Liberty Street Economics

Liberty Street Economics

April 10, 2019

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

Donghoon Lee and Joseph Tracy

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.

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Posted at 7:00 am in Equitable Growth, Household Finance, Housing | Permalink | Comments (2)
April 8, 2019

A Better Measure of First‑Time Homebuyers

Donghoon Lee and Joseph Tracy

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 initial post in a three-part series, 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 the series by examining the sustainability of homeownership for first-time buyers.

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Posted at 7:00 am in Equitable Growth, Household Finance, Housing | Permalink | Comments (1)
April 5, 2019

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

David Lucca, Jonathan McCarthy, and Richard Peach

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, […]

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Posted at 10:30 am in Forecasting, Macroeconomics | Permalink
April 3, 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.

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Posted at 7:00 am in Financial Markets, Repo | Permalink | Comments (1)
April 1, 2019

The Keynesian Growth Approach to Macroeconomic Policy and Productivity

Gianluca Benigno and Luca Fornaro

Productivity is one of the key determinants of potential output—that is, the trend level of production consistent with stable inflation. A productivity growth slowdown has occurred in several advanced economies in the aftermath of the global financial crisis, raising concerns about long-term growth. In response, a variety of supply-side policy options have been proposed, such as reforms to increase labor and product market flexibility. In this blog post, we consider the role of demand-side policies in raising trend productivity growth.

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Posted at 7:00 am in Macroeconomics | Permalink | Comments (2)
March 27, 2019

Expecting the Unexpected: Job Losses and Household Spending

Fatih Karahan, Brendan Moore, and Laura Pilossoph

Unemployment risk constitutes one of the most significant sources of uncertainty facing workers in the United States. A large body of work has carefully documented that job loss may have long-term effects on one’s career, depressing earnings by as much as 20 percent after fifteen to twenty years. Given the severity of a job loss for earnings, an important question is how much such an event affects one’s standard of living during a spell of unemployment. This blog post explores how unemployment and expectations of job loss interact to affect household spending.

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Posted at 7:00 am in Expectations, Household Finance, Labor Market, Macroeconomics, Unemployment | Permalink | Comments (3)
March 25, 2019

Deciphering Americans’ Views on Cryptocurrencies

Sean Hundtofte, Michael Junho Lee, Antoine Martin, and Reed Orchinik

Having witnessed the dramatic rise and fall in the value of cryptocurrencies over the past year, we wanted to learn more about what motivates people to participate in this market. To find out, we included a special set of questions in the May 2018 Survey of Consumer Expectations, a project of the New York Fed’s Center for Microeconomic Data. This blog post summarizes the results of that survey, shedding light on U.S. consumers’ depth of participation in cryptocurrencies and their motives for entering this new market.

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Posted at 7:00 am in Banks, Credit, Cryptocurrencies, Financial Institutions, Financial Markets, Monetary Policy | Permalink
March 6, 2019

Assessing the Price Impact of Treasury Market Workups

Michael J. Fleming and Giang Nguyen

The price impact of a trade derives largely from its informational content. The “workup” mechanism, a trading protocol used in the U.S. Treasury securities market, is designed to mitigate the instantaneous price impact of a trade by allowing market participants to trade additional quantities of a security after a buyer and seller first agree on its price. Nevertheless, workup trades are not necessarily free of information. In this post, we assess the role of workups in price discovery, following our recent paper in the Review of Asset Pricing Studies (an earlier version of which was released as a New York Fed staff report).

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Posted at 7:00 am in Fed Funds, Financial Markets, Liquidity, Treasury | Permalink | Comments (1)
March 4, 2019

The Sensitivity of Long‑Term Interest Rates: A Tale of Two Frequencies

David O. Lucca, Samuel Hanson, and Jonathan H. Wright

The sensitivity of long-term interest rates to short-term interest rates is a central feature of the yield curve. This post, which draws on our Staff Report, shows that long- and short-term rates co-move to a surprising extent at high frequencies (over daily or monthly periods). However, since 2000, they co-move far less at lower frequencies (over six months or a year). We discuss potential explanations for this finding and its implications for the transmission of monetary policy.

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Posted at 7:00 am in Financial Markets, Macroeconomics, Monetary Policy | Permalink | Comments (1)
February 27, 2019

Global Trends in Interest Rates

Marco Del Negro, Domenico Giannone, Marc Giannoni, Andrea Tambalotti, Brandyn Bok, and Eric Qian

Long-term government bond yields are at their lowest levels of the past 150 years in advanced economies. In this blog post, we argue that this low-interest-rate environment reflects secular global forces that have lowered real interest rates by about two percentage points over the past forty years. The magnitude of this decline has been nearly the same in all advanced economies, since their real interest rates have converged over this period. The key factors behind this development are an increase in demand for safety and liquidity among investors and a slowdown in global economic growth.

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Posted at 7:00 am in Banks, Central Bank, Credit, Expectations, Federal Reserve, Financial Institutions, Financial Markets, Inflation, Liquidity, Macroeconomics, Monetary Policy, Treasury | Permalink | Comments (2)
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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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