Liberty Street Economics

Liberty Street Economics

September 23, 2019

Just Released: Transitions to Unemployment Tick Up in Latest SCE Labor Market Survey

Gizem Kosar and Kyle Smith

The Federal Reserve Bank of New York’s July 2019 SCE Labor Market Survey shows a year-over-year rise in employer-to-employer transitions as well as an increase in transitions into unemployment. Satisfaction with promotion opportunities and wage compensation were largely unchanged, while satisfaction with non-wage benefits retreated. Regarding expectations, the average expected wage offer (conditional on receiving one) and the average reservation wage—the lowest wage at which respondents would be willing to accept a new job—both increased. Expectations regarding job transitions were largely stable.

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Posted at 11:00 am in Labor Market, Unemployment | Permalink

Once Upon a Time in the Banking Sector: Historical Insights into Banking Competition

Mark Carlson, Sergio Correia, and Stephan Luck

How does competition among banks affect credit growth and real economic growth? In addition, how does it affect financial stability? In this blog post, we derive insights into this important set of questions from novel data on the U.S. banking system during the nineteenth century.

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Posted at 7:00 am in Banks, Crisis, Economic History, Financial Institutions, Financial Intermediation | Permalink
September 4, 2019

The Transmission of Monetary Policy and the Sophistication of Money Market Fund Investors

Marco Cipriani, Jeff Gortmaker, and Gabriele La Spada

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.

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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

Michael Cai, Marco Del Negro, Edward Herbst, Ethan Matlin, Reca Sarfati, and Frank Schorfheide

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.

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Posted at 7:00 am in DSGE, Macroeconomics | Permalink
August 14, 2019

Are U.S. Tariffs Turning Vietnam into an Export Powerhouse?

Hunter L. Clark and Brendan Kelly

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.

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Posted at 7:00 am in Exports, International Economics, Tariffs | Permalink
August 13, 2019

Just Released: Mind the Gap in Delinquency Rates

Andrew F. Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw

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.

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Posted at 11:00 am in Credit, Household Finance | Permalink | Comments (2)
August 7, 2019
July 19, 2019

At the New York Fed: Research Conference on FinTech

Alan Basmajian, Brad Groarke, Vanessa Kargenian, Kimberley Liao, Erika Ota-Liedtke, Jesse Maniff, and Asani Sarkar

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.

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Posted at 7:00 am in Financial Institutions, Financial Intermediation, Regulation | Permalink
July 17, 2019

How Do Large Banks Manage Their Cash?

Jeffrey Levine and Asani Sarkar

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.

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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

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.

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Posted at 7:00 am in Banks, Liquidity, Regulation | Permalink | Comments (1)
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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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