Economic Research

New From Liberty Street Economics
Crisis Chronicles: The Long Depression and the Panic of 1873
The financial panics of the 1800s were often tied to railroad investments that went awry. The Panic of 1873 was no exception. The final trigger occurred when a major bank financing a railroad venture announced it would suspend withdrawals. As other banks started failing, consumers and businesses pulled back and America entered its longest depression.
By Thomas Klitgaard and James Narron
What Is the Composition of Central Bank Balance Sheets in Normal Times?
“Unconventional” and “nonstandard” describe the balance sheet activity of central banks in recent years. The next post in our series focuses on the main characteristics of central bank balance sheets before the financial crisis. How does asset and liability composition vary across countries and how did the crisis change this composition?
By Emily Eisner, Antoine Martin, and Ylva Søvik
Counterparties and Collateral Requirements for Implementing Monetary Policy
Our series continues with an exploration of two key aspects of the framework that central banks use to implement monetary policy. The bloggers find significant variation in both the standards central banks set for the types of counterparties that can borrow from or lend to the bank and the collateral requirements those parties must meet.
By Emily Eisner, Antoine Martin, and Ylva Søvik
Standard Elements of a Monetary Policy Implementation Framework
When examining the role of a central bank, it is important to distinguish between how they formulate what the stance of monetary policy should be and how they implement that policy. In this first post of a four-part series, the bloggers examine the tools used as part of the more standard elements of a framework for implementing monetary policy.
By Emily Eisner, Antoine Martin, and Ylva Søvik
Hedging Income Fluctuations with Foreign Currency Assets
Over the past two decades, countries have reduced their bias toward holding assets in domestic rather than foreign currency. The bloggers show that shifting the composition of assets and liabilities to increase net foreign currency holdings serves as a hedging strategy to protect a country’s income and wealth during downturns.
By Bianca De Paoli and Hande Küçük
Research Topics
Empire State Manufacturing Survey
The January 2016 Survey indicates that business activity declined for New York manufacturers at the fastest pace since the Great Recession.
Supplemental Survey Report
The January Survey focused on staffing and compensation issues.
Business Leaders Survey
The January 2016 survey indicates that activity in the region’s service sector marginally improved.
Assessing Market Liquidity
In a series on Liberty Street Economics, our bloggers considered factors that might be driving a change in the nature of liquidity in key financial markets since the financial crisis.
Research Analyst Opportunities for College Graduates
The New York Fed’s Research Group is looking for talented individuals with a background in economics, mathematics, or statistics. We are now accepting applications for the RA position with a summer 2016 start date. Download our informational app from Apple's App Store.          
U.S. Economy in a Snapshot
U.S. Economy in a Snapshot is a monthly presentation designed to give you a quick and accessible look at developments in the economy.
SCE Housing Survey—2015
Our 2015 survey finds U.S. households remain broadly optimistic about the housing market. Most renters report that they would rather own than rent if they had the necessary financial resources. As in last year’s survey, a majority believe that it would be difficult to obtain a mortgage, although responses suggest a slight easing in perceived credit access.
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Recent Articles
A Simple Model of Subprime Borrowers and Credit Growth

House prices and mortgage debt surged more in zip codes with a higher concentration of subprime borrowers in the years prior to the Great Recession. The authors present a model that further distinguishes between types of borrowers and extends the time period being studied. Their model closely reproduces findings that subprime households take on disproportionately more debt when the supply of credit increases.

By Alejandro Justiniano, Giorgio E. Primiceri, and Andrea Tambalotti, Staff Reports 766, February 2016
Liquidity Traps, Capital Flows

The authors explore the role of capital flows and exchange rates in shaping the global economy's adjustment in a liquidity trap. They use a multi-country model to analyze the adjustment since the Great Recession, a period during which many advanced economies were pushed to the zero bound on interest rates. Their findings underscore the importance of international policy coordination.

By Sushant Acharya and Julien Bengui, Staff Reports 765, January 2016
An Anatomy of U.S. Personal Bankruptcy under Chapter 13

The authors build a structural model that captures the significant features of personal bankruptcy under Chapter 13. Their model predicts that the more stringent provisions of Chapter 13, in particular those that force subsets of debtors to file for long-term plans, would not materially affect creditor recovery rates or make discharge materially more likely for those debtors.

By Hülya Eraslan, Wenli Li, Gizem Koşar, and Pierre-Daniel Sarte, Staff Reports 764, January 2016
Interbank Market and Central Bank Policy

Banks require liquidity to meet unexpected shocks and they can obtain this liquidity from other banks by selling marketable securities. The authors propose a model to analyze the liquidity choices of banks. They suggest that, depending on parameter values, banks may choose to maintain an amount of liquidity that exceeds or falls short of the socially optimal amount.

By Jung-Hyun Ahn, Vincent Bignon, Régis Breton, and Antoine Martin, Staff Reports 763, January 2016
The Role of Start-Ups in Structural Transformation

Jobs have been moving from manufacturing into service industries for decades. The authors propose a decomposition framework to assess the contributions of various margins of firm dynamics to the reallocation of employment across sectors. They find that at least 50 percent of the change is owing to the allocation of startup employment.

By Robert C. Dent, Fatih Karahan, Benjamin Pugsley, and Ayşegül Şahin , Staff Reports 762, January 2016
Merger Options and Risk Arbitrage

The author introduces a structural asset pricing model to analyze market reactions to deal announcements, explain various features of merger arbitrage returns, and deliver accurate forecasts for deal outcomes.

By Peter Van Tassel, Staff Reports 761, January 2016
Hidden Cost of Better Bank Services: Carefree Depositors in Riskier Banks?

Banks attract customers and bolster loyalty by offering more ATMs, longer hours, and other services. The authors study the bright and dark side of a bank’s services, analyzing whether service quality is associated with a bank’s funding structure, funding costs and liquidity risk, and asset quality and soundness.

By Dong Beom Choi and Ulysses Velasquez, Staff Reports 760, January 2016
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