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Research Notes–March 2007


Featuring research published in February 2007

Macroeconomics

The Role of Labor Market Intermittency in Explaining Gender Wage Differentials
Working Paper 2007-1
Differences in intermittent working behavior account for a significant portion of the wage gap between men and women. Not controlling for this behavioral difference results in an overemphasis on differences in job characteristics.

Does Geography Matter to Bondholders?
Working Paper 2007-2
The location of a firm’s headquarters relative to its investors affects the firm’s cost of debt capital. More remotely located firms offer bondholders higher yields in part because of the distance between them.

The McKenna Rule and U.K. World War I Finance
Working Paper 2007-3
The McKenna rule committed the United Kingdom to debt retirement and greater capital taxation during and after World War I. The desire not to pass war costs onto future generations and limit returns to capital had adverse economic effects.

Uninsurable Individual Risk and the Cyclical Behavior of Unemployment and Vacancies
Working Paper 2007-5
Wealth heterogeneity as a result of idiosyncratic risk causes wage rigidity in a search-and-matching model. As a result, the volatility of vacancies and unemployment increases.

Dollar Appreciates in January
The average monthly value for the trade-weighted dollar index of 15 major currencies tracked by the Federal Reserve Bank of Atlanta increased 1.4 percent in January from the previous month.

Finance

Model Comparison Using the Hansen-Jagannathan Distance
Working Paper 2006-4
Comparing the performance of competing asset-pricing models using a novel test statistic, the authors show that commonly used returns and factors are mostly too noisy to determine a model’s superiority in terms of Hansen-Jagannathan distance.

Check 21 Growth Shows No Sign of Slowing
Financial Update Q1 2007
Financial institutions’ use of Check 21 continues to grow rapidly. In 2006, the Atlanta Fed processed 10 times as many Check 21 transactions as it did in 2005, and the trend is expected to accelerate.