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10 posts on "Household"

April 17, 2019

Did Tax Reform Raise the Cost of Owning a Home?



HOUSING SERIES: Post 5 of 5
LSE_2019_Did Tax Reform Raise the Cost of Owning a Home?

The 2018 slowdown in the housing market has been a subject of intense interest to the press and policymakers, including articles reporting a slowing in house price growth and a decline in home construction. Today we follow up on our colleagues’ research on whether the Tax Cut and Jobs Act of 2017 (TCJA) has contributed to a slowdown in the housing market, looking closely at what price signals tell us about the trade-off between owning and renting.

Continue reading "Did Tax Reform Raise the Cost of Owning a Home?" »

Posted by Blog Author at 7:00 AM in Fiscal Policy, Household, Household Finance, Housing, Mortgages | Permalink | Comments (0)

April 15, 2019

Is the Recent Tax Reform Playing a Role in the Decline of Home Sales?



HOUSING SERIES: Post 4 of 5
LSE_2019_Is the Recent Tax Reform Playing a Role in the Decline of Home Sales?

From the fourth quarter of 2017 through the third quarter of 2018, the average contract interest rate on new thirty-year fixed rate mortgages rose by roughly 70 basis points—from 3.9 percent to 4.6 percent. During this same period, there was a broad-based slowing in housing market activity with sales of new single-family homes declining by 7.6 percent while sales of existing single-family homes fell by 4.6 percent. Interestingly though, these declines in home sales were larger than in the two previous episodes when mortgage interest rates rose by a comparable amount. This post considers whether provisions in the Tax Cuts and Jobs Act of 2017 (TCJA) might have also contributed to the recent decline in housing market activity.

Continue reading "Is the Recent Tax Reform Playing a Role in the Decline of Home Sales?" »

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

April 12, 2019

The Sustainability of First-Time Homeownership



HOUSING SERIES: Post 3 of 5
LSE_2019_housing2-characteristics-first-time-buyer_lee_460_art

In this post we take up the important question of the sustainability of homeownership for first-time buyers. The evaluation of public policies aimed at promoting the transition of individuals from renting to owning should depend not only on the degree to which such policies increase the number of first-time buyers, but also importantly on whether these new buyers are able to sustain their homeownership. If a buyer is unprepared to manage the financial responsibilities of owning a home and consequently must return to renting, then the household may have made little to no progress in wealth accumulation. Despite the importance of sustainability, to date there have been no efforts at measuring the sustainability of first-time homeownership. We provide an example of a first-time homebuyer sustainability scorecard.

Continue reading "The Sustainability of First-Time Homeownership" »

Posted by Blog Author at 7:00 AM in Household, Household Finance, Housing, Mortgages | Permalink | Comments (2)

April 10, 2019

Who’s on First? Characteristics of First-Time Homebuyers



HOUSING SERIES: Post 2 of 5
LSE_2019_housing2-characteristics-first-time-buyer_lee_460_art

In our previous post, we presented a new measure of first-time homebuyers. In this post, we use this improved measure to describe the characteristics of first-time buyers and how those characteristics change over time. Having an accurate assessment of first-time buyers is important given that the aim of many housing policies is to support the transition from renting to owning. A proper assessment of these housing policies requires an understanding of the impact of these policies on the share of first-time buyers and the characteristics of these buyers. Our third post will directly examine the sustainability of homeownership by first-time buyers.

Continue reading "Who’s on First? Characteristics of First-Time Homebuyers" »

Posted by Blog Author at 7:00 AM in Credit, Forecasting, Household, Household Finance, Housing, Mortgages | Permalink | Comments (2)

May 30, 2018

Good News, Leverage, and Sudden Stops



LSE_Good News, Leverage, and Sudden Stops


One of the major debates in open economy macroeconomics is the extent to which capital inflows are beneficial for growth. In principle, these flows allow countries to increase their consumption and investment spending beyond their income by enabling them to tap into foreign saving. Periods of such borrowing, however, are associated with large trade deficits, external debt accumulation, and, in some cases, overheating when these economies operate beyond their potential output level for an extended period of time. The relevant question in this context is whether the rate at which a country is taking on external debt has useful predictive information about financial crises.

Continue reading "Good News, Leverage, and Sudden Stops" »

April 10, 2017

Financial Crises and the Desirability of Macroprudential Policy



LSE_Financial Crises and the Desirability of Macroprudential Policy

The global financial crisis has put financial stability risks—and the potential role of macroprudential policies in addressing them—at the forefront of policy debates. The challenge for macroeconomists is to develop new models that are consistent with the data while being able to capture the highly nonlinear nature of crisis episodes. In this post, we evaluate the impact of a macroprudential policy that has the government tilt incentives for banks to encourage them to build up their equity positions. The government has a role since individual banks do not internalize the systemic benefit of having more bank equity. Our model allows for an evaluation of the tradeoff between the size of such incentives and the probability of a future financial crisis.

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September 30, 2016

From the Vault: Does Forward Guidance Work?



In recent months, there have been some high-profile assessments of how far the Federal Reserve has come in terms of communicating about monetary policy since its “secrets of the temple” days. While observers say the transition to greater transparency “still seems to be a work in progress,” they note the range of steps the Fed has taken over the years to shed light on its strategy, including issuing statements to announce and explain policy changes following Federal Open Market Committee (FOMC) meetings, post-meeting press conferences and minutes, FOMC-member speeches and testimony, and “forward guidance” in all its variants.

Continue reading "From the Vault: Does Forward Guidance Work?" »

Posted by Blog Author at 7:00 AM in DSGE, Expectations, Fed Funds, Forecasting, Household, Inflation, Treasury | Permalink | Comments (2)

June 27, 2016

Hey, Economist! How Is the Research and Statistics Group Changing?



LSE_Hey, Economist! How Is the Research and Statistics Group Changing?

As Director of Research for the New York Fed for the past seven years, Jamie McAndrews has been responsible for the Bank’s financial and economic policy research, as well as the collection of data and statistics from financial institutions. On the eve of his retirement on June 30, Jamie shared his perspective on how the Research and Statistics Group has changed with Andrew Haughwout, a senior vice president in the Group.

Continue reading "Hey, Economist! How Is the Research and Statistics Group Changing?" »

Posted by Blog Author at 7:00 AM in DSGE, Hey, Economist!, Household, Macroecon, Monetary Policy | Permalink | Comments (1)

May 25, 2016

The Macro Effects of the Recent Swing in Financial Conditions



Credit conditions tightened considerably in the second half of 2015 and U.S. growth slowed. We estimate the extent to which tighter credit conditions last year were responsible for the slowdown using the FRBNY DSGE model. We find that growth would have slowed substantially more had the Federal Reserve not delayed liftoff in the federal funds rate.

Continue reading "The Macro Effects of the Recent Swing in Financial Conditions" »

May 20, 2015

Why Are Interest Rates So Low?



Second post in the series
In a recent series of blog posts, the former Chairman of the Federal Reserve System, Ben Bernanke, has asked the question: “Why are interest rates so low?” (See part 1, part 2, and part 3.) He refers, of course, to the fact that the U.S. government is able to borrow at an annualized rate of around 2 percent for ten years, or around 3 percent for thirty years. If you expect that inflation is going to be on average 2 percent over the next ten or thirty years, this implies that the U.S. government can borrow at real rates of interest between 0 and 1 percent at the ten- and thirty-year maturities. This phenomenon is by no means limited to the United States. Governments in Japan and Germany are able to borrow for ten years at nominal rates below 1 percent, and the ten-year yield on Swiss government debt is slightly negative. Why is that?

Continue reading "Why Are Interest Rates So Low?" »

Posted by Blog Author at 7:00 AM in DSGE, Financial Markets, Household, Macroecon, Monetary Policy, Wages | Permalink | Comments (7)
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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.

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