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9 posts from October 2013

October 21, 2013

Long Island’s Economy Back on Track after Sandy

Jason Bram and Rachel Keller

In late October last year, Superstorm Sandy devastated and disrupted much of the tri-state region, including a large swath of Long Island. For most of Suffolk County and inland parts of Nassau County, the disruptions were widespread but relatively short lived—they mostly involved power, transportation, and communications outages. However, the southern coast of Nassau County was particularly hard hit, and the recovery in cities like Long Beach has taken considerably longer. Overall, though, Long Island’s economic rebound appears to be progressing well. In this post, we give a short overview of the Island’s economy and track its performance before and after Sandy.

Continue reading "Long Island’s Economy Back on Track after Sandy" »

Posted by Blog Author at 7:00 AM in Regional Analysis, Sandy | Permalink | Comments (0)

October 18, 2013

Historical Echoes: Passbooks and Hand Grenades

Megan Cohen

The Postal Savings System began in 1911 as a means for communities without banks to allow their citizens access to basic banking services. The system was seen as a means for banking without directly competing with banks. The height of utilization was during the period after the Great Depression through the end of World War II, when traditional banks reestablished themselves as secure sources of financial services.

Continue reading "Historical Echoes: Passbooks and Hand Grenades" »

Posted by Blog Author at 7:00 AM in Historical Echoes | Permalink | Comments (2)

October 16, 2013

Dealer Balance Sheet Capacity and Market Liquidity during the 2013 Selloff in Fixed-Income Markets

Tobias Adrian, Michael Fleming, Jonathan Goldberg, Morgan Lewis, Fabio Natalucci, and Jason Wu

Long-term interest rates hit record-low levels in 2012 but have since increased substantially. As discussed in an earlier post, the sharpest increase occurred between May 2 and July 5 of this year, with the ten-year Treasury yield rising from 1.63 percent to 2.74 percent. During the May-July episode, market liquidity also deteriorated. Some market participants have suggested that constraints on dealer balance sheet capacity impaired liquidity during the selloff, amplifying the magnitude and speed of the rise in interest rates and volatility. In this post, we review the evolution of Treasury market liquidity, evaluate whether dealer balance sheet capacity amplified the selloff, and examine what motivated dealer behavior during the episode.

Continue reading "Dealer Balance Sheet Capacity and Market Liquidity during the 2013 Selloff in Fixed-Income Markets" »

Posted by Blog Author at 7:02 AM in Dealers, Financial Institutions, Financial Markets, Liquidity | Permalink | Comments (3)

A Look at Bank Loan Performance

Tara Sullivan and James Vickery

U.S. banks experienced a rapid rise in loan delinquencies and defaults during the 2007-09 recession, driven by rising unemployment and falling real estate prices, among other factors. More than four years on from the official end of the recession, how do things look now?

Continue reading "A Look at Bank Loan Performance" »

Posted by Blog Author at 7:00 AM in Crisis, Financial Institutions | Permalink | Comments (3)

October 11, 2013

Historical Echoes: Throwing Coins into a Fountain—Who Is Getting Paid?

Amy Farber

Do you throw coins into a fountain when you see that others have done so?  A comprehensive and thoughtful student project on wishing well use in Southern California has been posted on the internet by University of California, Irvine, anthropology professor Bill Maurer. The 2006 project bases its findings on interviews of people throwing coins into fountains and states that:

Although the exact origins of this practice are unknown, offering money to water is an old tradition that can be dated back to Roman-British and Celtic mythology. Since then, the tradition of making a wish with a coin has been passed down through generations by socialization, evolving from a religious ritual into a fun, yet superstitious, cultural practice in Southern California.

Continue reading "Historical Echoes: Throwing Coins into a Fountain—Who Is Getting Paid? " »

Posted by Blog Author at 7:00 AM in Historical Echoes | Permalink | Comments (1)

October 09, 2013

Twenty-Eight Money Market Funds That Could Have Broken the Buck: New Data on Losses during the 2008 Crisis

Marco Cipriani, Michael Holscher, Antoine Martin, and Patrick McCabe

During the financial crisis in 2008, just one money market fund (MMF) “broke the buck”—that is, its share price dropped below one dollar. The Reserve Primary Fund announced on September 16 that the value of its shares had dropped to 97 cents. As we discussed in a previous post, Reserve’s announcement helped spark a widespread, damaging run on MMFs that slowed only when the federal government intervened three days later to backstop the funds.

Continue reading "Twenty-Eight Money Market Funds That Could Have Broken the Buck: New Data on Losses during the 2008 Crisis" »

Posted by Blog Author at 7:00 AM in Fed Funds, Financial Institutions | Permalink | Comments (0)

October 07, 2013

What’s News?

Linda Goldberg

Economic news moves markets. Most analyses find that economic news is incorporated quickly (within minutes) into asset prices, with some measurable persistence of these effects, and with some spillovers across national borders. Some types of announcements—for example, U.S. nonfarm payrolls announcements—generate much larger asset price responses than others. Generally, news that is more timely, is more precise (being subject to smaller revisions on average), and contains more information (being better able to better forecast GDP growth, inflation, or central bank policy decisions) has a larger effect on asset prices.

Continue reading "What’s News?" »

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

October 04, 2013

Historical Echoes: A Central Bank by Any Other Name Is Still . . .

Amy Farber

Perhaps you enjoy being read to out loud. Perhaps you enjoy being read to on subjects related to central banking. Perhaps you would enjoy being read the Wikipedia entries for central banks around the world. If so, and your reader was to read the following beginning sentences for central bank entries, you would hear:
The central bank of Trinidad and Tobago is the central bank of Trinidad and Tobago . . . . The central bank of Yemen is the central bank of Yemen . . . . The central bank of The Bahamas is the central bank of The Bahamas . . . . The central bank of Jordan is the central bank of Jordan . . .

Continue reading "Historical Echoes: A Central Bank by Any Other Name Is Still . . . " »

Posted by Blog Author at 7:00 AM in Central Bank, Historical Echoes | Permalink | Comments (0)

October 02, 2013

Capital Flight inside the Euro Area: Cooling Off a Fire Sale

Matthew Higgins and Thomas Klitgaard

Countries in the euro area periphery such as Greece, Italy, Portugal, and Spain saw large-scale capital flight in 2011 and the first half of 2012. While events unfolded much like a balance of payments crisis, the contraction in domestic credit was less severe than would ordinarily be caused by capital flight of this scale. Why was that? An important reason is that much of the capital flight was financed by credits to deficit countries’ central banks, with those credits extended collectively by other central banks in the euro area. This balance of payments financing was paired with policies to supply liquidity to periphery commercial banks. Absent these twin lifelines, periphery countries would have had to endure even steeper recessions from the sudden withdrawal of foreign capital.

Continue reading "Capital Flight inside the Euro Area: Cooling Off a Fire Sale" »

Posted by Blog Author at 7:00 AM in Balance of Payments, Credit, Crisis, Euro Area, Exchange Rates, Exports, Fire Sale, International Economics | Permalink | Comments (0)

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