Liberty Street Economics
July 31, 2014

Just Released: Updated Study of the Competitiveness of Puerto Rico’s Economy Proposes Steps to Address the Island’s Fiscal Stress

An Update on the Competitiveness of Puerto Rico’s Economy, released today, offers six steps that the Island’s government should consider taking to restore its fiscal health.

July 21, 2014

Becoming More Alike? Comparing Bank and Federal Reserve Stress Test Results

Stress tests have become an important method of assessing whether financial institutions have enough capital to operate in bad economic conditions.

Posted at 7:00 am in Financial Institutions | Permalink | Comments (2)
July 18, 2014

Historical Echoes: The Worst Bank Robbers in Mendham, New Jersey

There are many methods by which financial institutions can ready themselves for worst-case scenarios: they acquire FDIC insurance, they follow a variety of banking regulations, and they prepare for natural disasters, for starters.

July 16, 2014

Risk Aversion and the Natural Interest Rate

One way to assess the stance of monetary policy is to assert that there is a natural interest rate (NIR), defined as the rate consistent with output being at its potential. Broadly speaking, monetary policy can be seen as expansionary if the policy rate is below the NIR with the gap between the rates measuring the extent of the policy stimulus. Of course, there are many challenges in defining and measuring the NIR, with various factors driving its value over time. A key factor that needs to be considered is the effect of uncertainty and risk aversion on households’ savings decisions. Households’ tolerance for risk tends to be lower during downturns, putting upward pressure on precautionary savings, and thereby downward pressure on the natural interest rate. In addition, uncertainty dictates how much precautionary savings responds to changes in risk aversion. So policymakers need to be aware that rate moves to offset adverse economic conditions that are appropriate in tranquil times may not be sufficient in times of high uncertainty.

Posted at 7:00 am in Macroecon, Monetary Policy | Permalink | Comments (1)
July 15, 2014

Just Released: July Empire State Manufacturing Survey Shows Strength

Jason Bram and Richard Deitz The July 2014 Empire State Manufacturing Survey, released today, points to some notable strengthening in New York’s manufacturing sector. The survey’s headline general business conditions index and the new orders and shipments indexes all climbed to their highest levels in more than four years. The employment measure also moved up in […]

Posted at 8:45 am in Regional Analysis | Permalink | Comments (0)
July 14, 2014

High Unemployment and Disinflation in the Euro Area Periphery Countries

http://www.typepad.com/site/blogs/6a01348793456c970c013487934a93970c/post/6a01348793456c970c01a3fd0719b1970b/edit?saved=e#

July 11, 2014

Crisis Chronicles: The Collapse of the French Assignat and Its Link to Virtual Currencies Today

In the late 1700s, France ran a persistent deficit and by the late 1780s struggled with how to balance the budget and pay down the debt.

July 10, 2014

At the N.Y. Fed: Conference Highlights Financing Tools for New York’s Food and Beverage Firms

With more than 35,000 farms and $5.5 billion in annual sales, the agriculture industry is an important part of the New York State economy.

July 9, 2014

Lifting the Veil on the U.S. Bilateral Repo Market

The repurchase agreement (repo), a contract that closely resembles a collateralized loan, is widely used by financial institutions to lend to each other.

Posted at 7:00 am in Financial Markets, Treasury | Permalink | Comments (0)
July 7, 2014

Why Hasn’t the Yen Depreciation Spurred Japanese Exports?

The Japanese yen depreciated 30 percent from its peak in the fourth quarter of 2011 against its trading partners.

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