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Economic Research

Recent Publications
Safety, Liquidity, and the Natural Rate of Interest
Why are U.S. interest rates so low today? The authors point to a higher “convenience yield”—the premium that investors are willing to pay for safety and liquidity. This increase, together with a slowdown in economic growth, explains much of the decline in estimates of the natural rate of interest since the late 1990s.
By Marco Del Negro, Domenico Giannone, Marc P. Giannoni, and Andrea Tambalotti, Staff Reports 812, May 2017
How Does For-Profit College Attendance Affect Student Loans, Defaults, and Earnings?
For-profit schools tend to serve students from more disadvantaged backgrounds, so it is important to isolate the causal effect of for-profit enrollment on educational and labor market outcomes. The authors use a novel strategy to estimate the effect of attending a for-profit college relative to a local public college or university on graduation rates, financial aid, student debt, and future earnings.
By Luis Armona, Rajashri Chakrabarti, and Michael Lovenheim, Staff Reports 811, April 2017
Interest Rate Conundrums in the Twenty-First Century
Our authors find that “conundrums”—six- or twelve-month periods in which short-term interest rates and long-term interest rates move in opposite directions—have become far more common since 2000. They show that the excess sensitivity of long-term interest rates to high-frequency movements in short-term rates has grown stronger, while the positive association between low-frequency changes in short- and long-term rates has weakened.
By Samuel G. Hanson, David O. Lucca, and Jonathan H. Wright, Staff Reports 810, March 2017
The Pre-Crisis Monetary Policy Implementation Framework
The Federal Reserve’s monetary policy implementation framework changed during the financial crisis of 2007-08 owing to the substantial increase in reserves resulting from unconventional policy measures. In this paper, the authors assess the Fed’s pre-crisis framework in order to facilitate a better understanding of changes in monetary policy implementation since the crisis.
By Alexander Kroeger, John McGowan, and Asani Sarkar, Staff Reports 809, March 2017
The Behavior of Uncertainty and Disagreement and Their Roles in Economic Prediction: A Panel Analysis
The authors provide a detailed exploration of two aspects of forecast behavior—uncertainty and disagreement. Using data from the European Central Bank’s Survey of Professional Forecasters (ECB-SPF), they derive individual measures of uncertainty and disagreement from reported point and density forecasts. Their empirical analysis indicates substantial heterogeneity in respondents’ uncertainty and disagreement.
By Robert Rich and Joseph Tracy, Staff Reports 808, February 2017
Disaster (Over-)Insurance: The Long-Term Financial and Socioeconomic Consequences of Hurricane Katrina
The authors examine the local long-run net impact of Hurricane Katrina and the subsequent policy response on New Orleans residents. They find that, ten years after the storm, inundated city residents have higher rates of insolvency and lower homeownership than their non-flooded neighbors, and that residents of the Gulf Opportunity Zone obtained net financial benefits.
By Zachary Bleemer and Wilbert van der Klaauw, Staff Reports 807, February 2017