Global financial markets tend to move together. For example, stock market movements across the globe are highly synchronized, economic data releases frequently have large spillover effects across borders, and episodes of financial turmoil often spread across countries that share no significant economic linkages.
September 12, 2011
September 9, 2011
Historical Echoes: Meet William McChesney Martin Jr.
William McChesney Martin Jr. (1906-98) was chairman of the Board of Governors of the Federal Reserve System from 1951 to 1970, serving under five U.S. presidents.
Posted at 10:00 am in Historical Echoes | Permalink
September 7, 2011
Consumer Goods from China Are Getting More Expensive
We find that, in a sharp reversal of earlier trends, U.S. import prices for consumer goods shipped from China have been rising rapidly in recent quarters—by 7 percent between 2010:Q2 and 2011:Q1.
September 6, 2011
Helping Unemployed Borrowers Meet Their Mortgage Payments
With unemployment very high, income loss is now the primary reason for mortgage default. Unemployed homeowners face tough choices.
September 2, 2011
Historical Echoes: Forced Savings and Prison Cells for Rent
In the nineteenth century, convicts transported to New South Wales, Australia, were encouraged to deposit their money in one of the colony’s banks. But in 1822, they were forced to do so. Prisoners in private jails were also compelled to pay for their incarceration and were housed according to their ability to pay, with accommodations ranging from a private cell with a cleaning woman to one where the convict had to lie on the floor with no cover.
Posted at 10:00 am in Historical Echoes | Permalink
August 31, 2011
Is There Stigma to Discount Window Borrowing?
The Federal Reserve employs the discount window (DW) to provide funding to fundamentally solvent but illiquid banks (see the March 30 post “Why Do Central Banks Have Discount Windows?”). Historically, however, there has been a low level of DW use by banks, even when they are faced with severe liquidity shortages, raising the possibility of a stigma attached to DW borrowing. If DW stigma exists, it is likely to inhibit the Fed’s ability to act as lender of last resort and prod banks to turn to more expensive sources of financing when they can least afford it. In this post, we provide evidence that during the recent financial crisis banks were willing to pay higher interest rates in order to avoid going to the DW, a pattern of behavior consistent with stigma.
August 29, 2011
Local Hangovers: How the Housing Boom and Bust Affected Jobs in Metro Areas
What explains why some places suffered particularly severe job losses during the Great Recession? In this post, we extend our recent Current Issues article analyzing regional dimensions of the latest housing cycle and show that metropolitan areas that experienced the biggest housing booms and busts from 2000 to 2008 lost the most jobs during the recession. Not surprisingly, construction activity helps explain the tight link between housing and local job market performance. Given this pattern, we believe that each metro area’s boom-bust experience is likely to continue to influence its growth prospects for some time to come.
August 26, 2011
Historical Echoes: This Is Your (Great) Grandparents’ Quantitative Easing
A recent Federal Reserve Bank of St. Louis essay by Richard Anderson reminds us that the Fed’s recent large-scale asset purchase (LSAP) programs have a precedent. Anderson says: “Few analysts recall . . . that this is the second, not the first, quantitative easing by U.S. monetary authorities. During 1932, with congressional support, the Fed purchased approximately $1 billion in Treasury securities.” After the Fed’s program ended in October 1933, the Roosevelt administration continued to expand reserves, using measures authorized by the Gold Reserve Act of 1934, including large gold purchases.
Posted at 10:00 am in Historical Echoes | Permalink
August 24, 2011
Are Charter Schools Draining Private School Enrollment?
Charter schools are a major policy initiative at the national and local levels. As charter schools spread, one key question is whether they reduce private school enrollment, especially at CathoCharter schools are a major policy initiative at the national and local levels. As charter schools spread, one key question is whether they reduce private school enrollment, especially at Catholic schools. If so, an increase in charters could change public school spending patterns, decrease the number or size of private schools, and alter educational outcomes and school quality for public and private school students. But is this really the case? Maybe not. In this post, based on our 2010 New York Fed staff report, we find that despite widespread fears to the contrary, the expansion of charter schools in Michigan led to only a small decline in private school enrollment.lic schools.
Just Released: July’s Indexes of Coincident Economic Indicators Show Economic Activity Picking Up across the Region
The July Indexes of Coincident Economic Indicators (CEIs) for New York State, New York City, and New Jersey, released today, reveal that economic activity continued to expand in both New York State and New York City and—for the second month in a row—picked up moderately in New Jersey.
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