Press Release

New York Fed Releases Reports Focused on the Impact of Recessions on Schools and ‘Regular and Predictable’ Treasury Bill Issuance

January 13, 2017

NEW YORK—The Federal Reserve Bank of New York today released two new articles for its Economic Policy Review, a policy-oriented journal focused on macroeconomic, banking and financial market topics. The articles—“A Tale of Two States: The Recession's Impact on N.Y. and N.J. School Finances” and “The Effect of ‘Regular and Predictable' Issuance on Treasury Bill Financing”—focus on the distinct topics of school finances and Treasury debt management, respectively.

A Tale of Two States: The Recession's Impact on N.Y. and N.J. School Finances
This article is the first to compare the impacts of the Great Recession on schools in different states—in this case, New York and New Jersey. Through this comparison, the authors aim to provide a deeper understanding of the effects of recessions on schools and the role that policy can play in shaping those effects. The study finds that school finance experiences in New York and New Jersey differed significantly, both in terms of funding and spending decisions. While total school funding in New York was maintained at its pre-recession trend, New Jersey funding experienced downward shifts from trend. On the spending side, New York schools maintained instructional expenditures (which focus on student learning) while schools in New Jersey made cuts in this category.

The Effect of ‘Regular and Predictable' Issuance on Treasury Bill Financing
This article examines the impact of regular and predictable issuance on the short-run cost of issuing Treasury bills—in particular, whether this approach effectively minimizes the cost of financing government debt. The authors estimate the cost differences between two types of strategies for setting the size of Treasury bill auctions: one that focuses solely on cost-minimization and alternative strategies that emphasize regularity and predictability. The authors find that the additional cost of adhering to a regular and predictable schedule is likely less than one basis point.

The first article is authored by Ravi Bhalla, a former research analyst at the New York Fed; Rajashri Chakrabarti, a senior economist at the New York Fed; and Max Livingston, a former senior research analyst at New York Fed.

The second article is authored by Paul Glasserman, the Jack R. Anderson Professor of Business at Columbia University and a former consultant to the U.S. Department of the Treasury through the Sapient Corporation; Amit Sirohi, former senior associate at Sapient; and Allen Zhang, former deputy director of the Office of Debt Management at the Treasury Department.

Both articles will be published in a forthcoming edition of the Economic Policy Review.

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