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Working Paper
“Don’t Know What You Got Till It’s Gone”—The Community Reinvestment Act in a Changing Financial Landscape
This study provides new evidence on the impact of the Community Reinvestment Act (CRA) on mortgage lending by taking advantage of an exogenous policy shock in 2014, which caused significant changes in neighborhoods’ CRA eligibility in the Philadelphia market. The loss of CRA coverage leads to an over 10 percent decrease in purchase originations by CRA-regulated lenders. While nondepository institutions replace approximately half, but not all, of the decreased lending, their increased market share was accompanied by a greater involvement in riskier and more costly FHA lending. This study ...
Working Paper
“Don't Know What You Got Till It’s Gone” — The Effects of the Community Reinvestment Act (CRA) on Mortgage Lending in the Philadelphia Market
The Community Reinvestment Act (CRA), enacted in 1977, has served as an important tool to foster access to financial services for lower-income communities across the country. This study provides new evidence on the effectiveness of CRA on mortgage lending by focusing on a large number of neighborhoods that became eligible and ineligible for CRA credit in the Philadelphia market because of an exogenous policy shock in 2014. The CRA effects are more evident when a lower-income neighborhood loses its CRA coverage, which leads to a 10 percent or more decrease in purchase originations by ...
Working Paper
What is the U.S. gross investment in intangibles? (At least) one trillion dollars a year!
This paper argues that the rate of intangible investment ? investment in the development and marketing of new products ? accelerated in the wake of the electronics revolution in the 1970s. The paper presents preliminary direct and indirect empirical evidence that US private firms currently invest at least $1 trillion annually in intangibles. This rate of investment roughly equals US gross investment in nonresidential tangible assets. It also suggests that the capital stock of intangibles in the US has an equilibrium market value of at least $5 trillion.
Working Paper
Credit Ratings, Private Information, and Bank Monitoring Ability
In this paper, we use credit rating data from two large Swedish banks to elicit evidence on banks' loan monitoring ability. For these banks, our tests reveal that banks' internal credit ratings indeed include valuable private information from monitoring, as theory suggests. Banks' private information increases with the size of loans.
Journal Article
The retail revolution and food-price mismeasurement
If a product sells for $3 this week at the local supermarket and $2 next week, what is the "real" price? What if that same product has a different price at a different store? Thanks to scanner technology, food prices differ a lot these days because they can be changed quickly and easily. How do our official statistics take these price movements into account? Not too well, according to Leonard Nakamura. In this article, he describes the retail revolution of recent years and how it has led to mismeasurement of food prices
Working Paper
Entry-deterring debt
Working Paper
Intangible assets and national income accounting
In this paper I focus on three related and difficult areas of the measurement of national income. I argue that the economic theory underlying measurement of these items is currently controversial and incomplete.
Journal Article
What you don’t know can hurt you: keeping track of risks in the financial system
The financial crisis of 2007-2008 left in its wake new responsibilities for regulators to monitor the economy for risks to financial stability. The new task of monitoring financial stability includes tracking the risks of financial instruments and learning where these risks are located within the financial marketplace. One way to do this is to track the quantities of financial instruments and which institutions hold them. In this article, Leonard Nakamura discusses some limitations of the current data and the current data framework and the extent to which we can use the Flow of Funds for ...
Working Paper
The measurement of retail output and the retail revolution
The computerization of retailing has made price dispersion a norm in the United States, so that any given list price or transactions price is an increasingly imperfect measure of a product's resource cost. As a consequence, measuring the real output of retailers has become increasingly difficult. Food retailing is used as a case study to examine data problems in retail productivity measurement. Crude direct measures of grocery store output suggest that the CPI for food-at-home may have been overstated by 1.4 percentage points annually from 1978 to 1996.
Working Paper
Climate Shocks in the Anthropocene Era: Should Net Domestic Product Be Affected by Climate Disasters
The monetary costs of weather and climate disasters in the U.S. have grown rapidly from 1980 to 2022, rising more than 5 percent in real terms annually. Much of this real growth in costs is likely due to climate change. Regardless of its cause, these costs imply a faster depreciation of real assets. We argue that the expected depreciation from these events could be included in the consumption of fixed capital, leading to lower levels, and slightly lower growth rates, for net domestic product (NDP). We use Poisson pseudo-maximum-likelihood regressions to estimate this expectation and to ...