112 posts on "Credit"
August 19, 2016
Historical Echoes: That’s Where the Celebrity Advertising Was, or the Gentleman Bank Robber
In 1970, New Britain Bank and Trust (inactive as of 1984) ran a television advertisement that starred a real-life bank robber touting a safety feature of its new “face card.” (A History Channel video includes interesting preliminaries about how the journalists obtained the ad; the ad itself starts at 5:44.) Why would this bank be willing to create such an ad? Of course, neither this bank, nor any other bank, nor any Federal Reserve Bank would condone the act of robbing a bank. But this particular thief, the notorious Willie Sutton (1901-80), was different from typical bank robbers. Let’s consider why:
August 12, 2016
Puerto Rico’s Evolving Household Debts
Debt and its performance play a critical role in economic development. The enormous increase in mortgage debt that took place during the run-up to the 2007 financial crisis and the contribution of that debt to the crisis underscore the importance of household debt to financial stability and economic growth.
August 9, 2016
Just Released: Recent Developments in Consumer Credit Card Borrowing
The Federal Reserve Bank of New York’s Center for Microeconomic Data today released its Quarterly Report on Household Debt and Credit for the second quarter of 2016.
Posted at 11:05 am in Credit, Household Finance, Inflation, Puerto Rico, Regional Analysis | Permalink
August 8, 2016
Restoring Economic Growth in Puerto Rico: Introduction to the Series
The difficult economic and financial issues facing the Commonwealth of Puerto Rico have remained very much in the news since our post on options for addressing its fiscal problems appeared last fall. That post was itself a follow-up on a series of analyses, starting with a 2012 report that detailed the economic challenges facing the Commonwealth. In 2014, we extended that analysis with an update where we focused more closely on the fiscal challenges facing the Island. As the problems deepened, we have continued to examine important related subjects ranging from positive revisions in employment data, to the understanding emigration, and to considering how the Commonwealth’s public debts stack up. In most of this work, we have focused on how policymakers could help to address the immediate issues facing the Island and its people. The U.S. Congress and the Obama Administration took action in June to provide a framework to help address Puerto Rico’s fiscal crisis. But much remains to be done to address these ongoing problems, which represent a significant impediment to economic growth in the short run. It also seems important to revisit the question of the prospects for reviving longer-run growth in the Commonwealth. These concerns were underscored by projections published by the International Monetary Fund (IMF) in the April edition of the World Economic Outlook that forecast Puerto Rico’s real GDP and population to decline through 2021.
Posted at 7:00 am in Credit, Employment, Fed Funds, Fiscal Policy, Forecasting, Inflation, International Economics, Puerto Rico, Regional Analysis | Permalink | Comments (1)
August 1, 2016
Which Households Have Negative Wealth?
At some point in its life a household’s total debt may exceed its total assets, in which case it has “negative wealth.” Even if this status is temporary, it may affect the household’s ability to save for durable goods, restrict access to further credit, and may require living in a state of limited consumption. Detailed analysis of the holdings of negative-wealth households, however, is a topic that has received little attention. In particular, relatively little is known about the characteristics of such households or about what drives negative wealth. A better understanding of these factors could also prove valuable in explaining and forecasting the persistence of wealth inequality. In this post, we take advantage of a special module of the Survey of Consumer Expectations to shed light on this issue.
July 13, 2016
Could Liquidity Regulation Revive the Bank Lending Channel?
Dong Beom Choi and Ulysses Velasquez How does monetary policy affect spending in the economy? The economic literature suggests two main channels of monetary transmission: the money or interest rate channel and the bank lending channel. The first view focuses on changes in real interest rates resulting from a shift in monetary policy and corresponding […]
July 11, 2016
How Have High Reserves and New Policy Tools Reshaped the Fed Funds Market?
Gara Afonso and Sammuel Stern Over the last decade, the federal funds market has evolved to accommodate new policy tools such as interest on reserves and the overnight reverse repo facility. Trading motives have also responded to the expansion in aggregate reserves as the result of large-scale asset purchases. These changes have affected market participants […]
February 12, 2016
Just Released: Household Debt Grew Slowly in 2015 as Mortgage Balances Stayed Flat
This morning, New York Fed President William Dudley spoke to the press about the growing resilience of the U.S. household sector. His speech was followed by a briefing by New York Fed economists on developments in household borrowing. Their presentation included a detailed decomposition on mortgage borrowing and payment trends, and some new research on how borrowing has evolved differently across age groups. Today, the New York Fed also released the Quarterly Report on Household Debt and Credit for the fourth quarter of 2015. The report, the press briefing, and the following analysis are all based on the New York Fed Consumer Credit Panel, which is itself based on consumer credit data from Equifax.
April 20, 2015
Credit Supply and the Housing Boom
There is no consensus among economists as to what drove the rise of U.S. house prices and household debt in the period leading up to the recent financial crisis. In this post, we argue that the fundamental factor behind that boom was an increase in the supply of mortgage credit, which was brought about by securitization and shadow banking, along with a surge in capital inflows from abroad. This argument is based on the interpretation of four macroeconomic developments between 2000 and 2006 provided by a general equilibrium model of housing and credit.
March 27, 2015
Just Released: SCE Credit Access Survey Shows Higher Likelihood of Consumers Applying for Credit
The Federal Reserve Bank of New York today released results from its February 2015, which provides information on consumers’ experiences with and expectations about credit demand and credit access.
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