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Look for our next post on June 24.

May 08, 2019

Ten Years Later—Did QE Work?

Stephan Luck and Tom Zimmerman

By November 2008, the Global Financial Crisis, which originated in the residential housing market and the shadow banking system, had begun to turn into a major recession, spurring the Federal Open Market Committee (FOMC) to initiate what we now refer to as quantitative easing (QE). In this blog post, we draw upon the empirical findings of post-crisis academic research–including our own work–to shed light on the question: Did QE work?

Posted by Blog Author at 7:00 AM in Banks , Central Bank , Employment , Financial Markets , FOMC , Monetary Policy | Permalink | Comments ( 7 )

May 06, 2019

Selected Deposits and the OBFR

Alyssa Cambron, Marco Cipriani, Joshua Jones, Romen Mookerjee, Scott Sherman, Brett Solimine, and Timothy Wessel

The Federal Reserve Bank of New York recently decided to revise the composition of the Overnight Bank Funding Rate (OBFR), a reference rate measuring the cost banks face to borrow overnight in unsecured U.S. dollar-denominated money markets. Specifically, in addition to the federal funds and Eurodollar transactions currently comprising the OBFR, the OBFR now also includes overnight, interest-bearing demand deposits (at rates negotiated between the counterparties and excluding deposits payable on demand) booked within banks’ U.S. offices, known as “selected deposits.” In this post, we discuss the change in more detail, the reason for including selected deposits, and the likely impact on the OBFR’s published values.

Posted by Blog Author at 7:00 AM in Central Bank , Fed Funds , Federal Reserve , Monetary Policy | Permalink | Comments ( 0 )

April 18, 2019

Just Released: The New York Fed’s New Regional Economy Website

Jaison R. Abel, Jason Bram, Richard Deitz, and Jonathan Hastings

The New York Fed today unveiled a newly designed website on the regional economy that offers convenient access to a wide array of regional data, analysis, and research that the Bank makes available to the public. Focusing specifically on the Federal Reserve’s Second District, which includes New York State, Northern New Jersey, Southwestern Connecticut, Puerto Rico, and the U.S. Virgin Islands, the new site also features information about the Bank's community engagement and outreach efforts across the region. With today’s release, we are providing new regional economic précis for local areas in our District—that is, short reports that give an overview of economic trends in each location; these reports will be updated regularly as new data are released.

Posted by Blog Author at 11:01 AM in Employment , Labor Market , New Jersey , New York , New York City , Puerto Rico , Regional Analysis , Unemployment | Permalink | Comments ( 0 )

April 17, 2019

Did Tax Reform Raise the Cost of Owning a Home?

Sonia Gilbukh, Andrew Haughwout, Rebecca Landau, and Joseph Tracy

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.

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?

Richard Peach and Casey McQuillan

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.

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

Donghoon Lee and Joseph Tracy

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.

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

Donghoon Lee and Joseph Tracy

HOUSING SERIES: Post 2 of 5

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.

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

April 08, 2019

A Better Measure of First-Time Homebuyers

Donghoon Lee and Joseph Tracy

HOUSING SERIES: Post 1 of 5

LSE_2019_A Better Measure of First-Time Homebuyers

Much of the concern about affordable homeownership has focused on first-time buyers. These buyers, who are often making the transition from renting to owning, can find it difficult to save to meet down-payment requirements; this is particularly true in those areas where rent takes up a significant portion of a household’s monthly income. In contrast to first-time buyers, repeat buyers can typically rely on the equity in their current house to help fund the down payment on a trade-up purchase; they also have an easier time qualifying for a new mortgage if they’ve successfully made payments on a prior mortgage, thereby improving their credit score. Despite the policy focus on first-time buyers, reliable data on these buyers do not exist. In this first of three posts, we introduce a better measure of first-time buyers and examine the dynamics of this group over the past seventeen years. In our next post, we will describe the characteristics of first-time buyers. We will conclude this part of the housing series by examining the sustainability of homeownership for first-time buyers.

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

April 05, 2019

Just Released: The New York Fed Staff Forecast—April 2019

David Lucca, Jonathan McCarthy, and Richard Peach

Today, the Federal Reserve Bank of New York is hosting the spring meeting of its Economic Advisory Panel (EAP). As has become the custom at this meeting, the New York Fed Research staff is presenting its forecast for U.S. growth, inflation, and the unemployment rate. Following the presentation, members of the EAP, which consists of leading economists in academia and the private sector, are asked to critique the staff forecast. Such feedback helps the staff evaluate the assumptions and reasoning underlying its forecast as well as the forecast’s key risks. The feedback is also an important part of the forecasting process because it informs the staff’s discussions with New York Fed President John Williams about economic conditions. In that same spirit, we are sharing a short summary of the staff forecast in this post; for more detail, see the New York Fed Staff Outlook Presentation from the EAP meeting on our website.

Posted by Blog Author at 10:30 AM in Forecasting , Macroecon | Permalink | Comments ( 0 )

April 03, 2019

Are New Repo Participants Gaining Ground?

Adam Copeland, Ira Selig, and Anya Tarascina

Following the 2007-09 financial crisis, regulations were introduced that increased the cost of entering into repurchase agreements (repo) for bank holding companies (BHC). As a consequence, banks and securities dealers associated with BHCs, a set of firms which dominates the repo market, were predicted to pull back from the market. In this blog post, we examine whether this changed environment allowed new participants, particularly those not subject to the new regulations, to emerge. We find that although new participants have come on the scene and made gains, they remain a small part of the overall repo market.

Posted by Blog Author at 7:00 AM in Dealers , Financial Markets , Repo | Permalink | Comments ( 1 )

About the Blog

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.

The views expressed are those of the authors, and do not necessarily reflect the position of the New York Fed or the Federal Reserve System.

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