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Economic Research

Liberty Street Economics
Income Growth Outpaces Household Borrowing
Household debt balances grew by $147 billion over the third quarter of 2024, according to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data. Are rising aggregate debt burdens sustainable? Or is the expansion expected and normal given increases in aggregate income and population size? The authors examine debt balances scaled by income, and how this has evolved over the past twenty-five years.
By Andrew Haughwout, Donghoon Lee, Daniel Mangrum, Joelle W. Scally, and Wilbert van der Klaauw
Banking System Vulnerability: 2024 Update
After a period of relative stability, a series of bank failures in 2023 renewed questions about the fragility of the banking system. The authors provide an update of four analytical models aimed at capturing different aspects of U.S. banking system vulnerability. Using data through the second quarter of 2024, the authors discuss how these measures have changed.
By Matteo Crosignani, Thomas Eisenbach, and Fulvia Fringuellotti
Decorative photo: dark blue background with illustration of two banks with arrows going from one bank to another and dollar signs around a map of the U.S.
The Dueling Intraday Demands on Reserves
A central use of reserves held at Federal Reserve Banks is for the settlement of interbank obligations, but the total amount needed is an active area of debate. The average daily total reserves used on two main settlement systems, Fedwire Funds and Fedwire Securities, exceeds $6.5 trillion. The authors examine the intraday flows of reserves and show that the mechanics of each settlement system result in starkly different intraday demands on reserves.
By Adam Copeland and Sarah Yu Wang
Tracking Reserve Ampleness in Real Time Using Reserve Demand Elasticity
As central banks around the world shrink their balance sheets, gauging the ampleness of reserves has become a central topic. The reason is that the ampleness of reserves informs when to slow and then stop quantitative tightening. The authors review how to measure the ampleness of reserves using Reserve Demand Elasticity (RDE) and announce the introduction of RDE as a standalone product.
By Gara Afonso, Domenico Giannone, Gabriele La Spada, and John C. Williams
International Stock Markets’ Reactions to EU Climate Policy Shocks
While policies to combat climate change are generally implemented at the national level, the impact of domestic climate policies may spill over internationally, given countries' economic and financial interdependence. The authors quantify the spillover effects of climate policies on forward-looking asset prices globally by estimating the impact of EU climate policy shocks on stock prices across a broad set of country-industry pairs.
Julian di Giovanni, Galina Hale, Neel Lahiri, and Anirban Sanyal
What Do Climate Risk Indices Measure?
As interest in the economic impacts of climate change grows, several indices have been developed to quantify climate risks. Various approaches have been employed, utilizing firm-level emissions data, financial market data (from equity and derivatives markets), or textual data. Focusing on the latter approach, the authors conduct descriptive analyses of six text-based climate risk indices from published or well-cited papers, highlighting their differences and commonalities.
By Hyeyoon Jung and Oliver Hannaoui
RESEARCH TOPICS
Applied Macroeconomics
and Econometrics Center
The mission of the Applied Macroeconomics and Econometrics Center (AMEC) is to provide intellectual leadership in the central banking community in the fields of macro and applied econometrics.

Data Releases
Global Supply Chain Pressure Index
(Updated: Monthly)

Measuring the Natural Rate of Interest
(Updated: Quarterly)

Multivariate Core Trend Inflation
(Updated: Monthly)

The New York Fed DSGE Model
(Updated: Quarterly)

New York Fed Staff Nowcast
(Updated: Weekly)

Outlook-at-Risk
(Updated: Monthly)

Treasury Term Premia
(Updated: Daily)

Yield Curve as a Leading Indicator
(Updated: Monthly)
Center for Microeconomic Data
Reserve Demand Elasticity (RDE)
RDE estimates provide a quantitative measure of the ampleness of reserves in the U.S. banking system in real time. New data are published monthly.
Decorative Image - variety of polaroid portraits of diverse group of people
Equitable Growth Indicators (EGIs)   
A measure of disparities across four economic outcomes—inflation, real and nominal earnings, employment, and real and nominal consumer spending.
Corporate Bond Market Distress Index (CMDI)
The CMDI is a summary metric of corporate bond market functioning based on information from multiple sources including measures of primary market issuance and pricing, secondary market pricing and liquidity conditions, and the relative pricing between traded and nontraded bonds. It updates monthly.
Regional Surveys
Monthly surveys conducted by the New York Fed track the sentiment of executives at regional manufacturing and service-sector firms regarding business conditions.

Data Releases
Empire State Manufacturing Survey
(Updated: Monthly)

Business Leaders Survey
(Updated: Monthly)

Regional Business Surveys:
Special Topics
(Updated: Quarterly)
Regional Employment Trends
These interactive charts track employment in state and metro regions in the Federal Reserve’s Second District, utilizing the New York Fed’s early benchmarks of payroll employment data. It updates monthly.
Mapping Home Price Changes
Explore year-over-year changes in home prices since 2003, both regionally and nationally, using this dynamic map — updated with new home price index data on a monthly basis. Hover over a county for granular data.
Early Benchmarked Employment Data
Monthly releases of early benchmarked employment figures for New York State, New Jersey, Puerto Rico, and the U.S. Virgin Islands, as well as the metropolitan areas in New York and Northern New Jersey
The Labor Market for Recent College Graduates
The labor market for recent college graduates weakened somewhat in the third quarter of 2024. The unemployment rate ticked up to 5.3 percent, while the underemployment rate held steady at around 40.6 percent.
Recent Publications
The Financial Stability Implications of Digital Assets
In recent years, financial activity associated with digital assets has grown significantly, with periods of exponential growth and multiple precipitous crashes. The authors consider the potential vulnerabilities associated with the digital asset ecosystem. They argue that while the contribution of digital assets to system risk has been limited to date, the observed fragilities in the digital asset space could destabilize the broader financial system if the digital ecosystem becomes more systemic.
Pablo D. Azar, Garth Baughman, Francesca Carapella, Jacob Gerszten, Arazi Lubis, J.P. Perez-Sangimino, David E. Rappoport, Chiara Scotti, Nathan Swem, Alexandros P. Vardoulakis, and Aurite Werman, Economic Policy Review 30, no. 2, November 2024
Firms’ Supply Chain Adaptation to Carbon Taxes
The authors provide evidence on how firms’ supply chain decisions adapt in response to carbon taxes. By constructing a novel dataset using information from the European Union’s Emissions Trading System (EU ETS) and Carbon Border Adjustment Mechanism, they demonstrate that French firms modified their sourcing of dirty products as the EU ETS tightened. Specifically, firms increased imports from non-ETS countries, leading to carbon leakage both in terms of trade shares and at the extensive margin, as the firms established new supply relationships with dirty non-ETS foreign producers.
Pierre Coster, Julian di Giovanni, and Isabelle Mejean, Staff Report 1136, November 2024
Clustering in Natural Disaster Losses
Economists have primarily studied the effects of natural disasters using county-by-month level datasets, which requires implicitly assuming that losses from natural disasters are independently distributed across space and time. On the other hand, the climate science literature finds consistent evidence of clustering in natural disaster occurrences, where disasters tend to be concentrated either in certain regions or in short windows of time. This paper introduces the concept of natural disaster clustering to the economics literature.
Jacob Kim-Sherman and Lee Seltzer, Staff Report 1135, November 2024
Who Collaborates with the Soviets? Financial Distress and Technology Transfer During the Great Depression
The authors investigate the factors that drive domestic firms to sign technology transfer agreements (TTAs) and sell their technology to foreigners. By studying the agreements signed between U.S. firms and the Soviet Union during the 1920s and 1930s, they find that both local financial distress and cultural affinity with the foreign, receiving country make it more likely that firms will sign TTAs.
Jerry Jiang and Jacob P. Weber, Staff Report 1134, November 2024
A Jackknife Variance Estimator for Panel Regressions
Panel data models are often characterized by strong cross-sectional and time-series dependence. Typical applications, such as panels of states or countries, feature time series behavior which is, at least partially, driven by common components. The authors introduce a new jackknife variance estimator for panel-data regressions. They prove the asymptotic validity of their variance estimator and demonstrate desirable finite-sample properties in a series of simulation experiments.
Richard K. Crump, Nikolay Gospodinov, and Ignacio Lopez Gaffney, Staff Report 1133, October 2024
A Simple Diagnostic for Time-Series and Panel-Data Regressions
Time-series models are the main tool for evaluating the dynamic effects of macroeconomic shocks and policy actions. The authors introduce a new regression diagnostic that is tailored to the time-series setting and allows researchers to assess the robustness of any set of linear regression results. This diagnostic enables applied researchers to scrutinize regression results and probe for underlying fragility of the sample OLS estimate, and the authors demonstrate its utility using a variety of empirical applications.
Richard K. Crump, Nikolay Gospodinov, and Ignacio Lopez Gaffney, Staff Report 1132, October 2024
Financial Education and Household Financial Decisions During the Pandemic
COVID-19 presented economic challenges, but policy responses provided opportunities for savvy borrowers. The authors found that one driver of differences in their responses to these policies was exposure to financial education. Using variation in state-mandated financial education during high school, they find that mandated borrowers reduced their credit card balances by larger amounts after receiving stimulus checks and were more likely to buy homes and to refinance mortgages at low rates.
Donghoon Lee, Daniel Mangrum, Wilbert van der Klaauw, and Crystal Wang, Staff Report 1131, October 2024
Extend-and-Pretend in the U.S. CRE Market
Since the pandemic, commercial real estate (CRE) has experienced rapidly deteriorating property values. The authors document how banks have used an “extend-and-pretend” process to avoid writing off their capital: Banks with weaker marked-to-market capital have extended the maturity of their impaired CRE mortgages coming due and pretended that such credit provision was not as distressed to avoid further depleting their capital. Extend-and-pretend has crowded out new credit provision, leading to a drop in CRE mortgage origination since 2022.
Matteo Crosignani and Saketh Prazad, Staff Report 1130, October 2024
RESEARCH SERIES
Economic Inequality
This ongoing Liberty Street Economics series analyzes disparities in economic and policy outcomes by race, gender, age, region, income, and other factors.
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