In December 2015, the Federal Reserve tightened monetary policy for the first time in almost ten years and, over the following three years, it raised interest rates eight more times, increasing the target range for the federal funds rate from 0-25 basis points (bps) to 225-250 bps. To what extent are changes in the fed funds rate transmitted to cash investors, and are there differences in the pass-through between retail and institutional investors? In this post, we describe the impact of recent rate increases on the yield paid by money market funds (MMFs) to their investors and show that the impact varies depending on investors’ sophistication.
September 4, 2019
The Transmission of Monetary Policy and the Sophistication of Money Market Fund Investors
Posted at 7:00 am in Federal Reserve, Financial Institutions, Financial Intermediation, Monetary Policy | Permalink | Comments (3)
August 21, 2019
Online Estimation of DSGE Models
Our macroeconomists explain their approach for parallel and “online” estimation of DSGE models using sequential Monte Carlo techniques and share a GitHub link for obtaining their SMC Julia code.
August 14, 2019
Are U.S. Tariffs Turning Vietnam into an Export Powerhouse?
The imposition of Section 301 tariffs on about half of China’s exports to the United States has coincided with a fall in imports from China and gains for other countries. The U.S.-China trade conflict also appears to be accelerating an ongoing shift in foreign direct investment (FDI) from China to other emerging markets, particularly in Asia. Within the region, Vietnam is often cited as a clear beneficiary of these trends, a rising economy that could displace China, to some extent, in global supply chains. In this note, we examine the data and conclude that Vietnam is indeed gaining market share, but is too small to replace China anytime soon.
August 13, 2019
Just Released: Mind the Gap in Delinquency Rates
Total household debt balances increased by $192 billion in the second quarter of 2019, boosted primarily by a $162 billion gain in mortgage installment balances, according to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data (the mortgage installment balances exclude home equity lines of credit, which are reported separately and have been declining in balance for some time). The new mortgage total of $9.4 trillion is slightly higher than the previous high in mortgage balances from the third quarter of 2008 in nominal terms.
August 7, 2019
Does a Data Quirk Inflate China’s Travel Services Deficit?
China international trade service balance of payments imports exports tourism current account balance
July 19, 2019
At the New York Fed: Research Conference on FinTech
Financial technology (“FinTech”) refers to the evolving intersection of financial services and technology. In March, the New York Fed hosted “The First New York Fed Research Conference on FinTech” to understand the implications of FinTech developments on issues that are relevant to the Fed’s mandates such as lending, payments, and regulation. In this post, we summarize the principal themes and findings of the conference.
July 17, 2019
How Do Large Banks Manage Their Cash?
As the aggregate supply of reserves shrinks and large banks implement liquidity regulations, they may follow a variety of liquidity management strategies depending on their business models and the interest rate differences between alternative liquid instruments. For example, the banks may continue to hold large amounts of excess reserves or shift to Treasury or agency securities or shrink their balance sheets. In this post, we provide new evidence on how large banks have managed their cash, which is the largest component of reserves, on a daily basis since the implementation of liquidity regulations.
Posted at 7:00 am in Banks, Federal Reserve, Liquidity, Regulation, Repo, Treasury | Permalink | Comments (2)
July 15, 2019
Large Bank Cash Balances and Liquidity Regulations
Jeffrey Levine and Asani Sarkar discuss the recent evolution of large bank cash balances, the effect of liquidity regulations on these balances, and how banks might react to the Federal Reserve’s changes in the supply of reserves.
July 12, 2019
Just Released: Historical Reconstruction of the New York Fed Staff Nowcast, 2002‑15
The New York Fed Staff Nowcast has been running for over three years. Each Friday at 11:15 a.m., we publish our updated predictions for real GDP growth based on the data released each week. When the Bureau of Economic Analysis (BEA) releases the first estimate of GDP growth, we stop updating our nowcast and archive it. We maintain these archives as part of our Nowcasting Report on the New York Fed’s public website to allow users to study the features of the nowcast and its accuracy. Now, to better understand the model and its performance during different cyclical episodes, we are publishing extended historical archives of the nowcast. Doing so provides fourteen additional years of forecasts that can be used not only to evaluate our nowcast model, but also to explore daily U.S. economic history through the model’s lens.
July 10, 2019
Did the Value of a College Degree Decline during the Great Recession?
In an earlier post, we studied how educational attainment affects labor market outcomes and earnings inequality. In this post, we investigate whether these labor market effects were preserved across the last business cycle: Did students with certain types of educational attainment weather the recession better?
Posted at 7:00 am in Education, Human Capital, Inequality, Labor Market, Recession | Permalink | Comments (5)
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