Just Released: NY Fed’s Erica Groshen Becomes Commissioner of Labor Statistics

Jamie McAndrews

What could cap being a Liberty Street Economics blogger/editor? Apparently, for one of us, becoming a chief bean-counter. Yesterday, our colleague Erica L. Groshen was sworn in as the nation’s new Commissioner of Labor Statistics.

Historical Echoes: The Whimsical Side of Banking circa 1960

Megan Cohen

Modern-day banks provide many services to their customers: checking and savings accounts, mortgages, investment advice, and the like. On occasion, visitors might receive a pen or a travel mug, children a lollipop or a coloring book. However, the generous customer rewards of yore have all but disappeared.

How Severe Was the Credit Cycle in the New York-Northern New Jersey Region?

Jaison R. Abel and Richard Deitz

U.S. households accumulated record-high levels of debt in the 2000s, and then began a process of deleveraging following the Great Recession and financial crisis. In some parts of the country, the rise and fall in household indebtedness was quite a bit sharper than in others. In this post, we highlight some of our research examining the magnitude of the recent credit cycle, and focus on how significant it’s been in New York State and northern New Jersey. Compared with the nation as a whole, we find that the region experienced a relatively mild credit cycle, although pockets of elevated household financial stress exist.

China’s Impact on U.S. Inflation

Mary Amiti and Mark Choi

U.S. import prices of consumer goods shipped from China have been moderating in recent quarters, following an upward surge of 11 percent between mid-2010 and the end of 2011. These price changes have far-reaching consequences for U.S. businesses and consumers, because China is the largest single supplier of imports to the United States, accounting for more than 20 percent of nonoil imports and more than 30 percent of consumer goods. In this post, we track U.S. import price movements in different product categories from China by constructing import price indexes that use highly disaggregated data. We also explore various underlying factors that might explain these important trends.

Historical Echoes: Banking in Early Nineteenth-Century New England

Amy Farber

Old Sturbridge Village (OSV) is an historic site, a living museum located in Sturbridge, Massachusetts, that has a well-developed public website. Its page about banking in the early 1800s describes the Thompson Bank (see also video of exterior), which was constructed in the 1830s in Thompson, Connecticut, was a bank until 1893, and was disassembled and reassembled in 1963 to be part of the museum.

Ring-Fencing and "Financial Protectionism" in International Banking

Linda Goldberg and Arun Gupta

Some market watchers and academic researchers are concerned about a “Balkanization” of banking, owing to a sharp decline in cross-border international banking activity (see chart below), and an increased home bias of financial transactions. Meanwhile, policy and regulatory efforts are under consideration that may further induce banks to shift away from international activity, including ring-fencing of domestic banking operations, other forms of "financial protectionism," and enhanced oversight and prudential measures.

Making a Statement: How Did Professional Forecasters React to the August 2011 FOMC Statement?

Richard Crump, Stefano Eusepi, and Emanuel Moench

The Federal Open Market Committee (FOMC) statement released on August 9, 2011, was the first to incorporate language on “forward guidance” with an explicit date tied to the Committee’s expected path of monetary policy. In this post, we exploit the timing of surveys taken before and after this statement’s release to investigate how professional forecasters changed their expectations of growth, inflation, and monetary policy. We find that the average forecast of the federal funds rate shifts considerably and closely aligns with the new language in the statement, while the average forecasts for growth and inflation change less. While there’s near unanimity among forecasters about the future path of the federal funds rate after the August 2011 FOMC statement, forecasters maintained differing views on the growth and inflation outlooks.

Historical Echoes: The Origins of the Piggy Bank

Megan Cohen

Looking far back, all the way to the Middle Ages, people were in many ways very similar to those living today. Households acquired items of value, including currency. In those times, when the question of where to keep money arose, people didn’t typically have the option of a local bank. Instead, the answer oftentimes involved keeping their valuables in a vessel made of pygg.

A “Reference Price Auction” to Buy or Sell Different Assets Simultaneously

Olivier Armantier

In finance, auctions are often conducted to buy or sell simultaneously various assets with very different characteristics. These auctions raise a number of challenges that cannot always be addressed with standard auction designs. In this post, I discuss an alternative design—the “reference price auction”—and present evidence that it may dominate other methods often implemented in practice.