New York Fed economists Tobias Adrian, Richard Crump, and Emanuel Moench developed a new approach for calculating the Treasury term premium. Their ACM term premia estimates have since become “increasingly canonical” in economic analysis.
Look for our next post on November 3.
March 24, 2017
March 22, 2017
The Need for Very Low Interest Rates in an Era of Subdued Investment Spending
Why have interest rates stayed low for so long after the financial crisis—and will they remain low for the foreseeable future?
March 20, 2017
Money Market Funds and the New SEC Regulation
On October 14, 2016, amendments to Securities and Exchange Commission (SEC) rule 2a-7, which governs money market mutual funds (MMFs), went into effect. The changes are designed to reduce MMFs’ susceptibility to destabilizing runs and contain two principal requirements.
March 17, 2017
Historical Echoes: The Bank That Never Existed, or You Say ‘Immigrant’ and I Say ‘Emigrant’
Just because an entity is referred to all over the place, does that mean it exists? We are not talking about heaven or hell. We are talking about the “Immigrant Savings Bank.”
March 3, 2017
Historical Echoes: That Pesky, Well‑Overdue Library Book
The “extremely overdue library book” has had a long run as a sitcom trope. As a source of humor, the ludicrously large library late fine pays off in at least two ways: first, there’s the enormity of the fine when compared with the insignificant monetary value of the book itself (paving the way for jokes about inflation and compound interest); and second, there’s the idea of the “criminality” of the offender, who is probably unlikely to commit any other kind of crime, with the concomitant image of “library police” (or actual police) coming after the negligent borrower . . . One day, that could be you, dear reader.
Posted at 7:00 am in Historical Echoes | Permalink
March 1, 2017
Just Released: The Regional Economy Is off to a Good Start in 2017
The New York Fed’s latest Beige Book report, released this afternoon, shows the regional economy gathering steam in early 2017. The report, based on information collected through February 17, suggests the regional economy, which had been essentially flat for the second half of 2016, saw growth pick up to a modest pace at the start of the year. Manufacturers, in particular, note a sharp rise in activity, as do businesses in wholesale distribution and transportation. Consequently, the market for industrial and warehouse space was pretty robust in the opening weeks of 2017. Meanwhile, businesses in most service industries continue to report steady to moderately expanding activity. And even though consumer spending has remained fairly subdued, consumer confidence climbed to highs not seen in more than a decade. All in all, it appears the regional economy has gotten off to a good start in 2017.
Posted at 2:15 pm in Regional Analysis | Permalink
When Debts Compete, Which Wins?
When faced with financial hardship, borrowers might choose to repay some debts while falling behind on others—potentially going into default.
February 27, 2017
China’s Continuing Credit Boom
Debt in China has increased dramatically in recent years, accounting for roughly one-half of all new credit created globally since 2005.
February 24, 2017
Why the Proposed Border Tax Adjustment Is Unlikely to Promote U.S. Exports
There has been much debate about the proposed border tax adjustment, in which U.S. firms would pay a 20 percent tax on all imported inputs and be exempt from paying taxes on export revenue. The view among many economists, including proponents of the plan, is that the U.S. dollar would appreciate by the full amount of the tax and thus completely offset any relative price effects. In this post, we consider the implications of an alternative scenario where the U.S. dollar only appreciates part of the way. This could happen, for example, as a result of the uncertainty surrounding the policy response from other countries. As the proposed tax is effectively equivalent to an import tax combined with an export subsidy, it is possible that there could be retaliation from other countries in the form of taxes on U.S. exports or litigation with the World Trade Organization. If the U.S. dollar does not appreciate by the full amount of the tax, we argue that the effect of the tax will be to lower both U.S. imports and exports in the short to medium run.
February 22, 2017
Getting More from the Senior Loan Officer Opinion Survey?
Every quarter, senior loan officers at selected large banks around the United States are asked by Fed economists how their standards for approving business loans changed compared with the quarter before. Of all the questions in the Senior Loan Officer Opinion Survey (SLOOS), responses to that question about standards usually attract the most attention from the financial press and researchers. Relatively ignored by comparison are loan officers’ reports on how they changed interest spreads, collateral requirements, and other terms on loans they are willing to approve. Lenders can clearly expand or contract credit by altering those terms even without changing their standards for approving loans, so we investigate whether the reports on loan terms collected in the SLOOS are also informative.
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