Historical Echoes: Policymakers Gone Fishin’–The Beginnings of the Fed’s Jackson Hole Symposium

Amy Farber

The Jackson Hole symposium (meeting, conference, summit) is referred to every which way in the media and even by Fed people themselves. The official name of the event is the “Jackson Hole Economic Policy Symposium.”

Just Released: August Indexes of Coincident Economic Indicators Show Uneven Growth across the Region

Jason Bram and James Orr

The August Indexes of Coincident Economic Indicators (CEIs) for New York State, New York City, and New Jersey, released today, give a mixed picture of current economic performance across the region. Economic activity in August expanded at a robust pace in New York City while activity in New York State and New Jersey grew at a more modest pace, continuing the pattern seen since the spring.

Rebalancing the Economy in Response to Fiscal Consolidation

Richard W. Peach

According to the Congressional Budget Office (CBO), under current policies the ratio of federal debt held by the public over gross domestic product—the debt-to-GDP ratio—will rise rapidly over the next decade. This unsustainable fiscal position presents the nation with two significant challenges. First, it requires fiscal consolidation that will, at a minimum, cause the ratio to level off in the not-too-distant future. Second, fiscal consolidation has to occur in a way that will keep the U.S. economy operating at as close to full employment as possible—a process known as rebalancing. While these challenges are very daunting, we’ve faced them before, and met them quite successfully in the mid-1980s through the mid-1990s. Using federal budget accounting and national income accounting, this post describes how fiscal consolidation and rebalancing were accomplished in the previous episode. By doing so, we can put our current fiscal position in perspective while shedding light on what needs to happen if we’re to be successful this time.

How Much Can Refinancing Reduce the Risk of Mortgage Defaults?

Joshua Abel, Joseph Tracy, and Joshua Wright

Improving the ability of homeowners to take advantage of prevailing low mortgage rates by refinancing has remained an active topic of discussion. In a speech in January, New York Fed President Bill Dudley advocated for efforts “to see refinancing made more broadly available on a streamlined basis and with moderate fees to all prime conforming borrowers who are current on their payments.” In an earlier post, we argued that such a refinancing program would not represent a zero sum game between borrowers and investors; rather, it would yield net macroeconomic benefits.

Historical Echoes: 150 Years after the Morrill Act

Rajashri Chakrabarti, Amy Farber, and Basit Zafar

One hundred and fifty years ago, the Morrill Act was signed into law, transforming the face of American higher education. The Act, officially titled An Act Donating Public Lands to the Several States and Territories which may provide Colleges for the Benefit of Agriculture and the Mechanic Arts had as its main purpose the creation of “at least one college in each state where the leading object shall be, without excluding other scientific or classical studies, to teach such branches of learning as are related to agriculture and the mechanic arts . . . in order to promote the liberal and practical education of industrial classes.”

Soaring Tuitions: Are Public Funding Cuts to Blame?

Rajashri Chakrabarti, Maricar Mabutas, and Basit Zafar

Public colleges and universities play a vital role in training a state’s workforce, yet state support for higher education has been declining for years. As a share of total revenues for America’s public institutions of higher education, state and local appropriations have fallen every year over the past decade, dropping from 70.7 percent in 2000 to 57.1 percent in 2011. At the same time, college enrollment numbers have swelled across the country—public institutions’ rolls grew from 8.6 million full-time students in 2000 to 11.8 million in 2011. Faced with dwindling funding from the states, public institutions of higher education have been forced to find ways to shift their costs or raise revenue on their own. In this post, we analyze the relationship between changes in state and local funding for higher education and changes in public institution tuition.

The Odd Behavior of Repo Haircuts during the Financial Crisis

Adam Copeland and Antoine Martin

Since the financial crisis began, there’s been substantial debate on the role of haircuts in U.S. repo markets. (The haircut is the value of the collateral in excess of the value of the cash exchanged in the repo; see our blog post for more on repo markets.) In an influential paper, Gorton and Metrick show that haircuts increased rapidly during the crisis, a phenomenon they characterize as a general “run on repo.” Consequently, some policymakers and academics have considered whether regulating haircuts might help stabilize the repo markets, for example, by setting a minimum level so that haircuts can never be too low, as discussed in another paper by Gorton and Metrick. In this post, we discuss recent findings showing that the rise in haircuts wasn’t a general phenomenon after all—haircuts didn’t rise in every repo market. We also discuss why the divergence across markets is odd, and the implications for policymakers.