Slightly more than a decade has passed since the introduction of the Treasury Inflation-Protected Securities (TIPS) program, through which the U.S. Treasury Department issues inflation-indexed debt. Several studies have suggested that the program has been a financial disappointment for the Treasury and by extension U.S. taxpayers. Relying on ex post analysis, the studies argue that the issuance of nominal Treasury securities remains a more cost-effective strategy. This article proposes that evaluations of the TIPS program be more comprehensive, and instead focus on the ex ante costs of TIPS issuance compared with nominal Treasury issuance. The authors contend that ex ante analysis is a more effective way to assess the costs of TIPS over the long run. Furthermore, relative cost calculations—whether ex post or ex ante—are just one aspect of a comprehensive analysis of the costs and benefits of the TIPS program. TIPS issuance provides other benefits that should be taken into account when evaluating the program, especially when TIPS are only marginally more expensive or about as expensive to issue as nominal Treasury securities.

After a month-long run on American banks, Franklin Delano Roosevelt proclaimed a Bank Holiday, beginning March 6, 1933, that shut down the banking system. When the banks reopened on March 13, depositors stood in line to return their hoarded cash. This article attributes the success of the Bank Holiday and the remarkable turnaround in the public’s confidence to the Emergency Banking Act, passed by Congress on March 9, 1933. Roosevelt used the emergency currency provisions of the Act to encourage the Federal Reserve to create de facto 100 percent deposit insurance in the reopened banks. The contemporary press confirms that the public recognized the implicit guarantee and, as a result, believed that the reopened banks would be safe, as the President explained in his first Fireside Chat on March 12, 1933. Americans responded by returning more than half of their hoarded cash to the banks within two weeks and by bidding up stock prices by the largest ever one-day percentage price increase on March 15—the first trading day after the Bank Holiday ended. The study concludes that the Bank Holiday and the Emergency Banking Act of 1933 reestablished the integrity of the U.S. payments system and demonstrated the power of credible regime-shifting policies.

Measures of housing units with negative equity—in which the mortgage balance exceeds the value of the collateral housing unit—have become a necessary component in crafting policies to address the current foreclosure crisis. This article estimates negative equity in the U.S. nonprime mortgage market for 2008-09 to describe the sources of the problem and the characteristics of borrowers in negative equity. The authors combine information from house price indexes with data on individual loans to estimate the prevalence and magnitude of negative equity across various dimensions, including the location of the property and the year in which the mortgage originated. They find that negative equity is closely associated with the time and place of mortgage origination and with the existence of subordinate liens against the property. In addition, borrowers whose mortgage is worth more than their house are twice as likely as borrowers in positive equity to be seriously delinquent, or in default, on their first-lien mortgage. The study also uses information derived from housing price futures contracts to estimate the path of negative equity beyond 2009.