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Working Paper
Evaluating the Benefits of a Streamlined Refinance Program
Willen, Paul S.; Gerardi, Kristopher S.; Loewenstein, Lara (2020-07-08)
Mortgage borrowers who have experienced employment disruptions as a result of the COVID-19 pandemic are unable to reﬁnance their loans to take advantage of historically low market rates. In this article, we analyze the eﬀects of a streamlined reﬁnance (“reﬁ”) program for government-insured loans that would allow borrowers to reﬁnance without needing to document employment or income. In addition, we consider a cash-out component that would allow borrowers to extract some of the substantial housing equity that many have accumulated in recent years.
Working Papers , Paper 20-21

Working Paper
Adverse Selection, Risk Sharing and Business Cycles
Veracierto, Marcelo (2014-10-22)
I consider a real business cycle model in which agents have private information about an idiosyncratic shock to their value of leisure. I consider the mechanism design problem for this economy and describe a computational method to solve it. This is an important contribution of the paper since the method could be used to solve a wide class of models with heterogeneous agents and aggregate uncertainty. Calibrating the model to U.S. data I find a striking result: That the information frictions that plague the economy have no effects on business cycle fluctuations.
Working Paper Series , Paper WP-2014-10

Speech
Inflation Then and Now
Barkin, Tom (2025-02-25)
Labor market conditions remain solid, while inflation remains somewhat elevated. It makes sense to stay modestly restrictive until we are more confident inflation is returning to our 2 percent target.I recognize the fight against inflation has been long. But it is critical that we remain steadfast.It is tempting to focus on gaming out short-term factors, but it’s hard to make significant monetary policy changes amidst such uncertainty. So, I prefer to wait and see how this uncertainty plays out and how the economy responds.
Speech

Report
Bank heterogeneity and capital allocation: evidence from \\"fracking\\" shocks
Plosser, Matthew (2014-10-01)
This paper empirically investigates banks? ability to reallocate capital. I use unconventional energy development to identify unsolicited deposit inflows and then I estimate how banks allocate these deposits over the recent business cycle. To condition on credit demand, I compare banks? allocations within affected areas over time and in the cross section. When conditions deteriorate, liquid asset allocations increase and loan allocations decrease. Banks with fewer funding sources and higher capital ratios reduce loan allocations more than nearby peers. My results suggest that during adverse ...
Staff Reports , Paper 693

Journal Article
A Simple Model of Gross Worker Flows across Labor Market States
Veracierto, Marcelo (2015-04)
The author develops a simple model of the gross flows of workers across labor market states that is based on Krusell et al. (2012). Its simplicity allows for analytical derivations that make the determination of these flows transparent. Moreover, he finds that if errors in the classification of agents? labor market states are introduced and allowed to vary over time, the model has the ability to generate business cycle dynamics similar to those observed in the U.S. data. However, its dynamics are driven essentially by exogenous factors, not endogenous ones.
Economic Perspectives , Issue Q II

Report
Zombies at Large? Corporate Debt Overhang and the Macroeconomy
Jordà, Òscar; Kornejew, Martin; Schularick, Moritz; Taylor, Alan M. (2020-12-01)
With business leverage at record levels, the effects of corporate debt overhang on growth and investment have become a prominent concern. In this paper, we study the effects of corporate debt overhang based on long-run cross-country data covering the near-universe of modern business cycles. We show that business credit booms typically do not leave a lasting imprint on the macroeconomy. Quantile local projections indicate that business credit booms do not affect the economy’s tail risks either. Yet in line with theory, we find that the economic costs of corporate debt booms rise when ...
Staff Reports , Paper 951

Working Paper
Can Pandemic-Induced Job Uncertainty Stimulate Automation?
Liu, Zheng; Leduc, Sylvain (2020-05-07)
The COVID-19 pandemic has raised concerns about the future of work. The pandemic may become recurrent, necessitating repeated adoptions of social distancing measures (voluntary or mandatory), creating substantial uncertainty about worker productivity. But robots are not susceptible to the virus. Thus, pandemic-induced job uncertainty may boost the incentive for automation. However, elevated uncertainty also reduces aggregate demand and reduces the value of new investment in automation. We assess the importance of automation in driving business cycle dynamics following an increase in job ...
Working Paper Series , Paper 2020-19

Speech
Recession Revisited
Barkin, Tom (2023-08-03)
This has been called the most predicted recession in memory. Forecasts keep getting pushed out. No one banished the business cycle, so those who keep predicting a recession will eventually be right. But most recessions come suddenly.Some fear that the Fed’s commitment to reining in inflation will be that shock to the economy. To be sure, the Fed’s objective is not to cause a recession; it’s to reduce inflation, in line with our mandate.There is still a plausible story that inflation normalizes in short order and the economy dodges additional trauma. Certainly, last month’s inflation ...
Speech

Working Paper
A Quantitative Theory of Time-Consistent Unemployment Insurance
Pei, Yun; Xie, Zoe (2016-11-01)
During recessions, the U.S. government substantially increases the duration of unemployment insurance (UI) benefits through multiple extensions. This paper seeks to understand the incentives driving these increases. Because of the trade-off between insurance and job search incentives, the classic time-inconsistency problem arises. During recessions, the U.S. government substantially increases the duration of unemployment insurance (UI) benefits through multiple extensions. This paper seeks to understand the incentives driving these extensions. Because of the trade-off between insurance and ...
FRB Atlanta Working Paper , Paper 2016-11

Report
Estimating Macroeconomic Models of Financial Crises: An Endogenous Regime-Switching Approach
Benigno, Gianluca; Foerster, Andrew T.; Otrok, Christopher; Rebucci, Alessandro (2020-10-01)
We estimate a workhorse dynamic stochastic general equilibrium (DSGE) model with an occasionally binding borrowing constraint. First, we propose a new speciﬁcation of the occasionally binding constraint, where the transition between the unconstrained and constrained states is a stochastic function of the leverage level and the constraint multiplier. This speciﬁcation maps into an endogenous regime-switching model. Second, we develop a general perturbation method for the solution of such a model. Third, we estimate the model with Bayesian methods to ﬁt Mexico’s business cycle and ...
Staff Reports , Paper 944

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