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Research Notes–February 2004

Featuring research published in December 2003 and January 2004


Look to the Long Term
January 5, 2004
Jack Guynn, president and chief executive officer of the Federal Reserve Bank of Atlanta, provides his 2004 economic outlook to the Rotary Club of Atlanta, Ga.


More Balanced Economic Growth Ahead for Nation and Southeast
EconSouth 2003Q4
The economic outlook for both the nation and the Southeast is brighter for 2004 than it has been for several years. Increased business investment and steady consumer spending should boost employment.

Hard Choices Ahead for Social Security
EconSouth 2003Q4
In this editorial, the author discusses the future of Social Security and some of the risks it faces.

Take Your Model Bowling: Forecasting with General Equilibrium Models
Economic Review 2003Q4
This article describes an approach that uses general equilibrium models as priors for vector autoregressions (VARs). The resulting model is shown to be competitive in terms of forecasting and usable for policy analysis.

Dollar Ends Year With Another Decline
In December the average monthly value for the trade-weighted dollar index of 15 major currencies tracked by the Federal Reserve Bank of Atlanta declined 1.2 percent, its fourth consecutive monthly decline.


Business Method Patents and Financial Services
Economic Review 2003Q4
The Atlanta Fed’s 2003 Financial Markets Conference focused on how the legitimization of “business method” patents in the United States affects financial services innovation. This article provides an overview of the conference papers and discussions.

The Uninvited Guest: Patents on Wall Street
Economic Review 2003Q4
The landmark 1998 State Street Bank legal decision made business methods—including financial services and products—patentable. This article considers whether patents will help or hurt financial services innovation in the long run.

The International Law of Business Method Patents
Economic Review 2003Q4
The author reviews the current state of U.S. and international patent law with respect to business methods, finding that the striking theoretical differences in American laws and those abroad are less profound in practice.

Does Opening a Stock Exchange Increase Economic Growth?
Working Paper 2003-36
Opening a stock exchange is thought to be a good way to increase countries’ economic growth. The evidence in this paper indicates that this effect is likely to be small.

Regional Economics

Economic Recovery Gains Ground in the Southeast
EconSouth 2003Q4
The Southeastern economy outperformed the nation’s in 2003. Florida and Georgia will continue to drive the region’s economy in 2004 as the other states try to shake off years of sluggish performance.

The Ups and Downs of Jobs in Georgia: What Can We Learn about Employment Dynamics from State Administrative Data?
Working Paper 2003-38
Using administrative data from Georgia to decompose net employment growth, the authors find that large establishments’ lack of expansion and continued contraction drove the weak employment growth following the 2001 recession.

International Economics

The Global Economy Heats Up
EconSouth 2003Q4
Geopolitical unrest, SARS and rising energy prices dampened growth in many economies worldwide early in 2003. But as these concerns abated, the largest economies began to recover. This trend should continue in 2004.

The Economics of International Monies
Working Paper 2003-37
History since the fourth century and economic theory provide insights into the adoption and use of international monies. The history suggests four common characteristics, and these characteristics are supported by economic theory.