Liberty Street Economics

Liberty Street Economics

Look for our next post on March 23.

April 16, 2018

Is Stigma Attached to the European Central Bank’s Marginal Lending Facility?

Helene Lee and Asani Sarkar

The European Central Bank (ECB)’s marginal lending facility has been used by banks to borrow funds both in normal times and during the crisis that started in 2007. In this post, we argue that how a central bank communicates the purpose of a facility is important in determining how users of the facility are perceived. In particular, the ECB never refers to the marginal lending facility as a back-up source of funds. The ECB’s neutral approach may be a key factor in explaining why financial institutions are less reluctant to use the marginal lending facility than the Fed’s discount window.

Continue reading »
Posted at 7:00 am in Central Bank, Euro Area, Lender of Last Resort | Permalink | Comments (1)
April 11, 2018

How Will the New Tax Law Affect Homeowners in High Tax States? It Depends

Richard Peach, Gizem Kosar, and Nicole Gorton

The Tax Cuts and Jobs Act of 2017 (TCJA) introduces significant changes to the federal income tax code for individuals and businesses. Several provisions of the new tax law are particularly significant for the owner-occupied housing market. In this blog post, we compare the federal tax liability and the marginal after-tax cost of mortgage interest and property taxes under the old and new tax codes for a wide range of hypothetical recent home buyers in a high tax state. We find that impacts vary substantially along the income/home price distribution.

Continue reading »
Posted at 7:00 am in Fiscal Policy, Household Finance, Housing | Permalink | Comments (3)
April 9, 2018

Vulnerable Growth

Tobias Adrian, Nina Boyarchenko, and Domenico Giannone

Traditional GDP forecasts potentially present an overly optimistic (or pessimistic) view of the state of the economy: by focusing on the point estimate for the conditional mean of growth, such forecasts ignore risks around the central forecast. Yet, policymakers around the world increasingly focus on risks to the central forecast in policy debates. For example, in the United States, the Federal Open Market Committee (FOMC) commonly discusses the balance of risks in the economy, with the relative prominence of this discussion fluctuating with the state of the economy. In a recent paper, we propose a method for constructing the full conditional distribution of GDP projected growth as a function of current economic and financial conditions. This blog post reviews some of the findings from that paper and the implications for macroeconomic theory and for policymakers.

Continue reading »
Posted at 7:00 am in Forecasting | Permalink
April 4, 2018

Do the Employed Get Better Job Offers?

R. Jason Faberman, Thomas Haasl, Andreas I. Mueller, Ayşegül Şahin, and Giorgio Topa

In a previous post, we examined the job search behavior of workers, both on the job and while unemployed. We found that job seeking is pervasive among employed workers, and that searching while employed is more effective than searching while unemployed in producing employer contacts and job offers. But how do the offers received through “on the job” search compare to those received while unemployed? What do their wages look like, how do they compare in terms of nonwage benefits, and how much bargaining between employers and job applicants is involved? In this post, we shed some light on how job offers may vary depending on the employment status of the job seeker.

Continue reading »
Posted at 7:00 am in Inequality, Labor Market | Permalink
April 2, 2018

Quantities and Prices during the Housing Bust

Sonia Gilbukh and Paul Goldsmith-Pinkham

The recent U.S. housing crisis featured explosive growth and collapse of house prices at the national level, with substantial boom-bust pattern variation at the local level. What is less commonly known in the housing market is the behavior of housing quantities. While measures of supply and inventory play an important role in understanding markets, quantity data in housing is traditionally limited to national aggregates. Using a rich new data set of homes listed for sale across a wide range of U.S. housing markets, this post explores whether the collapse in prices from 2006 to 2009 owed more to a flood of houses on the market (higher supply) or a dearth of sales (lower demand).

Continue reading »
Posted at 7:00 am in Crisis, Housing | Permalink
March 28, 2018

Do Expansions in Health Insurance Affect Student Loan Outcomes?

Maya Bidanda, Rajashri Chakrabarti, Sean Hundtofte, and Maxim L. Pinkovskiy

The Patient Protection and Affordable Care Act (ACA) is arguably the biggest policy intervention in health insurance in the United States since the passage of Medicaid and Medicare in 1965. The Act was signed into law in March 2010, and by 2016 approximately 20 to 24 million additional Americans were covered with health insurance. Such an extension of insurance coverage could affect not only medical bills, but also educational, employment, and broader financial outcomes. In this post, we take an initial look at the relationship between the ACA and higher education financing choices and outcomes. We find evidence that expansions in healthcare coverage may influence both the prevalence of student loans and loan repayment behavior. The evidence suggests that individuals covered by ACA-related expansions are taking out slightly more loans and taking a longer time to start repayment.

Continue reading »
Posted at 7:00 am in Credit, Human Capital, Labor Market, Student Loans | Permalink
March 26, 2018

Dealer Trading and Positioning in Floating Rate Notes

Michael J. Fleming and Amanda Wahlers

In January 2014, the U.S. Treasury Department made its first sale of Floating Rate Notes (FRNs), securities whose coupon rates vary over time depending on the course of short-term rates. Now that a few years have passed, we have enough data to analyze dealer trading and positioning in FRNs. In this post, we assess the level of trading and positioning, concentration across issues, and auction cycle effects, comparing these properties to those of other types of Treasury securities.

Continue reading »
Posted at 7:00 am in Financial Institutions, Financial Markets, Treasury | Permalink | Comments (2)
March 9, 2018

The New York Fed DSGE Model Forecast–March 2018

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

This post presents a quarterly update of the economic forecast generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. We describe our forecast very briefly and highlight its change since November 2017.

Continue reading »
Posted at 7:00 am in DSGE, Forecasting | Permalink
March 7, 2018

Do Low Rates Encourage Yield Seeking by Money Market Funds?

Gabriele La Spada

The term “reach for yield” refers to investors’ tendency to buy riskier assets in hopes of securing higher returns. Do low rates on safe assets encourage such yield-seeking behavior, particularly among U.S. prime money market funds (MMFs)? In a paper forthcoming in the Journal of Financial Economics, I develop a model of MMF competition to understand whether competitive pressure leads these funds to reach for yield in a low-rate environment like the current one. I test the model’s predictions on the 2002-08 period and show that, after controlling for changes in risk premia, declines in risk-free rates actually reduced MMF risk-taking, leading to a “reach for safety.”

Continue reading »
Posted at 7:00 am in Financial Institutions | Permalink | Comments (2)
March 5, 2018

Did the Dodd‑Frank Act End ‘Too Big to Fail’?

Gara Afonso, Michael Blank, and João A.C. Santos

One goal of the Dodd-Frank Act of 2010 was to end “too big to fail.” Toward that goal, the Act required systemically important financial institutions to submit detailed plans for an orderly resolution (“living wills”) and authorized the FDIC to create an alternative resolution procedure. In response, the FDIC has developed a “single point of entry” (SPOE) strategy, under which healthy parent companies bear the losses of their failing subsidiaries. Since SPOE makes the parent company responsible for subsidiaries’ losses, we would expect parents to become riskier, relative to their subsidiaries, compared to before the announcement of the SPOE strategy in December 2013. Do bond raters and investors share this view?

Continue reading »
Posted at 7:00 am in Banks, Crisis, Regulation, Systemic Risk | Permalink | Comments (4)
« Back | More Posts »

RSS RSS Feed

Twitter Follow Liberty Street Economics

WATCH: About the Research Group

“What’s really driving inflation?” “Why do some neighborhoods bounce back faster than others?” Meet some of the New York Fed researchers working to answer questions that matter most to the economy.

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, Thomas Klitgaard, Maxim Pinkovskiy, and Asani Sarkar, all economists in the Bank’s Research Group.

Liberty Street Economics does not publish new posts during the blackout periods surrounding Federal Open Market Committee meetings.

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.

Economic Research Tracker

Image of NYFED Economic Research Tracker Icon Liberty Street Economics is available on the iPhone® and iPad® and can be customized by economic research topic or economist.

View by Topic

Most Read this Year

  1. Who Is Paying for the 2025 U.S. Tariffs?
  2. Are Businesses Absorbing the Tariffs or Passing Them On to Their Customers?
  3. Credit Score Impacts from Past Due Student Loan Payments
  4. Is College Still Worth It?
  5. Why Does the U.S. Always Run a Trade Deficit?
Useful Links
Comment Guidelines

 

We encourage your comments and queries on our posts and will publish them (below the post) subject to the following guidelines:

Please be brief: Comments are limited to 1,500 characters.

Please be aware: Comments submitted shortly before or during the FOMC blackout may not be published until after the blackout.

Please be relevant: Comments are moderated and will not appear until they have been reviewed to ensure that they are substantive and clearly related to the topic of the post.

Please be respectful: We reserve the right not to post any comment, and will not post comments that are abusive, harassing, obscene, or commercial in nature. No notice will be given regarding whether a submission will or will
not be posted.‎

Comments with links: Please do not include any links in your comment, even if you feel the links will contribute to the discussion. Comments with links will not be posted.

Send Us Feedback

Disclosure Policy

The LSE editors ask authors submitting a post to the blog to confirm that they have no conflicts of interest as defined by the American Economic Association in its Disclosure Policy. If an author has sources of financial support or other interests that could be perceived as influencing the research presented in the post, we disclose that fact in a statement prepared by the author and appended to the author information at the end of the post. If the author has no such interests to disclose, no statement is provided. Note, however, that we do indicate in all cases if a data vendor or other party has a right to review a post.

Archives