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Liberty Street Economics
Look for our next post on January 29.
January 15, 2021

Discretionary and Nondiscretionary Services Expenditures during the COVID-19 Recession



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The coronavirus pandemic and the various measures to address it have led to unprecedented convulsions to the U.S. and global economies. In this post, I examine those extraordinary impacts through the lens of personal consumption expenditures on discretionary and nondiscretionary services, a framework I developed in a 2011 post (and subsequently employed in 2012, 2014, and 2017). In particular, I show that there were exceptional declines in both services categories during the spring; their recoveries, however, have displayed notably different patterns in recent months, with nondiscretionary services expenditures nearly back to their prior level and discretionary services expenditures seemingly stalled well below their pre-pandemic peak.

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

January 12, 2021

Understanding the Racial and Income Gap in COVID-19: Essential Workers



Understanding the Racial and Income Gap in COVID-19: Essential Workers

This is the fourth and final post in this series aimed at understanding the gap in COVID-19 intensity by race and by income. The previous three posts focused on the role of mediating variables—such as uninsurance rates, comorbidities, and health resource in the first post; public transportation, and home crowding in the second; and social distancing, pollution, and age composition in the third—in explaining the racial and income gap in the incidence of COVID-19. In this post, we now investigate the role of employment in essential services in explaining this gap.

Posted by Blog Author at 10:03 AM in Inequality , Pandemic | Permalink | Comments ( 0 )

Understanding the Racial and Income Gap in COVID-19: Social Distancing, Pollution, and Demographics



Understanding the Racial and Income Gap in COVID-19: Social Distancing, Pollution, and Demographics

This is the third post in a series looking to explain the gap in COVID-19 intensity by race and by income. In the first two posts, we have investigated whether comorbidities, uninsurance, hospital resources, and home and transit crowding help explain the income and minority gaps. Here, we continue our investigation by looking at three additional potential channels: the fraction of elderly people, pollution, and social distancing at the beginning of the pandemic in the county. We aim to understand whether these three factors affect overall COVID-19 intensity, whether the income and racial gaps of COVID-19 can be further explained when we additionally include these factors, and whether and to what extent these factors independently account for income and racial gaps in COVID-19 intensity (without controlling for the factors considered in the other posts in this series).

Posted by Blog Author at 10:02 AM in Inequality , Pandemic | Permalink | Comments ( 0 )

Understanding the Racial and Income Gap in COVID-19: Public Transportation and Home Crowding



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This is the second post in a series that aims to understand the gap in COVID-19 intensity by race and income. In our first post, we looked at how comorbidities, uninsurance rates, and health resources may help to explain the race and income gap observed in COVID-19 intensity. We found that a quarter of the income gap and more than a third of the racial gap in case rates are explained by health status and system factors. In this post, we look at two factors related to indoor density—namely public transportation use and home crowding. Here, we will aim to understand whether these two factors affect overall COVID-19 intensity, whether the income and racial gaps of COVID-19 can be further explained when we additionally include these factors, and whether and to what extent these factors independently account for income and racial gaps in COVID-19 intensity (without controlling for the factors considered in the other posts in this series).

Understanding the Racial and Income Gap in Covid-19: Health Insurance, Comorbidities, and Medical Facilities




Understanding the Racial and Income Gap in Covid-19: Health Insurance, Comorbidities, and Medical Facilities


Our previous work documents that low-income and majority-minority areas were considerably more affected by COVID-19, as captured by markedly higher case and death rates. In a four-part series starting with this post, we seek to understand the reasons behind these income and racial disparities. Do disparities in health status translate into disparities in COVID-19 intensity? Does the health system play a role through health insurance and hospital capacity? Can disparities in COVID-19 intensity be explained by high-density, crowded environments? Does social distancing, pollution, or the age composition of the county matter? Does the prevalence of essential service jobs make a difference? This post will focus on the first two questions. The next three posts in this series will focus on the remaining questions. The posts will follow a similar structure. In each post, we will aim to understand whether the factors considered in that post affect overall COVID-19 intensity, whether the racial and income gaps can be further explained when we additionally include the factors in consideration in that post, and whether and to what extent the factors under consideration in that post independently affect racial and income gaps in COVID-19 intensity (without controlling for the factors considered in the other posts in this series).

January 06, 2021

The International Spillover of U.S. Monetary Policy via Global Production Linkages



The International Spillover of U.S. Monetary Policy via Global Production Linkages

The recent era of globalization has witnessed growing cross-country trade integration as firms’ production chains have spread across the world, and with stock market returns becoming more correlated across countries. While research has predominantly focused on how financial integration impacts the propagation of shocks across international financial markets, trade also influences these cross-border spillovers. In particular, one important aspect, highlighted by the recent work of di Giovanni and Hale (2020), is how the global production network influences the transmission of U.S. monetary policy to world stock markets.

December 23, 2020

Understanding the Impact of COVID-19: The Top Five LSE Posts of 2020



Understanding the Impact of COVID-19: The Top Five LSE Posts of 2020

An annual tradition at Liberty Street Economics is to present our most‑read posts of the year. Given the events of 2020, New York Fed economists and guest coauthors focused their analysis on the effects of the coronavirus pandemic, writing some seventy articles since March on the subject. Our leading posts, in terms of traffic, all touch on the theme in some way. Consider this space a hub for COVID-19 coverage for some time to come, and take a look back at the top five posts grabbing attention in 2020.


Posted by Blog Author at 10:00 AM in Pandemic | Permalink | Comments ( 0 )

The New York Fed DSGE Model Forecast—December 2020



This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. We describe very briefly our forecast and its change since September 2020.

As usual, we wish to remind our readers that the DSGE model forecast is not an official New York Fed forecast, but only an input to the Research staff’s overall forecasting process. For more information about the model and variables discussed here, see our DSGE model Q & A. Note that interactive charts are now available for DSGE model forecasts.

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

December 22, 2020

How Does Zombie Credit Affect Inflation? Lessons from Europe



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Even after the unprecedented stimulus by central banks in Europe following the global financial crisis, Europe’s economic growth and inflation have remained depressed, consistently undershooting projections. In a striking resemblance to Japan’s “lost decades,” the European economy has been recently characterized by persistently low interest rates and the provision of cheap bank credit to impaired firms, or “zombie credit.” In this post, based on a recent staff report, we propose a “zombie credit channel” that links the rise of zombie credit to dis-inflationary pressures.

December 21, 2020

What’s Up with Stocks?



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“U.S. stocks are racing toward a second consecutive quarter of dramatic gains, continuing a historic stock-market recovery that few predicted in the depths of the March downturn,” said a September Wall Street Journal article. “The stock market is detached from economic reality. A reckoning is coming,” said the Washington Post. What is going on? In this post, I look not at what stocks have actually done or will do, but at what investors expected should have happened, and what they expect will happen going forward. It turns out that, at least by the particular measure of expectations I consider, investors expected stock returns to be high all along and continue to expect the same in the future.

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

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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.

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