The Regional Economist

July 2016

The Regional Economist is a quarterly publication aimed at an engaged, nonacademic audience. This publication addresses the regional, national and international economic issues of the day.

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C O N T E N T S Neo-Fisherism: Radical Idea or Obvious Solution? By Stephen Williamson Central banks around the world are struggling with inflation rates that are below their targets. According to conventional central banking wisdom, interest rate cuts should increase inflation, but that's not work- ing. Maybe—by Irving Fisher's logic—increasing nominal interest rates increases inflation. 4 THE REGIONAL ECONOMIST JULY 2016 | VOL. 24, NO. 3 The Regional Economist is published quarterly by the Research and Public Affairs divisions of the Federal Reserve Bank of St. Louis. It addresses the national, interna- tional and regional economic issues of the day, particularly as they apply to states in the Eighth Federal Reserve District. Views expressed are not necessarily those of the St. Louis Fed or of the Federal Reserve System. Director of Research Christopher J. Waller Chief of Staff to the President Cletus C. Coughlin Deputy Director of Research David C. Wheelock Director of Public Affairs Karen Branding Editor Subhayu Bandyopadhyay Managing Editor Al Stamborski Art Director A.P. Westcott and Joni Williams The Eighth Federal Reserve District includes all of Arkansas, eastern Missouri, southern Illinois and Indiana, western Kentucky and Tennessee, and northern Mississippi. The Eighth District offices are in Little Rock, Louisville, Memphis and St. Louis. Please direct your comments to Subhayu Bandyopadhyay at 314-444-7425 or by email at You can also write to him at the address below. Submission of a letter to the editor gives us the right to post it to our website and/or publish it in The Regional Economist unless the writer states otherwise. We reserve the right to edit letters for clarity and length. Single-copy subscriptions are free but available only to those with U.S. addresses. To subscribe, go to You can also write to The Regional Economist, Public Affairs Office, Federal Reserve Bank of St. Louis, P.O. Box 442, St. Louis, MO 63166-0442. 3 P R E S I D E N T ' S M E S S A G E 10 The Gender Pay Gap: Role of Irregular Hours By Maria Canon and Limor Golan e gender pay gap persists, even within occupations and even though women's educational attainments are surpassing men's. Is it because women tend to choose jobs with hours that are more irregular than those taken by men? 12 Government Spending Might Not Create Jobs By Bill Dupor and Rodrigo Guerrero A review of government spending over 120 years seems to show lit- tle, if any, impact on job creation. e result is the same whether the economy is in a recession or not. 14 Economic Mobility across Generations By George-Levi Gayle and Andrés Hincapié Are you likely to be in the same income situation as your parents? How about being in the same wealth category? Analyzing such intergenerational mobility can shed light on economic inequality and lead to better policy to deal with this issue. 16 D I S T R I C T O V E R V I E W District Households Buck the Trend on Debt By Helu Jiang and Juan M. Sánchez While at a national level house- holds have decreased their debt substantially since the financial crisis, in the St. Louis Fed's Dis- trict household debt has remained constant. e evolution of house prices may be the key. 18 E C O N O M Y A T A G L A N C E 19 N A T I O N A L O V E R V I E W Expansion May Be Weak, but It Keeps on Going By Kevin L. Kliesen e U.S. economic expansion marked its seventh anniversary in June. Among the challenges to its continuation are low inflation and a slowdown in the growth of labor productivity. 20 M E T R O P R O F I L E Health Care, Hospitality Buoy Hot Springs, Ark. By Charles S. Gascon and Faisal Sohail Although this small MSA has strong health care and tourism sectors, it also has its share of challenges: income inequality, no airport and Americans' changing vacation patterns. 23 R E A D E R E X C H A N G E ONLINE EXTRA Read more at Community Banks' Compliance Costs and Performance By Drew Dahl, Andrew Meyer and Michelle Neely Research shows that complying with government regulations is more burdensome for smaller community banks than larger community banks. Despite spending proportionately more resources on compli- ance, the smaller banks do not perform as well as the larger ones, at least in one key metric. C O V E R I M A G E : © L I B R A RY O F C O N G RE S S 2 The Regional Economist | July 2016

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