329 posts on "Liberty Street Economics"
November 10, 2022
Do Exchange Rates Fully Reflect Currency Pressures?
Currency values are important both for the real economy and the financial sector. When faced with currency market pressures, some central banks and finance ministries turn to foreign exchange intervention (FXI) in an effort to reduce realized currency depreciation, thus diminishing its economic and financial consequences. This post provides insights into how effective these interventions might be in limiting currency depreciation.
November 9, 2022
A Closer Look at Chinese Overseas Lending
While considerable attention has focused on China’s credit boom and the rise of China’s domestic debt levels, another important development in international finance has been growth in China’s lending abroad. In this post, we summarize what is known about the size and scope of China’s external lending, discuss the incentives that drove this lending, and consider some of the challenges these exposures pose for Chinese lenders and foreign borrowers.
November 7, 2022
What Is Atomic Settlement?
Distributed ledger technologies (DLTs) have garnered growing interest in recent years and are making inroads into traditional finance. One purported benefit of DLTs is their ability to bring about “atomic” settlement. Indeed, several recent private sector projects (SDX, Fnality, HQLAx) aim to do just that. But what exactly is atomic settlement? In this post, we explain that atomic settlement, as it is often defined, combines two distinct properties: instant settlement and simultaneous settlement, which should be kept separate.
October 21, 2022
Federal Reserve System Conference on the Financial Stability Considerations for Monetary Policy
How does monetary policy affect financial vulnerabilities and, in turn, how does the state of the financial system interact with the maximum employment and price stability goals of monetary policy? These were the key questions covered in the September 30 conference organized by the Federal Reserve System. The conference was co-led by Federal Reserve Board Vice Chair Lael Brainard and Federal Reserve Bank of New York President and CEO John C. Williams, each of whom offered prepared remarks. The program also included a panel of current and former central bank policymakers to explore the themes of the conference, as well as paper presentations with discussants. In this post, we discuss highlights of the conference. The agenda includes links to all of the presentations as well as videos for each session.
Posted at 7:00 am in Household Finance, Inflation, Monetary Policy, Systemic Risk | Permalink | Comments (1)
October 20, 2022
Long COVID Appears to Have Led to a Surge of the Disabled in the Workplace
Although most of those infected with COVID-19 have recovered relatively quickly, a substantial share has not, and remains symptomatic months or even years later, in what is commonly referred to as long COVID. Data on the incidence of long COVID is scarce, but recent Census Bureau data suggest that sixteen million working age Americans suffer from it. The economic costs of long COVID is estimated to be in the trillions. While many with long COVID have dropped out of the labor force because they can no longer work, many others appear to be working despite having disabilities related to the disease. Indeed, there has been an increase of around 1.7 million disabled persons in the U.S. since the pandemic began, and there are close to one million newly disabled workers. These disabled workers can benefit from workplace accommodations to help them remain productive and stay on the job, particularly as the majority deal with fatigue and brain fog, the hallmarks of long COVID.
Posted at 7:02 am in Equitable Growth, Inequality, Labor Market, Pandemic | Permalink | Comments (2)
How Have Racial and Ethnic Earnings Gaps Changed after COVID‑19?
Racial and ethnic earnings disparities have been salient features of the U.S. economy for decades. Between the pandemic-driven recession in 2020 and the rising inflation since 2021, workers’ real and nominal earnings have seen rapid change. To get a sense of how recent economic conditions have affected earnings disparities, we examine real and nominal weekly earnings trends for Asian, Black, Hispanic, and white workers. We find that average real weekly earnings have been declining in the past year, but less so for Black and Hispanic workers than for white and Asian workers. Black and Hispanic workers have also experienced small increases in real earnings since the pre-pandemic period.
October 18, 2022
What Have Workers Done with the Time Freed up by Commuting Less?
The COVID-19 pandemic has dramatically changed the way Americans spend their time. One of the most enduring shifts has occurred in the workplace, with millions of employees making the switch to work from home. Even as the pandemic has waned, more than 15 percent of full-time employees remain fully remote and an additional 30 percent work in hybrid arrangements (Barrero, Bloom, and Davis). These changes have substantially reduced time spent commuting to work; in the aggregate, Americans now spend 60 million fewer hours traveling to work each day. In this post, we investigate how people spend this saved time on other activities. Using detailed data from the American Time Use Survey (ATUS), we find that employed individuals allocate their saved commute time toward leisure activities and sleeping, while reducing overall work hours.
October 17, 2022
What Is the Outlook for China’s External Surplus?
The sharp slowdown in China’s property sector has reignited debate over the country’s future role as a net provider of savings to the global economy. The debate revolves around whether a sustained decline in property investment will spur a long-term increase in China’s current account surplus, given the country’s high savings rate. However, China’s rapidly aging population presents opposing forces that complicate this story. The shift of a large share of its population from working life to retirement will reduce savings supply even as a shrinking labor force will reduce investment demand. In this post, we focus on the demographic part of the story and find that this force will exert considerable downward pressure on China’s current account surplus in coming years.
October 12, 2022
With Abundant Reserves, Do Banks Adjust Reserve Balances to Accommodate Payment Flows?
As a result of the global financial crisis (GFC), the Federal Reserve switched from a regime of scarce reserves to one of abundant reserves. In this post, we explore how banks’ day-to-day management of reserve balances with respect to payment flows changed with this regime switch. We find that bank behavior did not change on average; under both regimes, banks increased their opening balances when they expected higher outgoing payments and, similarly, decreased these balances with expected higher incoming payments. There are substantial differences across banks, however. At the introduction of the abundant-reserves regime, small domestic banks no longer adjusted balances alongside changes in outgoing payments.
October 11, 2022
New SCE Charts Include a Measure of Longer‑Term Inflation Expectations
Today, the New York Fed introduces several new data series and interactive charts depicting findings from its Survey of Consumer Expectations (SCE). The SCE is a representative, internet-based monthly survey of a rotating panel of about 1,300 household heads in the United States. Since January 2014, we have been reporting findings from our monthly survey on U.S. households’ views on inflation, household income and spending growth, their expectations about the housing and labor market, and a range of other expectations about the economy and outcomes for their own household. In addition to publishing interactive charts showing national trends as well as trends by demographic groups (such as age, income, education, numeracy, and geography), we also post the underlying microdata online (with a nine-month lag) to make it available for research purposes. We are adding three new data series to our interactive charts today. The first two concern expectations about future inflation, and the third concerns expectations of future home price growth.
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