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Economic Research

At the New York Fed: Fourteenth Annual Joint Conference with NYU-Stern on Financial Intermediation
An understanding of developments in financial intermediation is critical to the New York Fed’s efforts to promote financial stability and economic growth. The authors discuss highlights from a recent conference that brought together a large number of academics and policymakers from around the world.
By Kristian Blickle, Anna Kovner, and Shivram Viswanathan
Reading the Tea Leaves of the U.S. Business Cycle—Part Two
In a second post, the authors further develop the case that labor market indicators provide the most reliable information for dating the U.S. business cycle. They show that the unemployment rate has provided an almost perfect record of distinguishing the beginning of recessions in the post-war U.S. economy.
By Richard Crump, Domenico Giannone, and David Lucca
Charging into Adulthood: Credit Cards and Young Consumers
The latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data shows that total household debt balances grew by $601 billion 2019, the largest annual gain since 2007. In this post, the authors place the spotlight on young borrowers and their first-time credit experiences.
By Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw
Firm-Level Shocks and GDP Growth: The Case of Boeing’s 737 MAX Production Pause
Large firms play an integral role in aggregate economic activity, and events specific to these firms can thus have a significant effect on the macroeconomy. The author applies a basic framework that is grounded in economic theory to provide a back-of-the-envelope calculation of how the recent pause in Boeing’s 737 MAX production could affect U.S. GDP growth in the first quarter of 2020.
By Julian di Giovanni
Reading the Tea Leaves of the U.S. Business Cycle—Part One
The study of the business cycle—fluctuations in aggregate economic activity between times of widespread expansion and contraction—is one of the foremost pursuits in macroeconomics. But even distinguishing periods of expansion and recession can be challenging. The authors discuss different conceptual approaches to dating the business cycle and study the past performance of these approaches for the U.S. economy.
By Richard Crump, Domenico Giannone, and David Lucca
Optimal Monetary Policy According to HANK
The authors study optimal monetary policy in a heterogeneous agent New Keynesian economy. When income risk is countercyclical, policy curtails the fall in output in recessions to mitigate the increase in inequality. Their study uncovers a new form of time inconsistency of the Ramsey plan—the temptation to exploit households’ unhedged interest rate exposure to lower inequality.
Sushant Acharya, Edouard Challe, and Keshav Dogra, Staff Report 916, February 2020
Forecasting Macroeconomic Risks
Timely characterizations of risks to the economic outlook play an important role in both economic policy and private sector decisions. The authors introduce a simple method to quantify time-varying risks around macroeconomic forecasts, and use this method to construct probabilistic forecasts for real GDP growth, unemployment, and inflation.
Patrick A. Adams, Tobias Adrian, Nina Boyarchenko, and Domenico Giannone, Staff Report 914, February 2020
The Global Financial Resource Curse
The authors present a model to study the impact of financial integration on global productivity growth. They show that capital flows from developing countries to the United States can generate a global productivity growth slowdown by triggering a fall in economic activity in the U.S. tradable sector—an effect they have dubbed “the global financial resource curse.”
Gianluca Benigno, Luca Fornaro, and Martin Wolf, Staff Report 915, February 2020
Managing the Treasury Yield Curve in the 1940s
The author examines the efforts of the Federal Open Market Committee to first control, and later decontrol, the level and shape of the Treasury yield curve in the 1940s. The discussion includes a review of the lessons in yield curve management that can be gleaned from the Committee’s efforts.
Kenneth Garbade, Staff Report 913, February 2020
How Did the Fed Funds Market Change When Excess Reserves Were Abundant?
The authors describe the functioning of the federal funds market during the recent period of abundant excess reserves that started in 2010 and ended in early 2018. In particular, they show that the very large increase in excess reserves in the period following the 2007-08 financial crisis changed both the types of participants that were active in the fed funds market and their motivations for participating. They also observe that day-to-day volatility in the effective federal funds rate decreased significantly in this period.
John P. McGowan and Ed Nosal, Economic Policy Review, Forthcoming
Tuition, Debt, and Human Capital
Between 2000 and 2017, average annual tuition for an undergraduate education in the United States increased by 58 percent in real terms. In this paper, the authors empirically investigate the effects of the level of university tuition on measures of human capital accumulation and on student debt.
Rajashri Chakrabarti, Vyacheslav Fos, Andres Liberman, and Constantine Yannelis, Staff Report 912, February 2020
Complexity in Large U.S. Banks
Bank size and complexity were identified as determinants of systemic importance following the global financial crisis. The simplification of bank complexity was a policy priority during the post-crisis period. Using a variety of measures of organizational, business, and geographic complexity, the authors show that large U.S. BHCs nonetheless remain very complex.
Linda Goldberg and April Meehl, Economic Policy Review, Forthcoming
Medicare and the Geography of Financial Health
Why does consumer financial strain vary so much across the United States? Using data from the New York Fed Consumer Credit Panel, the authors examine the role health insurance plays in shaping geographic differences in financial health. In particular, they estimate the effect of universal health insurance at age 65—when most Americans become eligible for Medicare.
Paul Goldsmith-Pinkham, Maxim Pinkovskiy, and Jacob Wallace, Staff Report 911, January 2020