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Working Paper
Sovereign Default in the US
In the absence of a judicial mechanism to reduce the debt burden of a sovereign member of our Union, the resolution process can be quick but perhaps too indifferent to the health, safety, and welfare of the affected residents. In this paper, I use evidence from the Arkansas state archives to provide a description of the events surrounding the default of the state in 1933. I examine the evolution of the negotiations, the outcomes, and the role of fiscal policy.
Discussion Paper
On the resolution of financial crises: the Swedish experience
Sweden was one of the Scandinavian countries experiencing a severe financial crisis In the late 1980s and early 1990s. I review the policy choices and external factors that pushed the countrys financial system over the edge and then examine the steps the government took to make its resolution of the crisis one of the most successful in the past 30 years.
Journal Article
The Employability of Returning Citizens Is Key to Neighborhood Revitalization
One problem low-income communities may face in trying to revitalize is dealing with a high share of residents who are returning home after serving prison terms. Returning citizens often concentrate in low-income areas, and they typically lack the education and skills needed to fi nd jobs. This Commentary reviews these and other barriers to employment, estimates the degree of unemployment, and describes some solutions emerging for this population.
Journal Article
Buy a home or rent? A better way to choose
Knowing whether buying a home is a better financial move for a family than renting requires a consideration of costs and options that people often neglect to factor in. One aspect of the calculation that is almost always overlooked is uncertainty--the fact that no matter how good one's estimates of the future are, the future can turn out differently than projected. Incorporating uncertainty into the rent-or-buy calculation gives potential homebuyers information that can improve their decisions. While incorporating uncertainty is complicated, it's made easier with the Cleveland Fed's online ...
Working Paper
Financial system structure and economic development: structure matters
This paper investigates how the structure of a financial system-whether it is bank- or market-oriented-affects economic growth. In contrast to earlier research, which indicated that the financial system's structure is irrelevant for growth, the author finds that countries grow faster when they have a flexible judicial system and more market-oriented financial systems.
Conference Paper
Foreclosures in Ohio: does lender type matter?
Whether mortgages are originated mostly by depository institutions regulated by the Federal agencies or by less-regulated lenders does not seem to affect the foreclosure filing rate in Ohio?s counties. What seems to matter is whether the lenders have a physical presence in the market, in which case, foreclosure rates are lower.
Journal Article
Trouble ahead for student loans?
The market for student loans may differ in some respects from other financial markets, but private lenders are the primary source of funds. As in other markets, the incentive to lend those funds comes from the ability to make a profit. But recent turmoil in financial markets is affecting all of the factors that contribute to the profitability of student loans, leading to speculation that the availability of such loans will fall.
Journal Article
The employability of returning citizens is key to neighborhood revitalization
One problem low-income communities may face in trying to revitalize is dealing with a high share of residents who are returning home after serving prison terms. Returning citizens often concentrate in low-income areas, and they typically lack the education and skills needed to fi nd jobs. This Commentary reviews these and other barriers to employment, estimates the degree of unemployment, and describes some solutions emerging for this population.
Report
Central banks and crisis management
As 2007 began, historians prepared to reflect on several anniversaries of financial turmoil. It had been 10 years since the East Asian crisis, 20 years since the Black Monday stock market crash, 100 years since the Panic of 1907, and 150 years since the Hamburg financial crisis of 1857. Not many, however, could have predicted that 2007 would write its own chapter in history with the subprime mortgage meltdown.
Working Paper
Beyond the transaction: depository institutions and reduced mortgage default for low-income homebuyers
We evaluate the effects of the lending institution and soft information on mortgage loan performance for low-income homebuyers. We find that even after controlling for bank selection, those who receive a loan from a local bank are significantly less likely to become delinquent or default than other bank or nonbank borrowers, suggesting an information effect. These effects are most pronounced for higher-risk borrowers, who likely benefit more from informational advantages of local banks. These findings support previous research on small business lending and provide additional explanation for ...