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59 posts on "Household Finance"

November 19, 2015

Just Released: New and Improved Charts and Data on Auto Loans


Today, the New York Fed announced that household debt increased by a robust $212 billion in the third quarter of 2015. Both mortgage and auto loan originations increased, as auto originations reached a ten-year high and new mortgage lending appears to have finally recovered from the very low levels seen in the past year. This quarter, we’re introducing an improved estimate of auto loan originations, some new charts, and some fresh data on the auto loan market. The Quarterly Report on Household Debt and Credit and this analysis use our Consumer Credit Panel data, which is itself based on Equifax credit data.

Continue reading "Just Released: New and Improved Charts and Data on Auto Loans " »

Posted by Blog Author at 1:00 PM in Household Finance | Permalink | Comments (0)

November 16, 2015

Should Monetary Policy Respond to Financial Conditions?


There’s an ongoing debate about whether policymakers should respond to financial conditions when setting monetary policy. An argument is often made that financial stability concerns are more appropriately dealt with by using regulatory and macroprudential tools. This post offers a theoretical justification for policymakers to monitor and possibly respond to financial conditions not because this would lessen concerns about financial stability but because this information helps reveal the state of the economy and the appropriate stance of monetary policy.

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Posted by Blog Author at 7:00 AM in Financial Markets, Household Finance, Monetary Policy | Permalink | Comments (0)

November 09, 2015

The New Overnight Bank Funding Rate


The Federal Reserve Bank of New York will begin publishing the overnight bank funding rate (OBFR) sometime in the first few months of 2016. The OBFR will be a broad measure of U.S. dollar funding costs for U.S.-based banks as it will be calculated using both fed funds and Eurodollar transactions, as reported in a new data collection—the FR 2420 Report of Selected Money Market Rates. In a recent post, “The Eurodollar Market in the United States,” we described the Eurodollar activity of U.S.-based banks and compared recent fed funds and Eurodollar rates. Here, we look at the historical relationship between overnight fed funds and Eurodollars and compare the new OBFR rate to the fed funds rate.

Continue reading "The New Overnight Bank Funding Rate" »

Posted by Blog Author at 7:00 AM in Financial Markets, Household Finance, Monetary Policy | Permalink | Comments (2)

November 05, 2015

How Did Quantitative Easing Interact with Regional Inequality?


Income, or wealth, inequality is not something that central bankers generally worry about when setting monetary policy, the goals of which are to maintain price stability and promote full employment. Nevertheless, it is important to understand whether and how monetary policy affects inequality, and this topic has recently generated quite a bit of discussion and academic research, with some arguing that the Federal Reserve’s expansionary policy of recent years has exacerbated inequality (see, for instance, here or here), while others reach the opposite conclusion (see here or here). This disagreement can be attributed in part to the different channels through which expansionary monetary policy can affect inequality: its effect on asset prices would tend to increase inequality, while its effect on labor incomes and employment would likely decrease inequality. In this post, I study one particular channel through which Fed policies may have disparate effects—namely, mortgage refinancing—and I focus on dispersion across locations in the United States.

Continue reading "How Did Quantitative Easing Interact with Regional Inequality?" »

Trends in Debt Concentration in the United States By Income


Household debt in the United States expanded before the Great Recession, contracted afterward, and has been recovering since 2013. But how has the distribution of debt across different income groups evolved over time? Who has been driving the recovery of household debt over the past two years?  To date, there has been little work on how borrowing patterns for high- and low-income individuals have changed over time, although one notable exception is Amromin and McGranahan. Here, using the New York Fed Consumer Credit Panel (CCP), a quarterly panel data set based on Equifax credit reports, we shed further light on these questions.

Continue reading "Trends in Debt Concentration in the United States By Income" »

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

October 19, 2015

Reframing the Debate about Payday Lending


Except for the ten to twelve million people who use them every year, just about everybody hates payday loans. Their detractors include many law professors, consumer advocates, members of the clergy, journalists, policymakers, and even the President! But is all the enmity justified? We show that many elements of the payday lending critique—their “unconscionable” and “spiraling” fees and their “targeting” of minorities—don’t hold up under scrutiny and the weight of evidence. After dispensing with those wrong reasons to object to payday lenders, we focus on a possible right reason: the tendency for some borrowers to roll over loans repeatedly. The key question here is whether the borrowers prone to rollovers are systematically overoptimistic about how quickly they will repay their loan. After reviewing the limited and mixed evidence on that point, we conclude that more research on the causes and consequences of rollovers should come before any wholesale reforms of payday credit.

Continue reading "Reframing the Debate about Payday Lending" »

Posted by Blog Author at 7:02 AM in Household Finance | Permalink | Comments (19)

August 31, 2015

Discounting the Long Run


Expectations about the path of interest rates matter for many economic decisions. Three sources for obtaining information about such expectations are available. The first is extrapolation from historical data. The second consists of surveys of expectations. The third are expectations drawn from financial market prices, often referred to as market expectations. The last are usually considered to be model-based expectations, because, generally, a model is needed to reliably extract expectations from current prices. In this post, we explain the need for and usage of term structure models for extracting far in the future interest rate expectations from market rates, which can be used to discount the long run. We will illustrate our arguments by discussing the measurement of long-run discount rates for Social Security.

Continue reading "Discounting the Long Run" »

Posted by Blog Author at 7:00 AM in Financial Markets, Fiscal Policy, Household Finance | Permalink | Comments (1)

August 24, 2015

Rethinking Mortgage Design

John Campbell, Andreas Fuster, David Lucca, Stijn Van Nieuwerburgh, and James Vickery


Because mortgages make up the majority of household debt in most developed countries, mortgage design has important implications for macroeconomic policy and household welfare. As one example, most U.S. mortgages have fixed interest rates—if interest rates fall, existing borrowers need to refinance to lower their interest payments. In practice, households are often slow to refinance, or may not be able to do so. As a result, the transmission of U.S. monetary policy is dampened relative to countries like the United Kingdom where mortgage rates on most loans adjust automatically with short-term interest rates. In this post, we discuss some of the key takeaways from a recent conference where policymakers, academics, practitioners, and other experts convened to discuss mortgage design and consider possible mortgage market innovations.

Continue reading "Rethinking Mortgage Design" »

Posted by Blog Author at 7:00 AM in Household Finance, Housing | Permalink | Comments (1)

August 13, 2015

Just Released: Releveraging the Consumer Credit Panel with Two New Charts


Our Consumer Credit Panel, which is based on data from the Equifax credit reporting agency, first arrived at the New York Fed in 2009, and our very first Quarterly Report on Household Debt and Credit was published in August 2010, five years ago this month. We’ve continued to produce the same report, with very few changes, since the report’s initial release. However, with today’s release of the report for the second quarter of 2015, we’re beginning to make some changes, starting with two new charts that provide granularity on mortgage loan originations. These data are identical to the originations data that we’ve released previously, but we now report origination volume by credit score groups. The new charts’ form will be familiar to those who have seen our earlier work on auto loans or the U.S. Economy in a Snapshot, and will leverage some of the detail that we have in our dataset on new extensions of credit and underwriting standards.

Continue reading "Just Released: Releveraging the Consumer Credit Panel with Two New Charts" »

Posted by Blog Author at 11:15 AM in Household Finance, Housing | Permalink | Comments (0)

July 13, 2015

The Survey of Consumer Expectations Turns Two!

Survey of Consumer Expectations

The Federal Reserve Bank of New York’s Survey of Consumer Expectations (SCE) turned two years old in June. In this post, we review some of the key findings from the first two years of the survey’s history, highlighting the most noteworthy trends revealed in the data.

Continue reading "The Survey of Consumer Expectations Turns Two!" »

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