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Contact: Rachel Brown, Media Relations, 215-574-3840

Philadelphia, PA — The debut issue of the Federal Reserve Bank of Philadelphia's new Economic Insights examines three widely debated economics topics today — quantitative easing, economic stagnation, and the impact of stricter regulations on small banks.

Published by the Economic Research Department, the new quarterly publication continues the Philly Fed’s tradition of presenting cutting-edge thinking in economics in nontechnical language, a mission that the Business Review had fulfilled for more than 70 years before being retired in 2015.

Articles featured in the debut issue of Economic Insights reflect broad concerns that remain in the aftermath of the Great Recession.

To answer the question “Did Quantitative Easing Work?" Philadelphia Fed economist Edison Yu explains what QE is, the controversy over its theoretical underpinnings, and why the Federal Reserve nevertheless turned to this unconventional monetary policy tool during the financial crisis in 2008. As former Fed Chairman Ben Bernanke later put it, "Well, the problem with QE is it works in practice, but it doesn’t work in theory.” Yu discusses the real-world channels through which QE might be able to lower interest rates and thereby stimulate the economy and examines the evidence so far on how effective it was.

In “Monetary Policy and the New Normal,” Philadelphia Fed Research Director Michael Dotsey lays out the starkly divergent views driving the debate on the U.S. economy’s future rate of growth. Whether labor productivity remains on its slower track of recent years or breaks out in a renewed burst of productivity will affect wage growth and income inequality, among other things. Dotsey explains why the debate also matters critically for Federal Reserve policy.

Small banks contend that stricter regulations imposed since the financial crisis, though aimed primarily at large banks, are excessively costly for small institutions. In the latest Banking Trends, James DiSalvo and Ryan Johnston estimate the regulatory burden on banks with less than $10 billion in assets resulting from three changes: the qualified mortgage rule, Basel III capital standards, and the Durbin Amendment.

The Federal Reserve Bank of Philadelphia helps formulate and implement monetary policy, supervises banks and bank and savings and loan holding companies, and provides financial services to depository institutions and the federal government. It is one of the 12 regional Reserve Banks that, together with the Board of Governors in Washington, D.C., make up the Federal Reserve System. The Philadelphia Federal Reserve Bank serves eastern Pennsylvania, southern New Jersey, and Delaware.