Search Results
Report
The topology of the federal funds market
The recent turmoil in global financial markets underscores the importance of the federal funds market as a means of distributing liquidity throughout the financial system and a tool for implementing monetary policy. In this paper, we explore the network topology of the federal funds market. We find that the network is sparse, exhibits the small-world phenomenon, and is disassortative. In addition, reciprocity loans track the federal funds rate, and centrality measures are useful predictors of the interest rate of a loan.
Report
The welfare effects of a liquidity-saving mechanism
This paper considers the welfare effect of introducing a liquidity-saving mechanism (LSM) in a real-time gross settlement (RTGS) payment system. We study the planner's problem to get a better understanding of the economic role of an LSM and find that an LSM can achieve the planner's allocation for some parameter values. The planner's allocation cannot happen without an LSM, as long as some payments can be delayed without cost. We show that, in equilibrium with an LSM, there can be either too few or too many payments settled early compared with the planner's allocation, depending on the ...
Report
Quantifying the benefits of a liquidity-saving mechanism
This paper attempts to quantify the benefits associated with operating a liquidity-saving mechanism (LSM) in Fedwire, the large-value payment system of the Federal Reserve. Calibrating the model of Martin and McAndrews (2008), we find that potential gains are large compared to the likely cost of implementing an LSM, on the order of hundreds of thousands of dollars per day.
Journal Article
Words of Economics
To quantify how well economists respond to real-world events, this article looks at what they write about.
Journal Article
How Accurate Are Long-Run Employment Projections?
The occupational mix has been changing for decades. Planners and decision makers need to know how it will continue to change, and why.
Journal Article
Time Use Before, During, and After the Pandemic
Before 2020, we increasingly worked from home, spent time alone, and shared child-care duties. COVID accelerated and reshaped these trends.
Briefing
Reopening the Economy: What Are the Risks, and What Have States Done?
The process of reopening economies battered by the COVID-19 pandemic has been the subject of considerable deliberation in recent months. It is generally agreed that accurate and timely monitoring of the pace of coronavirus spread is of the utmost importance in managing reopening. In addition, the discussion of reopening has often been framed by an assess-ment of the health risks posed by each economic sector. Some sectors, for example, involve especially close and protracted interaction among customers and employees, which can facilitate COVID-19 transmission. Accordingly, the sequence ...
Working Paper
School Closures, Parental Labor Supply, and Time Use
This paper re-examines the response of parental labor supply to the pandemic-era suspension of in-person instruction. The effect of school closures is undetectable after controlling comprehensively for unobserved heterogeneity. Even excluding such controls, a shift from fully virtual to in-person implies an increase in weekly hours worked of just 2 to 2.5. These estimates are used to inform a simple model of the household in which access to telework and nonparental care mitigate the labor supply impact of school closures. Time use data suggest telework and nonparental care indeed helped some ...
Working Paper
Why Is Manufacturing Productivity Growth So Low?
We examine the recent slow growth in manufacturing productivity. We show that nearly all measured TFP growth since 1987 — and its post-2000s decline — comes from a few computer-related industries. We argue conventional measures understate manufacturing productivity growth by failing to fully capture quality improvements. We compare consumer to producer and import price indices. In rapidly changing industries, consumer price indices indicate less inflation, suggesting mismeasurement in standard industry deflators. Using an input-output framework, we estimate that TFP growth is understated ...
Working Paper
Quality Adjustment in Industry Deflators Strengthens Estimated Innovation–Productivity Relationships
How do investments in innovation translate into future productivity growth? Empirically answering this question is challenging. R&D spending is an observed input into the innovation process, but mapping it to productivity growth requires assumptions about the depreciation of R&D capital, gestation lags, and how well such expenditures capture true innovative effort (Hall, 2007). Patents, an alternative measure, capture successful innovations but vary widely in novelty (Kelly et al., 2021) and economic value (Kogan et al., 2017). Firms may forgo patenting to preserve secrecy, while others ...