative approaches should be evaluated first, with a national bottle bill adopted only as a last resort and then only with broad public support. Along with the impacts of the law, its operational characteristics require more research attention. Several directions for policy analysis are identified.     

Safety Transformation and the Structure of the Financial System

This paper studies how a financial system that is organized to efficiently create safe assets responds to macroeconomic shocks. Financial intermediaries face a cost of bearing risk, so they choose the least risky portfolio that backs their issuance of riskless deposits: a diversified pool of nonfinancial firms' debt. Nonfinancial firms choose their capital structure to exploit the resulting segmentation between debt and equity markets. Increased safe asset demand yields larger and riskier intermediaries and more levered firms. Quantitative easing reduces the size and riskiness of intermediaries and can decrease firm leverage, despite reducing borrowing costs at the zero lower bound.     

SONG CHINA'S WATER TRANSPORT REVISITED: A STUDY OF THE 1077 COMMERCIAL TAX DATA

This paper provides an overall assessment of water transport in Song China based on the 1077 commercial tax data. The analysis demonstrates that the extension of waterway networks, especially the major waterways that linked the north and the south, greatly reduced transportation costs. Development of 11th century water transportation was due to two reasons: the emergence of a national market during the Tang–Song transition and the massive construction of canals by the government.     

Nowcasting and the Taylor Rule

Actual federal funds rates in the U.S. have, at times, deviated from the recommendations of a simple Taylor rule. This paper proposes a “nowcasting” Taylor rule that preserves the form of the Taylor rule but encompasses realistic assumptions on information observable to policymakers. Because contemporaneous inflation rates and output gaps are not observable at the time policy is set, policymakers must form “nowcasts.” The optimal nowcast will depend, in part, on forecast uncertainty whenever policymakers have asymmetric costs to over‐ and underpredicting inflation and output. Empirical evidence shows that actual policy rates are consistent with those recommended by a nowcasting Taylor rule.     

Information Disclosure and Consumer Credit Knowledge: A Longitudinal Analysis

Early evaluations of Truth-in-Lending have observed impressive gains in consumer knowledge about interest rates. Contrary to original goals, consumers with more education, income, and debt experience have benefited far more than low-income and minority consumers. How will these results change over time as consumers gain credit experience with the aid of disclosure? Has disclosure improved consumer understanding about finance charges, and what factors beyond socio-economic status might have enhanced consumer knowledge of credit terms? These questions are addressed in this report of a large sample of California households surveyed at two points in time. The longitudinal analysis shows individual changes in knowledge, the effects of credit experience on learning, and a projection of future levels of credit knowledge.