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NY Fed

The Federal Reserve Bank of New York was incorporated in May 1914 and opened for business in November later that year. To commemorate the New York Fed’s centennial, take a look at the people and events that helped shape our history.

Articles by NY Fed

Twenty Years After 9/11, New York City’s Resilience Is Tested Once Again

September 10, 2021

Jason Bram and Joelle Scally

As we mourn the tragic losses of the 9/11 attacks twenty years on, we thought it would be appropriate to re-examine the remarkable resilience New York City’s economy has shown over the years—a resilience that is once again being tested by the ongoing COVID-19 pandemic. In this Liberty Street Economics post, we look at how Lower Manhattan, in particular, has changed since that tragedy on a number of dimensions, and use that as a framework to think about how the city might change as a result of the COVID pandemic. 

Living and Working in Lower Manhattan

First let’s briefly revisit some of the metrics we used in an earlier blog post from 2016 to gauge the city’s recovery on the fifteenth anniversary of 9/11. In terms of residents, Lower Manhattan

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If Prices Fall, Mortgage Foreclosures Will Rise

September 8, 2021

Andrew Haughwout and Belicia Rodriguez

In our previous post, we illustrated the recent extraordinarily strong growth in home prices and explored some of its key spatial patterns. Such price increases remind many of the first decade of the 2000s when home prices reversed, contributing to a broad housing market collapse that led to a wave of foreclosures, a financial crisis, and a prolonged recession. This post explores the risk that such an event could recur if home prices go into reverse now. We find that although the situation looks superficially similar to the brink of the last crisis, there are important differences that are likely to mitigate the risks emanating from the housing sector.

Same Old Story?

Our last post demonstrated that price increases have been unusually

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Does the Rise in Housing Prices Suggest a Housing Bubble?

September 8, 2021

Andrew Haughwout and Belicia Rodriguez

House prices have risen rapidly during the pandemic, increasing even faster than the pace set before the 2007 financial crisis and subsequent recession. Is there a risk that another dangerous housing bubble is developing? This is a complicated question, and the answer has many components. This post, the first of two, provides a more detailed look at the recent rise in home prices by breaking it down geographically, with a comparison to the pre-2007 bubble. The second post looks at the potential risks to financial stability by comparing the currently outstanding stock of mortgage debt to the period before the financial crisis and projecting defaults should prices decline.

The Sharp Rise in Housing Prices during the Pandemic

The U.S.

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The Housing Boom and the Decline in Mortgage Rates

September 7, 2021

Haoyang Liu, David Lucca, Dean Parker, and Gabriela Rays-Wahba

During the pandemic, national home values and housing activity soared as mortgage rates declined to historic lows. Under the canonical “user cost” house price model, home values are held to be very sensitive to interest rates, especially at low interest rate levels. A calibration of this model can account for the house price boom with the observed decline in interest rates. But empirically, we find that home values are nowhere near as sensitive to interest rates as the user cost model predicts. This lower sensitivity is also found in prior economic research. Thus, the historical experience suggests that lower interest rates can only account for a tiny fraction of the pandemic house price boom. Instead, we find more scope for

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Going with the Flow: Changes in Banks’ Business Model and Performance Implications

September 1, 2021

Nicola Cetorelli, Michael G. Jacobides, and Samuel Stern

Does the performance of banks improve or worsen when banks enter into new business activities? And does it matter which activities a bank expands into, or retreats from, and when that decision is made? These important questions have remained unaddressed due to a lack of data. In a recent publication, we used a unique data set detailing the organizational structure of the entire population of U.S. bank holding companies (BHCs). In this post, we draw on that research to show that while scope expansion on average hurts performance, entering into activities that are highly synergistic with core banking at a given point in time yields net performance benefits.

Transformation in U.S. Banks’ Organizational Structure

In the

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Unequal Burdens: Racial Differences in ICU Stress during the Third Wave of COVID-19

August 9, 2021

Ruchi Avtar, Rajashri Chakrabarti, and Maxim Pinkovskiy

A critical risk during the COVID-19 pandemic has been the possibility of the hospital system becoming overwhelmed. COVID-19 not only has killed nearly 2 percent of people with confirmed infections but causes many more who contract it to develop severe complications that are potentially fatal if not treated in an intensive care unit (ICU). As ICU capacity is based on typical needs for intensive care before the pandemic, a surge of COVID-related ICU patients may leave no room for individuals requiring intensive care for other reasons—such as heart attacks—or may exceed the total ICU capacity to treat even COVID-19 patients. In this post, we investigate the extent to which members of different racial and ethnic groups faced

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Forbearance Participation Declines as Programs’ End Nears

August 3, 2021

Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw

The Federal Reserve Bank of New York’s Center for Microeconomic Data today released its Quarterly Report on Household Debt and Credit for the second quarter of 2021. It showed that overall household debt increased at a quick clip over the period, with a $322 billion increase in balances, boosted primarily by a 2.8 percent increase in mortgage balances, a 2.2 percent increase in credit card balances, and a 2.4 percent increase in auto balances. Mortgage balances in particular were boosted by a record $1.22 trillion in newly originated loans. Although some borrowers are originating new loans, struggling borrowers remain in forbearance programs, where they are pausing repayment on their debts and creating an

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Who Received Forbearance Relief?

August 2, 2021

Rajashri Chakrabarti, Jessica Lu, Joelle Scally, and Wilbert van der Klaauw

Forbearance on debt repayment was a key provision of the CARES Act, legislation intended to combat the widespread economic losses stemming from the COVID-19 pandemic. This pause on required payments for federally guaranteed mortgages and student loans has provided temporary relief to those affected by the COVID-19 pandemic, and servicers of nonfederal loans often provided forbearances or other relief on request as well. Here, using a special survey section fielded with the August 2020 Survey of Consumer Expectations, we aim to understand who benefitted from these provisions. Specifically, were there differences by age, race, income, and educational background? Did individuals who suffered job or income losses

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Intraday Timing of General Collateral Repo Markets

July 14, 2021

Kevin Clark, Adam Copeland, R. Jay Kahn, Antoine Martin, Mark Paddrik, and Benjamin Taylor

Market participants have often noted that general collateral (GC) repo trades happen very early in the morning, with most activity being completed soon after markets open at 7 a.m. Data on intraday repo volumes timing are not publicly available however, obscuring those dynamics to outside observers. In this post, we use confidential data collected by the Office of Financial Research (OFR) to describe the intraday timing dynamics of GC repo in the interdealer market. We demonstrate that a significant majority of interdealer overnight Treasury repo is completed prior to 8:30 a.m. (all times Eastern time), and explore the various factors that are driving repo traders to secure funding in the early

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Tailoring Regulations

July 12, 2021

Rebecca Reubenstein and Asani Sarkar

Regulations are not written in stone. The benefits derived from them, along with the costs of compliance for affected institutions and of enforcement for regulators, are likely to evolve. When this happens, regulators may seek to modify the regulations to better suit the specific risk profiles of regulated entities. In this post, we consider the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) passed by Congress in 2018, which eased banking regulations for smaller institutions. We focus on one regulation—the Liquidity Coverage Ratio (LCR)—and assess how its relaxation affected newly exempt banks’ assets and liabilities, and the resilience of the banking system.

Economic Growth, Regulatory Relief, and Consumer

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Credit, Income, and Inequality

July 1, 2021

Manthos Delis, Fulvia Fringuellotti, and Steven Ongena

Access to credit plays a central role in shaping economic opportunities of households and businesses. Access to credit also plays a crucial role in helping an economy successfully exit from the pandemic doldrums. The ability to get a loan may allow individuals to purchase a home, invest in education and training, or start and then expand a business. Hence access to credit has important implications for upward mobility and potentially also for inequality. Adverse selection and moral hazard problems due to asymmetric information between lenders and borrowers affect credit availability. Because of these information issues, lenders may limit credit or post higher lending rates and often require borrowers to pledge collateral.

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Hold the Check: Overdrafts, Fee Caps, and Financial Inclusion

June 30, 2021

Jennifer Dlugosz, Brian Melzer, and Donald P. Morgan

The 25 percent of low-income Americans without a checking account operate in a separate but unequal financial world. Instead of paying for things with cheap, convenient debit cards and checks, they get by with “fringe” payment providers like check cashers, money transfer, and other alternatives. Costly overdrafts rank high among reasons why households “bounce out” of the banking system and some observers have advocated capping overdraft fees to promote inclusion. Our recent paper finds unintended (if predictable) effects of overdraft fee caps. Studying a case where fee caps were selectively relaxed for some banks, we find higher fees at the unbound banks, but also increased overdraft credit supply, lower bounced check rates, and

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Hold the Check: Overdrafts, Fee Caps, and Financial Inclusion

June 30, 2021

Jennifer Dlugosz, Brian Melzer, and Donald P. Morgan

Editor’s Note: Our series continues tomorrow with an examination of “Credit, Income, and Inequality.”

The 25 percent of low-income Americans without a checking account operate in a separate but unequal financial world. Instead of paying for things with cheap, convenient debit cards and checks, they get by with “fringe” payment providers like check cashers, money transfer, and other alternatives. Costly overdrafts rank high among reasons why households “bounce out” of the banking system and some observers have advocated capping overdraft fees to promote inclusion. Our recent paper finds unintended (if predictable) effects of overdraft fee caps. Studying a case where fee caps were selectively relaxed for some banks, we

Read More »

Banking the Unbanked: The Past and Future of the Free Checking Account

June 30, 2021

Stein Berre, Kristian Blickle, and Rajashri Chakrabarti

About one in twenty American households are unbanked (meaning they do not have a demand deposit or checking account) and many more are underbanked (meaning they do not have the range of bank-provided financial services they need). Unbanked and underbanked households are more likely to be lower-income households and households of color. Inadequate access to financial services pushes the unbanked to use high-cost alternatives for their transactional needs and can also hinder access to credit when households need it. That, in turn, can have adverse effects on the financial health, educational opportunities, and welfare of unbanked households, thereby aggravating economic inequality. Why is access to financial services so uneven?

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Banking the Unbanked: The Past and Future of the Free Checking Account

June 30, 2021

Stein Berre, Kristian Blickle, and Rajashri Chakrabarti

About one in twenty American households are unbanked (meaning they do not have a demand deposit or checking account) and many more are underbanked (meaning they do not have the range of bank-provided financial services they need). Unbanked and underbanked households are more likely to be lower-income households and households of color. Inadequate access to financial services pushes the unbanked to use high-cost alternatives for their transactional needs and can also hinder access to credit when households need it. That, in turn, can have adverse effects on the financial health, educational opportunities, and welfare of unbanked households, thereby aggravating economic inequality. Why is access to financial services so uneven?

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Central Banks and Digital Currencies

June 23, 2021

Tobias Adrian, Michael Lee, Tommaso Mancini-Griffoli, and Antoine Martin

Recent developments in payments technology raise important questions about the role of central banks either in providing a digital currency themselves or in supporting the development of digital currencies by private actors, as some authors of this post have discussed in a recent IMF blog post. In this post, we consider two ways a central bank could choose to become involved with digital currencies and discuss some implications of these potential choices.

How Could a Central Bank Support Stablecoins?

One criticism of cryptocurrencies, such as Bitcoin, is that they exhibit excessive price volatility, which undermines their ability to serve as a common means of payment. And yet, cryptocurrencies’

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Central Banks and Digital Currencies

June 23, 2021

Tobias Adrian, Michael Lee, Tommaso Mancini-Griffoli, and Antoine Martin

Recent developments in payments technology raise important questions about the role of central banks either in providing a digital currency themselves or in supporting the development of digital currencies by private actors, as some authors of this post have discussed in a recent IMF blog post. In this post, we consider two ways a central bank could choose to become involved with digital currencies and discuss some implications of these potential choices.

How Could a Central Bank Support Stablecoins?
One criticism of cryptocurrencies, such as Bitcoin, is that they exhibit excessive price volatility, which undermines their ability to serve as a common means of payment. And yet, cryptocurrencies’ underlying

Read More »

Cyberattacks and Supply Chain Disruptions

June 22, 2021

Matteo Crosignani, Marco Macchiavelli, and André F. Silva.

Cybercrime is one of the most pressing concerns for firms. Hackers perpetrate frequent but isolated ransomware attacks mostly for financial gains, while state-actors use more sophisticated techniques to obtain strategic information such as intellectual property and, in more extreme cases, to disrupt the operations of critical organizations. Thus, they can damage firms’ productive capacity, thereby potentially affecting their customers and suppliers. In this post, which is based on a related Staff Report, we study a particularly severe cyberattack that inadvertently spread beyond its original target and disrupted the operations of several firms around the world. More recent examples of disruptive cyberattacks include the

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Cyberattacks and Supply Chain Disruptions

June 22, 2021

Matteo Crosignani, Marco Macchiavelli, and André F. Silva

Cybercrime is one of the most pressing concerns for firms. Hackers perpetrate frequent but isolated ransomware attacks mostly for financial gains, while state-actors use more sophisticated techniques to obtain strategic information such as intellectual property and, in more extreme cases, to disrupt the operations of critical organizations. Thus, they can damage firms’ productive capacity, thereby potentially affecting their customers and suppliers. In this post, which is based on a related Staff Report, we study a particularly severe cyberattack that inadvertently spread beyond its original target and disrupted the operations of several firms around the world. More recent examples of disruptive cyberattacks include the ransomware

Read More »

What Happened to the U.S. Deficit with China during the U.S.-China Trade Conflict?

June 21, 2021

Hunter L. Clark and Anna Wong

The United States’ trade deficit with China narrowed significantly following the imposition of additional tariffs on imports from China in multiple waves beginning in 2018—or at least it did based on U.S. trade data. Chinese data tell a much different story, with the bilateral deficit rising nearly to historical highs at the end of 2020. What’s going on here? We find that (as also discussed in a related note) much of the decline in the deficit recorded in U.S. data was driven by successful efforts to evade U.S. tariffs, with an estimated $10 billion loss in tariff revenues in 2020.

There Was an Unprecedented Shift in the Trade Balance Discrepancy after 2018

The U.S.-reported bilateral trade deficit with China during the decade prior to 2018

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What Happened to the U.S. Deficit with China during the U.S.-China Trade Conflict?

June 21, 2021

Hunter L. Clark and Anna Wong

The United States’ trade deficit with China narrowed significantly following the imposition of additional tariffs on imports from China in multiple waves beginning in 2018—or at least it did based on U.S. trade data. Chinese data tell a much different story, with the bilateral deficit rising nearly to historical highs at the end of 2020. What’s going on here? We find that (as also discussed in a related note) much of the decline in the deficit recorded in U.S. data was driven by successful efforts to evade U.S. tariffs, with an estimated $10 billion loss in tariff revenues in 2020.

There Was an Unprecedented Shift in the Trade Balance Discrepancy after 2018
The U.S.-reported bilateral trade deficit with China during the decade prior to 2018 was on average

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Has Market Power of U.S. Firms Increased?

June 21, 2021

Mary Amiti and Sebastian Heise

A number of studies have documented that market concentration among U.S. firms has increased over the last decades, as large firms have grown more dominant. In a new study, we examine whether this rising domestic concentration means that large U.S. firms have more market power in the manufacturing sector. Our research argues that increasing foreign competition over the last few decades has in fact reduced U.S. firms’ market power in manufacturing.

Measuring Market Power
A rise in market power is often interpreted to mean that firms can increase their markups over marginal cost without sacrificing profitability. However, markups are unobservable, which helps explain why different studies don’t agree on whether aggregate markups have risen or not. Our

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Has Market Power of U.S. Firms Increased?

June 21, 2021

Mary Amiti and Sebastian Heise

A number of studies have documented that market concentration among U.S. firms has increased over the last decades, as large firms have grown more dominant. In a new study, we examine whether this rising domestic concentration means that large U.S. firms have more market power in the manufacturing sector. Our research argues that increasing foreign competition over the last few decades has in fact reduced U.S. firms’ market power in manufacturing.

Measuring Market Power

A rise in market power is often interpreted to mean that firms can increase their markups over marginal cost without sacrificing profitability. However, markups are unobservable, which helps explain why different studies don’t agree on whether aggregate markups have risen or

Read More »

The Future of Remote Work in the Region

June 18, 2021

Jaison R. Abel, Jason Bram, Richard Deitz, and Jessica Lu

The coronavirus pandemic abruptly changed the way we work, in meaningful and potentially lasting ways. While working from home represented a small share of work before the pandemic, such arrangements became unexpectedly widespread once the pandemic struck. With the pandemic now being brought under control and conditions improving, workers have begun to return to the office. But just how much remote work will persist in the new normal? The New York Fed’s June regional business surveys asked firms about the extent of remote working before, during, and after the pandemic. Results indicate that before the pandemic, the average firm in the region conducted just a small share of its work remotely, a figure that currently stands

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The Future of Remote Work in the Region

June 18, 2021

Jaison R. Abel, Jason Bram, Richard Deitz, and Jessica Lu

The coronavirus pandemic abruptly changed the way we work, in meaningful and potentially lasting ways. While working from home represented a small share of work before the pandemic, such arrangements became unexpectedly widespread once the pandemic struck. With the pandemic now being brought under control and conditions improving, workers have begun to return to the office. But just how much remote work will persist in the new normal? The New York Fed’s June regional business surveys asked firms about the extent of remote working before, during, and after the pandemic. Results indicate that before the pandemic, the average firm in the region conducted just a small share of its work remotely, a figure that currently stands at

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The New York Fed DSGE Model Forecast—June 2021

June 18, 2021

William Chen, Marco Del Negro, Shlok Goyal, and Alissa Johnson
This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. We describe very briefly our forecast and its change since March 2021. As usual, we wish to remind our readers that the DSGE model forecast is not an official New York Fed forecast, but only an input to the Research staff’s overall forecasting process. For more information about the model and variables discussed here, see our DSGE model Q & A.

Estimating the Model taking the Pandemic and the New Monetary Policy Framework into Account
The key drivers of the model’s forecast remain the responses of the economy and policy to the COVID-19 pandemic. The model’s parameters

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The New York Fed DSGE Model Forecast—June 2021

June 18, 2021

William Chen, Marco Del Negro, Shlok Goyal, and Alissa Johnson

This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. We describe very briefly our forecast and its change since March 2021. As usual, we wish to remind our readers that the DSGE model forecast is not an official New York Fed forecast, but only an input to the Research staff’s overall forecasting process. For more information about the model and variables discussed here, see our DSGE model Q & A.

Estimating the Model taking the Pandemic and the New Monetary Policy Framework into Account

The key drivers of the model’s forecast remain the responses of the economy and policy to the COVID-19 pandemic. The model’s

Read More »

Sophisticated and Unsophisticated Runs

June 2, 2021

Marco Cipriani and Gabriele La Spada

In March 2020, U.S. prime money market funds (MMFs) suffered heavy outflows following the liquidity shock triggered by the COVID-19 crisis. In a previous post, we characterized the run on the prime MMF industry as a whole and the role of the liquidity facility established by the Federal Reserve (the Money Market Mutual Fund Liquidity Facility) in stemming the run. In this post, based on a recent Staff Report, we contrast the behaviors of retail and institutional investors during the run and explain the different reasons behind the run.

Retail and Institutional Investors during the COVID-19 Run of March 2020

The chart below shows cumulative percentage outflows from prime MMFs offered to retail and institutional investors from January to

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Sophisticated and Unsophisticated Runs

June 2, 2021

Marco Cipriani and Gabriele La Spada

In March 2020, U.S. prime money market funds (MMFs) suffered heavy outflows following the liquidity shock triggered by the COVID-19 crisis. In a previous post, we characterized the run on the prime MMF industry as a whole and the role of the liquidity facility established by the Federal Reserve (the Money Market Mutual Fund Liquidity Facility) in stemming the run. In this post, based on a recent Staff Report, we contrast the behaviors of retail and institutional investors during the run and explain the different reasons behind the run.

Retail and Institutional Investors during the COVID-19 Run of March 2020

The chart below shows cumulative percentage outflows from prime MMFs offered to retail and institutional investors from January to April 2020.

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