Liberty Street Economics
Liberty Street Economics
May 22, 2017

Measuring Trend Inflation with the Underlying Inflation Gauge



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Consumers, financial market participants, and policymakers are particularly interested in the trend, or persistent, component of inflation. But this variable is not observed, which has resulted in a variety of proposed proxy measures. Because each measure has its own strengths and weaknesses, a consensus about a preferred candidate has not emerged. Here, we introduce the Underlying Inflation Gauge (UIG) as a measure of trend inflation. Among its attractive features, the UIG is derived from a large data set that extends beyond price variables and displays greater forecast accuracy than various measures of core inflation.

May 19, 2017

Hey, Economist! Is Now a Good Time to Be Graduating from College?



LSE_2017_Hey, Economist! Is Now a Good Time to Be Graduating from College?

With the 2017 college graduation season in full swing, we thought it would be helpful to take stock of the job prospects for recent college graduates. Is now a good time to be graduating from college? Publications editor Trevor Delaney caught up with Jaison Abel and Richard Deitz, two economists in our Research and Statistics Group, to discuss some of their work on the labor market for recent college graduates.

May 17, 2017

Household Borrowing in Historical Perspective



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Today, the New York Fed’s Center for Microeconomic Data released its Quarterly Report on Household Debt and Credit for the first quarter of 2017. The report shows a rise in household debt balances in the quarter of $149 billion, the eleventh consecutive quarterly increase since the long period of deleveraging following the Great Recession. As of March 31, 2017, household debt balances stood at $12.73 trillion, surpassing the previous 2008 peak and hitting a level 14 percent above the trough seen in the second quarter of 2013. With this report’s release, we’re adding two new charts which show both early and severe delinquency trends by loan product type. The report and the analyses presented here are based on the New York Fed’s Consumer Credit Panel (CCP), which is sourced from Equifax credit report data.

May 15, 2017

Do Credit Markets Watch the Waving Flag of Bankruptcy?



Personal bankruptcy is surprisingly common in the United States. Almost 15 percent of the U.S. population has filed for bankruptcy sometime over the past twenty-five years, based on my calculations using the New York Fed Consumer Credit Panel/Equifax (CCP). In 2015, roughly 800,000 debtors filed for bankruptcy, according to court records, representing 0.64 percent of U.S. households. One of the consequences for filers is a mark on their credit report—a bankruptcy “flag”—which indicates that the consumer has filed for bankruptcy.

May 12, 2017

At the N.Y. Fed: The Evolution of OTC Derivatives Markets



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The 2007-09 financial crisis highlighted weaknesses in the over‑the‑counter (OTC) derivatives markets and the increased risk of contagion due to the interconnectedness of market participants in these markets. As a response, the global regulatory community introduced a number of reforms to both the market structure and the regulatory environment. The intent of these innovations was to improve the functioning of OTC markets but some market participants have suggested that some of the new regulations may have had unintended consequences. In this post, we discuss some key takeaways from a recent two-day conference on “Over‑the‑Counter Derivatives and Recent Regulatory Changes,” where policymakers, academics, practitioners, and other experts convened to discuss the evolution of OTC derivatives markets after the crisis.

May 11, 2017

Just Released: 2017 SCE Housing Survey Finds Increased Optimism about Home Price Growth



LSE_Just Released: 2017 SCE Housing Survey Finds Increased Optimism about Home Price Growth

The Federal Reserve Bank of New York’s 2017 SCE Housing Survey indicates that expected home price growth over the next year has increased compared with twelve months earlier, and is at its highest level since the survey’s inception in 2014. Five-year growth expectations have also risen, albeit more modestly. In line with these findings, the majority of households continue to view housing as a good investment. Respondents expect slightly larger increases in mortgage rates than they did in last year’s survey. Renters’ perceived access to mortgage credit continued to ease.

Posted by Blog Author at 11:00 AM in Household Finance | Permalink | Comments ( 2 )

May 10, 2017

Which Dealers Borrowed from the Fed’s Lender-of-Last-Resort Facilities?



LSE_Which Dealers Borrowed from the Fed’s Lender-of-Last-Resort Facilities?

During the 2007-08 financial crisis, the Fed established lending facilities designed to improve market functioning by providing liquidity to nondepository financial institutions—the first lending targeted to this group since the 1930s. What was the financial condition of the dealers that borrowed from these facilities? Were they healthy institutions behaving opportunistically or were they genuinely distressed? In published research, we find that dealers in a weaker financial condition were more likely to participate than healthier ones and tended to borrow more. Our findings reinforce the importance of Bagehot’s principle that the lender-of-last resort should lend only against high-quality collateral and at a penalty rate so as to discourage unneeded or opportunistic borrowing.

May 08, 2017

Forecasting with Julia



A little more than a year ago, in this post, we announced DSGE.jl—a package for working with dynamic stochastic general equilibrium (DSGE) models using Julia, the open-source computing language. At that time, DSGE.jl contained only the code required to specify, solve, and estimate such models using Bayesian methods. Now, we have extended the package to provide the additional code needed to produce economic forecasts, counterfactual simulations, and inference on unobservable variables, such as the natural rate of interest or the output gap. The old, pre-Julia version of the code, which was written in MATLAB and is posted here on Github, a public repository hosting service, also performed some of these functions, but not quite as fast.

Posted by Blog Author at 7:00 AM in DSGE , Forecasting | Permalink | Comments ( 1 )

April 21, 2017

Just Released: The New York Fed Staff Forecast—April 2017



Today, the Federal Reserve Bank of New York (FRBNY) is hosting the spring meeting of its Economic Advisory Panel (EAP). As has become the custom at this meeting, the FRBNY staff is presenting its forecast for U.S. real GDP growth, the unemployment rate, and inflation. Following the presentation, members of the EAP, which consists of leading economists in academia and the private sector, are asked to critique the staff forecast. Such feedback helps the staff evaluate the assumptions and reasoning underlying its forecast as well as the forecast’s key risks. The feedback is also an important part of the forecasting process because it informs the staff’s discussions with New York Fed President William Dudley about economic conditions. In that same spirit, we are sharing a summary of the staff forecast in this post. For more detail, see the FRBNY Staff Outlook Presentation from the EAP meeting on our website.

Posted by Blog Author at 10:30 AM in Forecasting | Permalink | Comments ( 0 )

April 19, 2017

Is Chinese Growth Overstated?



LSE_Is Chinese Growth Overstated?


For analysts of the Chinese economy, questions about the accuracy of the country’s official GDP data are a frequent source of angst, leading many to seek guidance from alternative indicators. These nonofficial gauges often suggest Beijing’s growth figures are exaggerated, but that conclusion is not supported by our analysis, which draws upon satellite measurements of the intensity of China’s nighttime light emissions—a good proxy for GDP growth that is presumably not subject to whatever measurement errors may affect the country’s official economic statistics.

Posted by Blog Author at 7:00 AM in International Economics | Permalink | Comments ( 10 )

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Liberty Street Economics features insight and analysis from economists working at the intersection of research and policy. The editors are Michael Fleming, Andrew Haughwout, Thomas Klitgaard, and Donald Morgan.

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