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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

The Transmission of Monetary Policy and the Sophistication of Money Market Fund Investors

17 days ago

Marco Cipriani, Jeff Gortmaker, and Gabriele La Spada

In December 2015, the Federal Reserve tightened monetary policy for the first time in almost ten years and, over the following three years, it raised interest rates eight more times, increasing the target range for the federal funds rate from 0-25 basis points (bps) to 225-250 bps. To what extent are changes in the fed funds rate transmitted to cash investors, and are there differences in the pass-through between retail and institutional investors? In this post, we describe the impact of recent rate increases on the yield paid by money market funds (MMFs) to their investors and show that the impact varies depending on investors’ sophistication.

The chart below shows the net yield (the yield that MMF investors receive, net of

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Online Estimation of DSGE Models

August 21, 2019

Michael Cai, Marco Del Negro, Edward Herbst, Ethan Matlin, Reca Sarfati, and Frank Schorfheide

The estimation of dynamic stochastic general equilibrium (DSGE) models is a computationally demanding task. As these models change to address new challenges (such as household and firm heterogeneity, the lower bound on nominal interest rates, and occasionally binding financial constraints), they become even more complex and difficult to estimate—so much so that current estimation procedures are no longer up to the task. This post discusses a new technique for estimating these models which belongs to the class of sequential Monte Carlo (SMC) algorithms, an approach we employ to estimate the New York Fed DSGE model. To learn more, check out this this paper of ours.

DSGE models are

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Are U.S. Tariffs Turning Vietnam into an Export Powerhouse?

August 14, 2019

Hunter Clark and Brendan Kelly

The imposition of Section 301 tariffs on about half of China’s exports to the United States has coincided with a fall in imports from China and gains for other countries. The U.S.-China trade conflict also appears to be accelerating an ongoing shift in foreign direct investment (FDI) from China to other emerging markets, particularly in Asia. Within the region, Vietnam is often cited as a clear beneficiary of these trends, a rising economy that could displace China, to some extent, in global supply chains. In this note, we examine the data and conclude that Vietnam is indeed gaining market share, but is too small to replace China anytime soon.

Which countries are picking up China’s market share?

The United States has levied three tranches

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Just Released: Mind the Gap in Delinquency Rates

August 13, 2019

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

Total household debt balances increased by $192 billion in the second quarter of 2019, boosted primarily by a $162 billion gain in mortgage installment balances, according to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data (the mortgage installment balances exclude home equity lines of credit, which are reported separately and have been declining in balance for some time). The new mortgage total of $9.4 trillion is slightly higher than the previous high in mortgage balances from the third quarter of 2008 in nominal terms.

The source for the Quarterly Report and this post is the New York Fed’s Consumer Credit Panel (CCP), a data set

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Does a Data Quirk Inflate China’s Travel Services Deficit?

August 7, 2019

Matthew Higgins, Thomas Klitgaard, and Anna Wong

Chinese residents are increasingly traveling to see the rest of the world, logging a total of 162 million foreign visits in 2018, up from 57 million in 2010. Increased travel spending by Chinese residents is acting to reduce the country’s trade surplus because such spending is counted as a services import. However, there appears to be a quirk in the Chinese data that results in a significant understatement of the offsetting spending by visitors to China (a services export). According to other Chinese data, this understatement totaled $85 billion in 2018. If so, China’s deficit in travel services is smaller than officially reported, and its trade surplus correspondingly larger.

Trade and Travel

China’s merchandise

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At the New York Fed: Research Conference on FinTech

July 19, 2019

Alan Basmajian, Brad Groarke, Vanessa Kargenian, Kimberley Liao, Erika Ota-Liedtke, Jesse Maniff, and Asani Sarkar

Financial technology (“FinTech”) refers to the evolving intersection of financial services and technology. In March, the New York Fed hosted "The First New York Fed Research Conference on FinTech” to understand the implications of FinTech developments on issues that are relevant to the Fed’s mandates such as lending, payments, and regulation. In this post, we summarize the principal themes and findings of the conference.

FinTech Advisory Group

In his opening remarks, Kevin Stiroh, head of the New York Fed’s Supervision Group, noted both the benefits and risks that FfinTtech poses to the economy of New York City and the surrounding region. Underscoring the need

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How Do Large Banks Manage Their Cash?

July 17, 2019

Jeffrey Levine and Asani Sarkar

Second of two posts

As the aggregate supply of reserves shrinks and large banks implement liquidity regulations, they may follow a variety of liquidity management strategies depending on their business models and the interest rate differences between alternative liquid instruments. For example, the banks may continue to hold large amounts of excess reserves or shift to Treasury or agency securities or shrink their balance sheets. In this post, we provide new evidence on how large banks have managed their cash, which is the largest component of reserves, on a daily basis since the implementation of liquidity regulations.

What Determines a Large Bank’s Cash Holdings?

Banks primarily hold liquid securities to meet ongoing operational

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Large Bank Cash Balances and Liquidity Regulations

July 15, 2019

Jeffrey Levine and Asani Sarkar

Update (9 a.m.): An earlier version of this post transposed line labels in the first figure. The error has been corrected.

First of two posts

The Federal Open Market Committee (FOMC) has recently communicated its aim to continue implementing monetary policy in a regime that maintains an ample supply of reserves, though with a significantly lower level of reserves than has prevailed in recent years. The liquidity needs of the largest U.S. commercial banks play an important role in understanding the banking system’s appetite for actual reserve holdings, which we refer to as bank reserve demand. In this post, we discuss the recent evolution of large bank cash balances and the effect of liquidity regulations on these balances. In part two of

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Just Released: Historical Reconstruction of the New York Fed Staff Nowcast, 2002-15

July 12, 2019

Patrick Adams, Domenico Giannone, Eric Qian, and Argia Sbordone

The New York Fed Staff Nowcast has been running for over three years. Each Friday at 11:15 a.m., we publish our updated predictions for real GDP growth based on the data released each week. When the Bureau of Economic Analysis (BEA) releases the first estimate of GDP growth, we stop updating our nowcast and archive it. We maintain these archives as part of our Nowcasting Report on the New York Fed’s public website to allow users to study the features of the nowcast and its accuracy. Now, to better understand the model and its performance during different cyclical episodes, we are publishing extended historical archives of the nowcast. Doing so provides fourteen additional years of forecasts that can be used not

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Did the Value of a College Degree Decline during the Great Recession?

July 10, 2019

Rajashri Chakrabarti, Michelle Jiang, and William Nober

In an earlier post, we studied how educational attainment affects labor market outcomes and earnings inequality. In this post, we investigate whether these labor market effects were preserved across the last business cycle: Did students with certain types of educational attainment weather the recession better?

Focusing on students’ labor market outcomes during 2003-14 (a period that spans both a boom and a bust), we hope to answer the following questions:

Did certain majors yield better outcomes than others during the bust? Did graduation status matter more or less during the bust?
Did students from certain types of institutions weather the recession better?
Were disparities in earnings between majors exacerbated

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From Policy Rates to Market Rates—Untangling the U.S. Dollar Funding Market

July 8, 2019

Gara Afonso, Fabiola Ravazzolo, and Alessandro Zori

How do changes in the rate that the Federal Reserve pays on reserves held by depository institutions affect rates in money markets in which the Fed does not participate? Through which channels do changes in the so-called administered rates reach rates in onshore and offshore U.S. dollar money markets? In this post, we answer these questions with the help of an interactive map that guides us through the web of interconnected relationships between the Fed, key market players, and the various instruments in the U.S. dollar funding market, highlighting the linkages across the short-term financial products that form this market.

The Fed

In today’s monetary policy framework of ample reserves, the Fed sets two rates to steer

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How Large Are Default Spillovers in the U.S. Financial System?

June 26, 2019

Fernando Duarte, Collin Jones, and Francisco Ruela

Second of two posts

When a financial firm suffers sufficiently high losses, it might default on its counterparties, who may in turn become unable to pay their own creditors, and so on. This “domino” or “cascade” effect can quickly propagate through the financial system, creating undesirable spillovers and unnecessary defaults. In this post, we use the framework that we discussed in “Assessing Contagion Risk in a Financial Network,” the first part of this two-part series, to answer the question: How vulnerable is the U.S. financial system to default spillovers?

Detailed Network Data is Difficult to Obtain

The main challenge in estimating the expected value of default spillovers is that it requires knowledge of all the

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Just Released: New Regional Employment Data Now Available

June 24, 2019

Richard Deitz and Jonathan Hastings

Regional employment data provided by the U.S. Bureau of Labor Statistics (BLS) are a critically important tool used to track and assess local economic conditions on a timely basis. However, the primary data used for this purpose are monthly survey-based estimates that are revised once per year, and these revisions can sometimes be substantial and surprising. As a result, initial readings of these data can lead to conclusions about employment trends that may later change. It is possible to anticipate these revisions in advance of their release using a second publicly available data set released by the BLS. Like some of our colleagues at other Reserve Banks (the Dallas Fed and St. Louis Fed, in particular), the Federal Reserve Bank of New York is

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Assessing Contagion Risk in a Financial Network

June 24, 2019

Fernando Duarte, Collin Jones, and Francisco Ruela

First of two posts

In compiling a list of key takeaways of the 2008 financial crisis, surely the dangers of counterparty risk would be near the top. During the crisis, speculation on which financial institution would be next to default on its obligations to creditors, and which one would come after that, dominated news cycles. Since then, there has been an explosion in research trying to understand and quantify the default spillovers that can arise through counterparty risk. This is the first of two posts delving into the analysis of financial network contagion through this spillover channel. Here we introduce a framework that is useful for thinking about default cascades, originally developed by Eisenberg and Noe.


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The New York Fed DSGE Model Forecast—June 2019

June 21, 2019

Sushant Acharya, Michael Cai, Marco Del Negro, Ethan Matlin, and Reca Sarfati

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 January 2019. 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.

The June model forecast for 2019-22 is summarized in the table below, alongside the January forecast, and in the following charts. The model uses quarterly macroeconomic data released through the first

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Despite Rising Costs, College Is Still a Good Investment

June 5, 2019

Jaison R. Abel and Richard Deitz

Second of two posts

In our last post, we showed that the cost of college has increased sharply in recent years due to the rising opportunity cost of attending school and the steady rise in tuition. This steep increase in the cost of college has once again raised questions about whether college is “worth it.” In this post, we weigh the economic benefits of a bachelor’s degree against the costs to estimate the return to college, providing an update to our 2014 study. We find that the average rate of return for a bachelor’s degree has edged down slightly in recent years due to rising costs, but remains high at around 14 percent, easily surpassing the threshold for a good investment. Thus, while the rising cost of college appears to have eroded

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The Cost of College Continues to Climb

June 3, 2019

Jaison R. Abel and Richard Deitz

First of two posts

College is much more expensive than it used to be. Tuition for a bachelor’s degree has more than tripled from an (inflation-adjusted) average of about $5,000 per year in the 1970s to around $18,000 today. For many parents and prospective students, this high and rising tuition has raised concerns about whether getting a college degree is still worth it—a question we addressed in a 2014 study. In this post, we update that study, estimating the cost of college in terms of both out-of-pocket expenses, like tuition, and opportunity costs, the wages one gives up to attend school. We find that the cost of college has increased sharply over the past several years, though tuition increases are not the primary driver. Rather,

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Is There Too Much Business Debt?

May 29, 2019

Anna Kovner and Brandon Zborowski

By many measures nonfinancial corporate debt has been increasing as a share of GDP and assets since 2010. As the May Federal Reserve Financial Stability Report explained, high business debt can be a financial stability risk because heavily indebted corporations may need to cut back spending more sharply when shocks occur. Further, when businesses cannot repay their loans, financial institutions and investors incur losses. In this post, we review measures of corporate leverage in the United States. Although corporate debt has soared, concerns about debt growth are mitigated in part by higher corporate cash flows.

Corporate Debt Is at a Fifty-Year High Ratio to GDP
After falling in the initial recovery from the Great Recession, corporate debt

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New China Tariffs Increase Costs to U.S. Households

May 23, 2019

Mary Amiti, Stephen J. Redding, and David E. Weinstein

Tariffs on $200 billion of U.S. imports from China subject to earlier 10 percent levies increased to 25 percent beginning May 10, 2019, after a breakdown in trade negotiations. In this post, we consider the cost of these higher tariffs to the typical U.S. household.

One way to estimate the effect of these higher tariffs is to draw on the recent experience of the 2018 U.S. tariffs. Our recent study found that the 2018 tariffs imposed an annual cost of $419 for the typical household. This cost comprises two components: the first, an added tax burden faced by consumers, and the second, a deadweight or efficiency loss.

The magnitude of these costs depends on how a tariff affects the prices charged by foreign

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Just Released: Press Briefing on the Evolution and Future of Homeownership

May 22, 2019

Olivier Armantier, Andrew Haughwout, Gizem Kosar, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw

The New York Fed today held a press briefing on homeownership in the United States, in connection with its release of the 2019 Survey of Consumer Expectations Housing Survey. The briefing opened with remarks from New York Fed President John Williams, who provided commentary on the macroeconomic outlook and summarized the prospects for homeownership. He noted that the labor market remains very strong and that there seems to be little evidence of inflationary pressures, meaning that the economy is on a healthy growth path.

The briefing continued with a presentation by Bank economists on how homeownership has evolved over the past fifty-plus years. After a long period—the

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How Has Germany’s Economy Been Affected by the Recent Surge in Immigration?

May 20, 2019

Matthew Higgins and Thomas Klitgaard

Germany emerged as a leading destination for immigration around 2011, as the country’s labor market improved while unemployment climbed elsewhere in the European Union. A second wave began in 2015, with refugees from the Middle East adding to already heavy inflows from Eastern Europe. The demographic consequences of the surge in immigration include a renewed rise in Germany’s population and the stabilization of the country’s median age. The macroeconomic consequences are hard to measure but look promising, since per capita income growth has held up and unemployment has declined. Data on labor-market outcomes specific to immigrants are similarly favorable through 2015, but reveal challenges in how well the economy is adjusting to the second

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Understanding Cyber Risk: Lessons from a Recent Fed Workshop

May 17, 2019

Gara Afonso, Filippo Curti, Ping McLemore, and Atanas Mihov

Cyber risk poses a major threat to financial stability, yet financial institutions still lack consensus on the definition of and terminology around cyber risk and have no common framework for confronting these hazards. This impedes efforts to measure and manage such risk, diminishing institutions’ individual and collective readiness to handle system-level cyber threats. In this blog post, we describe the proceedings of a recent workshop where leading risk managers, academics, and policy makers gathered to discuss proposals for countering cyber risk. This workshop is part of a joint two-phase initiative run by the Federal Reserve Banks of Richmond and New York and the Fed’s Board of Governors to harmonize cyber risk

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Did Changes in Economic Expectations Foreshadow Swings in the 2018 Elections?

May 15, 2019

Olivier Armantier, Michael Neubauer, Daphne Skandalis, and Wilbert van der Klaauw

Second of two posts

In the months leading up to the 2018 midterm elections, were economic expectations in congressional districts about to elect a Republican similar to those in districts about to elect a Democrat? How did economic expectations evolve in districts where the party holding the House seat would switch? After examining the persistence of polarization in expectations using voting patterns from the presidential election in our previous post, we explore here how divergence in expectations may have foreshadowed the results of the midterm elections. Using the Survey of Consumer Expectations, we show that economic expectations deteriorated between 2016 and 2018 in districts that

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Just Released: Shifts in Credit Market Participation over Two Decades

May 14, 2019

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

The New York Fed’s Center for Microeconomic Data today released the Quarterly Report on Household Debt and Credit for the first quarter of 2019. Total household debt grew by $124 billion over the quarter, boosted by increases in mortgage, auto, and student loan balances. Over the past twenty years, the prevalence of each type of credit has waxed and waned, shifts linked to the housing boom, the Great Recession, and the subsequent economic recovery. In this blog post, we draw on the New York Fed’s Consumer Credit Panel—a nationally representative sample of Equifax credit report data and the basis of our Quarterly Report—to explore those longer-term trends in credit market participation.

The chart below

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Economic Expectations Grow Less Polarized since the 2016 Election

May 13, 2019

Olivier Armantier, Michael Neubauer, Daphne Skandalis, and Wilbert van der Klaauw

First of two posts

In two previous blog posts (from January 2017 and December 2017), we examined political polarization in economic expectations in the period immediately after the 2016 presidential election using the Survey of Consumer Expectations (SCE). Today, we begin a two-part series that revisits the issue. In this post, we provide an update on how economic expectations have evolved in counties where a plurality voted for Donald Trump in 2016 and counties where a plurality voted for Hillary Clinton. In a second post, we will look at how economic expectations differed in the run-up to the 2018 congressional elections, based on how districts ended up voting in that election.

We begin by

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Ten Years Later—Did QE Work?

May 8, 2019

Stephan Luck and Tom Zimmerman

By November 2008, the Global Financial Crisis, which originated in the residential housing market and the shadow banking system, had begun to turn into a major recession, spurring the Federal Open Market Committee (FOMC) to initiate what we now refer to as quantitative easing (QE). In this blog post, we draw upon the empirical findings of post-crisis academic research–including our own work–to shed light on the question: Did QE work?

Unconventional Monetary Policy and Quantitative Easing

First things first: What does the term QE describe? QE is part of what is now referred to as unconventional monetary policy. Over the two decades prior to the Global Financial Crisis, central banks mainly conducted monetary policy through two instruments.

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Selected Deposits and the OBFR

May 6, 2019

Alyssa Cambron, Marco Cipriani, Joshua Jones, Romen Mookerjee, Scott Sherman, Brett Solimine, and Timothy Wessel

The Federal Reserve Bank of New York recently decided to revise the composition of the Overnight Bank Funding Rate (OBFR), a reference rate measuring the cost banks face to borrow overnight in unsecured U.S. dollar-denominated money markets. Specifically, in addition to the federal funds and Eurodollar transactions currently comprising the OBFR, the OBFR now also includes overnight, interest-bearing demand deposits (at rates negotiated between the counterparties and excluding deposits payable on demand) booked within banks’ U.S. offices, known as “selected deposits.” In this post, we discuss the change in more detail, the reason for including selected deposits, and the

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Just Released: The New York Fed’s New Regional Economy Website

April 18, 2019

Jaison R. Abel, Jason Bram, Richard Deitz, and Jonathan Hastings

The New York Fed today unveiled a newly designed website on the regional economy that offers convenient access to a wide array of regional data, analysis, and research that the Bank makes available to the public. Focusing specifically on the Federal Reserve’s Second District, which includes New York State, Northern New Jersey, Southwestern Connecticut, Puerto Rico, and the U.S. Virgin Islands, the new site also features information about the Bank’s community engagement and outreach efforts across the region. With today’s release, we are providing new regional economic précis for local areas in our District—that is, short reports that give an overview of economic trends in each location; these reports will be updated

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Did Tax Reform Raise the Cost of Owning a Home?

April 17, 2019

Sonia Gilbukh, Andrew Haughwout, Rebecca Landau, and Joseph Tracy


The 2018 slowdown in the housing market has been a subject of intense interest to the press and policymakers, including articles reporting a slowing in house price growth and a decline in home construction. Today we follow up on our colleagues’ research on whether the Tax Cut and Jobs Act of 2017 (TCJA) has contributed to a slowdown in the housing market, looking closely at what price signals tell us about the trade-off between owning and renting.

Changes in Tax Policy

Effective starting in 2018, the TCJA substantially increased the standard deduction. For married couples filing jointly, the standard deduction increased to $24,000, almost double the $12,700 figure of the

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Is the Recent Tax Reform Playing a Role in the Decline of Home Sales?

April 15, 2019

Richard Peach and Casey McQuillan


From the fourth quarter of 2017 through the third quarter of 2018, the average contract interest rate on new thirty-year fixed rate mortgages rose by roughly 70 basis points—from 3.9 percent to 4.6 percent. During this same period, there was a broad-based slowing in housing market activity with sales of new single-family homes declining by 7.6 percent while sales of existing single-family homes fell by 4.6 percent. Interestingly though, these declines in home sales were larger than in the two previous episodes when mortgage interest rates rose by a comparable amount. This post considers whether provisions in the Tax Cuts and Jobs Act of 2017 (TCJA) might have also contributed to the recent decline in housing

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