Liberty Street Economics

Liberty Street Economics

Look for our next post on August 5.

June 27, 2018

Why New York City Subway Delays Don’t Affect All Riders Equally

Nicole Gorton and Maxim L. Pinkovskiy

The state of the New York City subway system has worsened considerably over the past few years. As a consequence of rising ridership and decaying infrastructure, the network is plagued by delays and frequently fails to deliver New Yorkers to their destinations on time. While these delays are a headache for anyone who depends on the subway to get around, they do not affect all riders in the same way. In this post, we explain why subway delays disproportionately affect low-income New Yorkers. We show that wealthier commuters who rely on the subway are less likely to experience extensive issues on their commutes.

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Posted at 7:00 am in Employment, Inequality, New York, Regional Analysis | Permalink
June 25, 2018

How Is Technology Changing the Mortgage Market?

Andreas Fuster, Matthew Plosser, and James Vickery

The adoption of new technologies is transforming the mortgage industry. For instance, borrowers can now obtain a mortgage entirely online, and lenders use increasingly sophisticated methods to verify borrower income and assets. In a recent staff report, we present evidence suggesting that technology is reducing frictions in mortgage lending, such as reducing the time it takes to originate a mortgage, and increasing the elasticity of mortgage supply. These benefits do not seem to come at the cost of less careful screening of borrowers.

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Posted at 7:00 am in Banks, Housing | Permalink
June 19, 2018

At the New York Fed: Conference on the Effects of Post‑Crisis Banking Reforms

Richard Crump and João Santos

Crump and Santos preview a New York Fed conference debating the efficacy of post-crisis banking reforms, looking at whether they have achieved their intended goals and considering the unintended consequences.

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Posted at 7:00 am in Banks, Crisis, Nonbank (NBFI), Regulation | Permalink
June 1, 2018

Hey, Economist! Outgoing New York Fed President Bill Dudley on FOMC Preparation and Thinking Like an Economist

Bill Dudley will soon turn over the keys to the vault—so to speak. But before his tenure in office ends after nine years as president of the New York Fed, Liberty Street Economics caught up with him to capture his parting reflections on economic research, FOMC preparation, and leadership. Publications editor Trevor Delaney recently caught up with Dudley.

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Posted at 7:00 am in Banks, Federal Reserve, Hey, Economist!, Monetary Policy | Permalink
May 30, 2018

Good News, Leverage, and Sudden Stops

Ozge Akinci and Ryan Chahrour

One of the major debates in open economy macroeconomics is the extent to which capital inflows are beneficial for growth. In principle, these flows allow countries to increase their consumption and investment spending beyond their income by enabling them to tap into foreign saving. Periods of such borrowing, however, are associated with large trade deficits, external debt accumulation, and, in some cases, overheating when these economies operate beyond their potential output level for an extended period of time. The relevant question in this context is whether the rate at which a country is taking on external debt has useful predictive information about financial crises.

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Posted at 7:00 am in Balance of Payments, International Economics, Macroeconomics, Systemic Risk | Permalink
May 23, 2018

Mixed Impacts of the Federal Tax Reform on Consumer Expectations

Gizem Kosar, Wilbert van der Klaauw, Olivier Armantier, and John Conlon

The Tax Cuts and Jobs Act of 2017 changed the tax brackets, tax rates, credits and deductions for individuals and similarly altered corporate tax rates, deductions and exclusions. In this post, we examine whether the reform has shifted individuals’ expectations about their financial situation and the macroeconomic outlook. We also ask whether households have already started to adjust their behavior in line with their expectations. In order to answer these questions, we use novel data from a special module of the New York Fed’s Survey of Consumer Expectations (SCE) fielded in February 2018 to a nationally representative sample of heads of households.

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Posted at 7:00 am in Expectations, Household Finance | Permalink
May 21, 2018

Economic Predictions with Big Data: The Illusion of Sparsity

Domenico Giannone, Michele Lenza, and Giorgio E. Primiceri

The availability of large data sets, combined with advances in the fields of statistics, machine learning, and econometrics, have generated interest in forecasting models that include many possible predictive variables. Are economic data sufficiently informative to warrant selecting a handful of the most useful predictors from this larger pool of variables? This post documents that they usually are not, based on applications in macroeconomics, microeconomics, and finance.

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Posted at 7:00 am in Forecasting | Permalink
May 17, 2018

Just Released: New York Fed Press Briefing Highlights Changes in Home Equity and How It’s Used

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

Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw At a press briefing this morning, economists at the New York Fed focused on the evolution of housing wealth and its use as collateral. Their comments came in connection with the Center for Microeconomic Data’s release of its Quarterly Report on Household Debt and […]

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Posted at 10:00 am in Household Finance, Housing | Permalink
May 14, 2018

Recycling Oil Revenue

Michael Fosco and Thomas Klitgaard

Michael Fosco and Thomas Klitgaard Almost half the U.S. merchandise trade deficit was tied to petroleum ten years ago. Oil prices were above $100 a barrel, the economy was doing well enough that oil consumption was growing despite high oil prices, and domestic oil production was falling. The U.S. petroleum trade balance has since narrowed substantially from $400 […]

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Posted at 7:00 am | Permalink | Comments (1)
May 9, 2018

Forecasts of the Lost Recovery

Michael Cai, Marco Del Negro, Marc Giannoni, Abhi Gupta, and Pearl Li

The years following the Great Recession were challenging for forecasters for a variety of reasons, including an unprecedented policy environment. This post, based on our recently released working paper, documents the real-time forecasting performance of the New York Fed dynamic stochastic general equilibrium (DSGE) model in the wake of the Great Recession. We show that the model’s predictive accuracy was on par with that of private forecasters and proved to be quite a bit better, at least in terms of GDP growth, than that of the median forecasts from the Federal Open Market Committee’s (FOMC) Summary of Economic Projections (SEP).

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Posted at 7:00 am in DSGE, Forecasting | Permalink
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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.

The editors are Michael Fleming, Andrew Haughwout, Thomas Klitgaard, and Asani Sarkar, all economists in the Bank’s Research Group.

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