Liberty Street Economics
Liberty Street Economics
August 15, 2018

Will Demographic Headwinds Hobble China’s Economy?



LSE-will-demographic-headwinds-hobble-chinas-economy

China’s population is only growing at a 0.5 percent annual rate, its working-age cohort (ages 15 to 64) is shrinking, and the share of the population that is 65 and over is rising rapidly. Together, these trends will act as a significant restraint on the country’s economic growth. Nonetheless, there are reasons to conclude that growth will remain relatively strong going forward, most notably because the ongoing shift from rural to urban jobs will continue to boost labor productivity for some time to come.

Posted by Blog Author at 7:00 AM in Demographics , Macroecon | Permalink | Comments ( 0 )

August 14, 2018

Just Released: Cleaning Up Collections



Just Released: Cleaning Up Collections

Household debt balances continued their upward trend in the second quarter, with increases in mortgage, auto, and credit card balances, according to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data. Student loans were roughly flat, a typical seasonal pattern in the second quarter. The Quarterly Report contains summaries of the types of information that is covered in credit reports, sourced from the New York Fed Consumer Credit Panel (CCP). The CCP is based on anonymized Equifax credit reports and is the source for the analysis provided in this post, which focuses on an area that until recently has received little attention: collections accounts.

Posted by Blog Author at 11:00 AM in Household Finance | Permalink | Comments ( 0 )

August 13, 2018

Do Import Tariffs Help Reduce Trade Deficits?



LSE_2018_deficit_amiti_460_art

Import tariffs are on the rise in the United States, with a long list of new tariffs imposed in the last few months—25 percent on steel imports, 10 percent on aluminum, and 25 percent on $50 billion of goods from China—and possibly more to come. One of the objectives of these new tariffs is to reduce the U.S. trade deficit, which stood at $568.4 billion in 2017 (2.9 percent of GDP). The fact that the United  States imports far more than it exports is viewed by some as unfair, so the idea is to try to reduce the amount that the nation imports from the rest of the world. While more costly imports are likely to reduce the quantity and value of imports into the United States, the story does not stop there, because we cannot presume that the value of exports will remain unchanged. In this post, we argue that U.S. exports will also fall, not only because of other countries’ retaliatory tariffs on U.S. exports, but also because the costs for U.S. firms producing goods for export will rise and make U.S. exports less competitive on the world market. The end result is likely to be lower imports and lower exports, with little or no improvement in the trade deficit.

August 10, 2018

Opening the Toolbox: The Nowcasting Code on GitHub



LSE_2018_Opening the Toolbox: The Nowcasting Code on GitHub

In April 2016, we unveiled—and began publishing weekly—the New York Fed Staff Nowcast, an estimate of GDP growth using an automated platform for tracking economic conditions in real time. Today we go a step further by publishing the MATLAB code for the nowcasting model, available here on GitHub, a public repository hosting service. We hope that sharing our code will make it easier for people interested in monitoring the macroeconomy to understand the details underlying the nowcast and to replicate our results.

Posted by Blog Author at 11:15 AM in Forecasting , Macroecon | Permalink | Comments ( 0 )

August 08, 2018

How Do the Fed’s MBS Holdings Affect the Economy?



LSE_How Do the Fed’s MBS Holdings Affect the Economy?

In our previous post, we discussed the meaning of the term “credit allocation” and how it relates to the Federal Reserve’s holdings of agency mortgage-backed securities (MBS). We concluded that the Fed’s MBS holdings do not pose significant credit risk but that the Fed does influence the relative market price of credit when it purchases agency MBS, and this indirectly influences decisions by investors. Today, we take the next step and discuss how the Fed’s MBS purchases affect the U.S. economy and, in particular, how the effect of MBS purchases can differ from the effect of purchases of Treasury securities.

August 06, 2018

How Do the Fed's MBS Purchases Affect Credit Allocation?



LSE_How Do the Fed's MBS Purchases Affect Credit Allocation?

It is sometimes said that the Federal Reserve should not engage in “credit allocation.” But what does credit allocation actually mean? And how do current Fed policies affect the allocation of credit? In this post, we describe two separate ideas often associated with credit allocation. The first idea is that the Fed should not take credit risk, which taxpayers would ultimately have to bear. The second idea is that the Fed’s actions should not influence the flow of credit to particular sectors. We consider whether the Fed’s holdings of agency mortgage-backed securities (MBS) could affect the allocation of credit. In a companion post, we discuss how the economic effects of the Fed’s MBS holdings compare with the economic effects of more traditional holdings.

August 03, 2018

At the New York Fed: Thirteenth Annual Joint Conference with NYU-Stern on Financial Intermediation



Better understanding of financial intermediation is critical to the efforts of the New York Fed to promote financial stability and economic growth. In pursuit of this mission, the New York Fed recently hosted the thirteenth annual Federal Reserve Bank of New York–New York University Stern School of Business Conference on Financial Intermediation. At this conference, a range of authors were invited to discuss their research in this area. In this post, we present some of the discussion and findings from the conference.

July 20, 2018

The Transatlantic Economy Ten Years after the Crisis: Macro-Financial Scenarios and Policy Responses



LSE_The Transatlantic Economy Ten Years after the Crisis: Macro-Financial Scenarios and Policy Responses

The Transatlantic Economy Ten Years after the Crisis: Macro-Financial Scenarios and Policy Response,” was the focus of a conference, jointly organized by the New York Fed, the European Commission, and the Centre for Economic Policy Research in April 2018. These three institutions had previously collaborated on a series of events related to transatlantic economic relations, including a workshop in April 2014 and a conference in April 2016. Ten years after the global financial crisis, this conference came at a crucial time in the history of the relationship between the United States and the European Union, and provided an opportunity to revisit and assess recent policy responses. A number of questions were addressed by the panelists: Is the world economy back on a sustainable growth path or have we entered a secular stagnation era with persistently low interest rates and inflation? How large are the spillovers of monetary and fiscal policies? Have we done enough to maintain financial stability and deal with cross-border resolution issues, which have been one of the most vexing topics in the regulatory space?

July 18, 2018

Just Released: Beige Book Points to Moderate Growth and Tight Labor Markets



LSE_Just Released: Beige Book Points to Moderate Growth and Tight Labor Markets

The New York Fed’s latest Beige Book report—based on information collected through July 9—points to sustained moderate growth and tight labor markets in the region. Manufacturers and wholesalers noted a persistent rise in economic activity over the first half of this year. However, a number of contacts in these sectors remarked that tariffs have raised their costs, and uncertainty about future trade policy was cited as a concern by businesses in a variety of industries. Meanwhile, businesses in most service industries continue to report flat to modestly expanding activity. And while consumer spending has remained fairly steady, consumer confidence edged up to a cyclical high, in large part due to an exceptionally positive assessment of the labor market.

Posted by Blog Author at 2:15 PM in Regional Analysis | Permalink | Comments ( 0 )

The Premium for Money-Like Assets



LSE_The Premium for Money-Like Assets

Several academic papers have documented investors’ willingness to pay a premium to hold money-like assets and focused on its implications for financial stability. In a New York Fed staff report, we estimate such premium using a quasi-natural experiment, the recent reform of the money market fund (MMF) industry by the Securities and Exchange Commission (SEC).

About the Blog
Liberty Street Economics features insight and analysis from New York Fed economists working at the intersection of research and policy. Launched in 2011, the blog takes its name from the Bank’s headquarters at 33 Liberty Street in Manhattan’s Financial District.

The editors are Michael Fleming, Andrew Haughwout, Thomas Klitgaard, and Asani Sarkar, all economists in the Bank’s Research Group.

The views expressed are those of the authors, and do not necessarily reflect the position of the New York Fed or the Federal Reserve System.


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