Speech At the Perspectives on the Pandemic Webinar Series, hosted by the National Association for Business Economics, Washington, D.C. (via webcast)
Speech At the Exchequer Club, Washington, D.C. (via webcast)
Speech At "Building a Resilient Workforce," a video conference sponsored by the Federal Reserve Bank of Cleveland, Youngstown, Ohio (via webcast)
Speech At Women in Housing and Finance, Washington, D.C.
Speech At the Foreign Policy Association, New York, New York
Speech At “A Fed Listens Event: How Is COVID-19 Affecting Your Community?,” sponsored by the Board of Governors of the Federal Reserve System, Washington, D.C., (via webcast)
Speech At "A Fed Listens Event: How Is COVID-19 Affecting Your Community?," sponsored by the Board of Governors of the Federal Reserve System, Washington, D.C. (via webcast)
Speech At the Peterson Institute for International Economics, Washington, D.C. (via webcast)
Speech At the "Investment Connection – Response to COVID-19: Colorado" webinar series hosted by the Federal Reserve Bank of Kansas City, Kansas City, Missouri
On April 7, 2020, the SEC’s Office of Compliance Inspections and Examinations (OCIE) released Risk Alerts for Reg BI and Form CRS. These Risk Alerts set forth OCIE’s expectations for firms’ compliance with Reg BI and Form CRS and provide broker-dealers with information about the scope and content of OCIE’s initial examinations following the compliance date of June 30, 2020. FINRA will take the same approach as se
WASHINGTON — FINRA today released a new report illustrating the FINRA Securities Helpline for Seniors’ efforts to provide support, resources and education to senior investors over the last five years.
WASHINGTON – The FINRA Investor Education Foundation (FINRA Foundation) recently announced the recipients of its higher-education awards created to recognize outstanding analyses by researchers-in-training who seek to advance understanding of consumer financial wellness and the complex relationships among financial literacy, financial capability and financial well-being.
WASHINGTON – FINRA's Board of Governors met virtually on June 10 and 11. During the meeting, the Board approved three rulemaking items and approved the organization's Annual Financial Report, which FINRA issues each year to provide transparency regarding its finances. The 2019 report will be published in the coming weeks.
WASHINGTON – With great sadness, FINRA today announced that Thomas Gira, Executive Vice President of Market Regulation and Transparency Services, passed away on Saturday, June 20. He was 58.
“Tom was a beloved and devoted husband and father, as well as a tremendous leader, colleague and friend, and we are enormously heartbroken by his passing. We extend our most sincere condolences to Tom’s family, who are in our thoughts and prayers during this difficult time,” said President and CEO Robert Cook.
WASHINGTON—FINRA announced today that it has fined SG Americas Securities, LLC (SGAS) $1.55 million for submitting inaccurate trade data (known as “blue sheets”) to FINRA for more than seven years. Additionally, the firm must also certify within 90 days of this settlement that it conducted a comprehensive review and revised its systems and procedures related to the deficiency.
WASHINGTON – The FINRA Board of Governors has unanimously elected Eileen Murray, former Co-CEO of Bridgewater Associates, LP, as Chairperson effective at FINRA’s Annual Meeting in August. In addition, Maureen Jensen, former Chair and CEO of the Ontario Securities Commission (OSC), and Eric Noll, CEO of Context Capital Partners, have been appointed to the FINRA Board as public governors, also effective at the August Annual Meeting.
WASHINGTON—FINRA announced today that it has ordered Stifel, Nicolaus & Company, Incorporated to pay approximately $1.9 million in restitution, plus interest, to more than 1,700 customers in connection with early rollovers of Unit Investment Trusts (UITs). FINRA also fined the firm $1.75 million for providing inaccurate information to customers related to rollover costs incurred, and for related supervisory violations.
Washington, DC – Female investors lag behind their male counterparts when it comes to investment knowledge and confidence, according to new research conducted by the FINRA Investor Education Foundation (FINRA Foundation) and the George Washington University School of Business' Global Financial Literacy Excellence Center (GFLEC).
WASHINGTON – FINRA announced today that it has named Greg Ruppert as Executive Vice President, National Cause and Financial Crimes Detection Programs. Ruppert will join FINRA March 23 and will report directly to Bari Havlik, Executive Vice President, Member Supervision.
“Detecting fraud and addressing it quickly is core to our mission of investor protection and market integrity,” said Havlik, “Under Greg’s leadership, we will build upon the successful work our teams have already done on behalf of investors.”
The Securities and Exchange Commission today announced a $3.8 million award to a whistleblower who provided significant information that helped the SEC disrupt an ongoing fraudulent scheme. The resulting enforcement action returned millions of…
The Securities and Exchange Commission today announced charges against Thunderbird Power Corp., an Arizona-based company claiming to be developing a wind turbine technology, and three individuals for defrauding investors out of more than $1.9 million in…
The Securities and Exchange Commission today charged California-based Abra and a related firm in the Philippines for offering and selling security-based swaps to retail investors without registration and for failing to transact those swaps on a…
The Securities and Exchange Commission today announced that it has proposed to amend Form 13F to update the reporting threshold for institutional investment managers and make other targeted changes. The threshold has not been adjusted since the…
The Securities and Exchange Commission today released the agenda for the virtual July 16 special meeting of the Asset Management Advisory Committee (AMAC). AMAC was formed to provide the Commission with a range of perspectives on asset management and…
The Securities and Exchange Commission today announced that it has voted to adopt rule amendments to establish an expedited review procedure for exemptive and other applications under the Investment Company Act that are substantially identical to recent…
The Securities and Exchange Commission today announced that Boston-based pharmaceutical company Alexion Pharmaceuticals Inc. has agreed to pay more than $21 million to resolve charges that it violated the books and records and internal accounting…
The Securities and Exchange Commission today announced the agenda and panelists for the July 9, 2020 staff roundtable on investing in emerging markets, including China. Further information, including prior statements and actions in…
The Securities and Exchange Commission today issued an order to update the filing threshold for broker-dealers’ Form 17-H filings made pursuant to Exchange Act Rules 17h-1T and Rule 17h-2T. The threshold, which had not been updated in nearly 30 years,…
The Securities and Exchange Commission announced today that it obtained court approval of settlements with Telegram Group Inc. and its wholly owned subsidiary TON Issuer Inc. to resolve charges that Telegram's unregistered offering of digital tokens…
Federal Reserve Board announces extension of rule change to bolster effectiveness of the Small Business Administration's Paycheck Protection Program
National College Fed Challenge to be held in a virtual format in 2020
Federal Reserve Board announces termination of enforcement action with The Leaders Group, Inc.
Minutes of the Board's discount rate meetings from May 18 through June 10, 2020
Federal Reserve Board issues enforcement action with Putnam County Bank and announces termination of enforcement action with Barclays Bank PLC
Federal Open Market Committee announces its tentative meeting schedule for 2021
Agencies provide largest firms with information for next resolution plans
Minutes of the Federal Open Market Committee, June 9-10, 2020
Federal Reserve Board issues enforcement action with Benchmark Community Bank and announces the termination of enforcement action with Peoples Bank
Federal Reserve Board announces that it is seeking individuals to serve on its Insurance Policy Advisory Committee
How does the Fed foster diversity and inclusion in the workplace?
The Work Plan presents the audits and evaluations that we are conducting to help the Board and the Bureau fulfill their respective missions.
The Bureau's Division of Supervision, Enforcement and Fair Lending monitors supervised institutions to maintain reasonably current information on their activities and to assess whether changes in risks to consumers or markets warrant changes in SEFL's planned supervisory activities. We evaluated SEFL's approach to monitoring supervised institutions for consistency with the Bureau's strategic plan and internal policies and procedures.
We found that SEFL can improve its supervisory monitoring program by monitoring more nondepository institutions, better tailoring resources dedicated to monitoring based on risk, and hiring additional examiners. In addition, SEFL can improve its efforts to conduct and document periodic monitoring activities. During the drafting of our report, SEFL finalized updates to its periodic monitoring policy, which include monitoring more nondepository institutions. SEFL is also in the process of hiring additional examiners.
This report contains recommendations.
A Winchester man was arrested today and charged with allegedly filing fraudulent loan applications seeking more than $13 million in forgivable loans guaranteed by the Small Business Administration for COVID-19 relief through the Paycheck Protection Program under the CARES Act.
Oversight challenges related to the Board's efforts to limit the economic effects of the coronavirus pandemic and the Bureau's role in protecting consumers from pandemic-related consumer financial fraud and abuse.
Summary of significant audit, evaluation, and investigative work concerning the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection we completed from October 1, 2019, through March 31, 2020.
Today, Michael E. Horowitz, Acting Chair of the Pandemic Response Accountability Committee (PRAC), announced that the PRAC will hold a virtual public listening forum entitled, "Stakeholder Perspectives on Oversight of the Federal COVID-19 Spending and Response," on June 3, 2020 at 2 pm Eastern Time.
A closed meeting of the Board of Governors of the Federal Reserve System will be held at 11:30 a.m. on May 18, 2020. Matter(s) considered: Review and determination by the Board of Governors of the advance and discount rates to be charged by the Federal Reserve Banks.
A closed meeting of the Board of Governors of the Federal Reserve System was held at 2:00 p.m. on May 7, 2020. Matter(s) considered: Discussion of the Semiannual Financial Stability Report.
Thiago Ferreira and Samer Shousha | We quantitatively evaluate the role of supply and demand of safe assets in determining neutral interest rates. Using an empirical cross-country state-space model, we find that the net supply of sovereign safe assets available to the private sector in secondary markets is an important driver of neutral rates for 11 advanced economies in the period 1970–2018. We also find that the global accumulation of international reserves in sovereign safe assets since the 1990s (the global savings glut) lowered the net supply of these assets and, thus reduced neutral rates by up to 50 basis points in our sample.
Lena Dräger, Michael J. Lamla, and Damjan Pfajfar | Using a new consumer survey dataset, we document a new dimension of heterogeneity in inflation expectations that has implications for consumption and saving decisions as well as monetary policy transmission. We show that German households with the same inflation expectations differently assess whether the level of expected inflation and of nominal interest rates is appropriate or too high/too low. The `hidden heterogeneity' in expectations stemming from these opinions is related to demographic characteristics and affects current and planned spending in addition to the Euler equation effect of the perceived real interest rate. Furthermore, these differences in opinions affect German households differently depending on whether they are renters or homeowners.
Seunghoon Na and Hyunseung Oh | Advancements in computer technology have reshaped not only business operations but also household consumption. We estimate a business-cycle model disaggregating consumer IT and non-IT durable goods from the capital stock. We find that shocks to the supply of IT durables account for more than half of the variation in house- holds' real expenditure on IT durables. Furthermore, investment-specific productivity shocks drove nearly half of the rapid growth in household durable expenditures during the 2000s. Nonetheless, they have small influence over output dynamics, because unlike business investment goods, consumer durables do not add to the productive capital of the economy. The shocks become important when household IT goods are complementary to firms' capital, such as when online services are provided through consumers' smartphones.
Enrico Mallucci | I investigate how natural disaster can exacerbate fiscal vulnerabilities and trigger sovereign defaults. I extend a standard sovereign default model to include disaster risk and calibrate it to a sample of seven Caribbean countries that are frequently hit by hurricanes. I find that hurricane risk reduces government's ability to issue debt and that climate change may further restrict market access. Next, I show that "disaster clauses", that provide debt-servicing relief, improve government ability to borrow and mitigate the adverse impact of climate change on government's borrowing conditions.
Sebastian Graves | The responsiveness of job creation to shocks is procyclical, while the responsiveness of job destruction is countercyclical. This new finding can be explained by a heterogeneous-firm model in which hiring costs lead to lumpy employment adjustment. The model predicts that policies that aim to stimulate employment by encouraging job creation, such as hiring subsidies, are significantly less effective in recessions: These are times when few firms are near their hiring threshold and many firms are near their firing threshold. Policies that target the job destruction margin, such as employment protection subsidies, are particularly effective at such times.
Ricardo Correa, Wenxin Du, and Gordon Liao | We characterize how U.S. global systemically important banks (GSIBs) supply short-term dollar liquidity in repo and foreign exchange swap markets in the post-Global Financial Crisis regulatory environment and serve as the "lenders-of-second-to-last-resort". Using daily supervisory bank balance sheet information, we find that U.S. GSIBs modestly increase their dollar liquidity provision in response to dollar funding shortages, particularly at period-ends, when the U.S. Treasury General Account balance increases, and during the balance sheet taper of the Federal Reserve. The increase in the dollar liquidity provision is mainly financed by reducing excess reserve balances at the Federal Reserve. Intra-firm transfers between depository institutions and broker-dealer subsidiaries within the same bank holding company are crucial to this type of "reserve-draining" intermediation. Finally, we discuss factors that contributed to the repo spike in September 2019 and the subseque nt response of U.S. GSIBs to recent policy interventions by the Federal Reserve.
Sumit Agarwal, Ricardo Correa, Bernardo Morais, Jessica Roldán and Claudia Ruiz-Ortega | How does a bank react when a substantial share of its borrowers suffer a large negative shock? To answer this question we exploit the 2014 collapse of energy prices using the universe of Mexican commercial bank loans. We show that, after the drop in energy prices, banks exposed to the energy sector increased their exposure to these borrowers even more, relaxing credit margins to their larger debtors in the sector. An increase of one standard deviation in a bank's ex-ante exposure to the energy sector increased the loan volume to borrowers in the sector by 18 percent and reduced interest rates by 6 percent, even though borrower's credit default swap spreads were widening. Highly exposed banks amplified this sector-specific shock to the rest of the economy by contracting lending to other sectors, with important real effects, as the borrowers could not switch credit suppliers. Finally, the energy price shock had a large negative impact on macro outcomes, especially in the capital-intensive secondary sector. Quantitatively, a one standard deviation increase in the exposure of a state's banks to the energy sector reduced its GDP by 1.8 percent.
Ricardo Correa and Linda S. Goldberg | Bank holding companies (BHCs) can be complex organizations, conducting multiple lines of business through many distinct legal entities and across a range of geographies. While such complexity raises the the costs of bank resolution when organizations fail, the effect of complexity on BHCs' broader risk profiles is less well understood. Business, organizational, and geographic complexity can engender explicit trade-offs between the agency problems that increase risk and the diversification, liquidity management, and synergy improvements that reduce risk. The outcomes of such trade-offs may depend on bank governance arrangements. We test these conjectures using data on large U.S. BHCs for the 1996-2018 period. Organizational complexity and geographic scope tend to provide diversification gains and reduce idiosyncratic and liquidity risks while also increasing BHCs' exposure to systematic and systemic risks. Regulatory changes focused on organizational complexity have significantly reduced this type of complexity, leading to a decrease in systemic risk and an increase in liquidity risk among BHCs. While bank governance structures have, in some cases, significantly affected the buildup of BHC complexity, better governance arrangements have not moderated the effects of complexity on risk outcomes.
Zhimin Li, Leslie Sheng Shen, Calvin Zhang | We study the effects of foreign real estate capital flows on local asset prices and employment using detailed housing transactions data. We document (i) a "China shock" in the U.S. real estate market after 2007 driven by the Chinese government's house purchase restrictions and (ii) "home bias" in foreign Chinese housing purchases in the United States as they are concentrated in ZIP codes historically populated by ethnic Chinese. Exploiting the quasi-random temporal and spatial variation of real estate capital inows from China, we find that foreign Chinese housing purchases have a positive and significant effect on local housing and labor markets. A one standard deviation increase in exposure to these purchases explains 24% and 18% of the cross-ZIP-code variation in local house prices and employment, respectively, with the employment effect transmitted through a housing net worth channel. We also show that these purchases drive out lower-income residents. Our results highlight the role of foreign real estate capital ows in both stimulating the real economy and inducing gentrification in local economies.
Javier Andrés, José E. Boscá, Javier Ferri, and Cristina Fuentes-Albero | Using households' balance sheet composition in the Panel Survey of Income Dynamics, we identify six household types. Since 1999, there has been a decline in the share of patient households and an increase in the share of impatient households with negative wealth. Using a six-agent New Keynesian model with search and matching frictions, we explore how changes in households' shares affect the transmission of government spending shocks. We show that the relative share of households in the left tail of the wealth distribution plays a key role in the aggregate marginal propensity to consume, the magnitude of fiscal multipliers, and the distributional consequences of government spending shocks. While the output and consumption multipliers are positively correlated with the share of households with negative wealth, the size of the employment multiplier is negatively correlated. Moreover, our calibrated model can deliver jobless fiscal expansions.
Original paper: PDF | Accessible materials (.zip)
Stuart Gabriel, Matteo Iacoviello, and Chandler Lutz | We investigate the impact of Great Recession policies in California that substantially increased lender pecuniary and time costs of foreclosure. We estimate that the California Foreclosure Prevention Laws (CFPLs) prevented 250,000 California foreclosures (a 20% reduction) and created $300 billion in housing wealth. The CFPLs boosted mortgage modifications and reduced borrower transitions into default. They also mitigated foreclosure externalities via increased maintenance spending on homes that entered foreclosure. The CFPLs had minimal adverse side effects on the availability of mortgage credit for new borrowers. Altogether, findings suggest that policy interventions that keep borrowers in their homes may be broadly beneficial during times of widespread housing distress.
Alexandros P. Vardoulakis | Banks add value by monitoring borrowers. High funding costs make banks reluctant to lend. A central bank can ease funding by purchasing loans, but cannot distinguish which loans require more or less monitoring, exposing it to adverse selection. A multi-tier loan pricing facility arises as the optimal institutional design setting both the purchase price and banks' risk retention for given loan characteristics. This design dominates uniform (flat) structure for loan purchases, provides the right incentives to banks and achieves maximum lending at lower rates to businesses. Both the multi-tier and flat structures deliver welfare gains compared to no intervention, but the relative gain between the two depends on three sufficient statistics: the share of loans requiring monitoring, the risk-retention ratio, and the liquidity premium.
Alain Chaboud, Erik Hjalmarsson, and Filip Zikes | We study the evolution of the price discovery process in the euro-dollar and dollar-yen currency pairs over a ten-year period on the EBS platform, a global trading venue used by both manual and automated traders. We find that the importance of market orders decreases sharply over that period, owing mainly to a decline in the information share from manual trading, while the information share of market orders from algorithmic and high-frequency traders remains fairly constant. At the same time, there is a substantial, but gradual, increase in the information share of limit orders. Price discovery also becomes faster, suggesting improvements in market efficiency. The results are consistent with theoretical predictions that in more efficient markets, informed traders tend to use more limit orders.
Haelim Anderson, Jin-Wook Chang, and Adam Copeland | The coronavirus outbreak raises the question of how central bank liquidity support affects financial stability and promotes economic recovery. Using newly assembled data on cross-county flu mortality rates and state-charter bank balance sheets in New York, we investigate the effects of the 1918 Influenza Pandemic on the banking system and the role of the Federal Reserve during the pandemic. We find that banks located in more severely affected areas experienced deposit withdrawals. Banks which were members of the Federal Reserve were able to access central bank liquidity and so continue or even expand lending. Banks which were not members, however, did not borrow on the interbank market but rather curtailed lending, suggesting there was little-to-no pass-through of central bank liquidity. Further, in the counties most affected by the 1918 Influenza, even banks with direct access to the discount window liquidated assets so as to meet large deposit withdrawals, suggesting limits to the effectiveness of the liquidity provision by the Federal Reserve. Finally, we show that the pandemic caused only a short-term disruption on the financial sector. Over the long-term, deposits returned and banks restored their asset portfolios.
Geert Bekaert, Eric Engstrom, and Andrey Ermolov | We extract aggregate demand and supply shocks for the US economy from real-time survey data on inflation and real GDP growth using a novel identification scheme. Our approach exploits non-Gaussian features of macroeconomic forecast revisions and imposes minimal theoretical assumptions. After verifying that our results for U.S. post-World War II business cycle fluctuations are largely in line with the prevailing consensus, we proceed to study output and price fluctuations during the COVID-19 pandemic. We attribute two thirds of the decline in 2020:Q1 GDP to a negative shock to aggregate demand. In contrast, regarding the staggeringly large decline in GDP in 2020:Q2, we estimate two thirds of this shock was due to a reduction in aggregate supply. Statistical analysis suggests a slow recovery due to a persistent effects of the supply shock, but surveys suggest a somewhat faster rebound with a recovery in aggregate supply leading the way.
Garth Baughman and Jean Flemming | We develop a model where persistent trade shocks create demand for a basket- backed stablecoin, such as Mark Carney's "synthetic hegemonic currency" or Facebook's recent proposal for Libra. In numerical simulations, we find four main results. First, because of general equilibrium effects of the basket currency on the volatility of currency values, overall demand for that currency is small. Second, despite scant holdings of the basket, its global reach may contribute to substantial increases in welfare if the basket is widely accepted, allowing it to complement holdings of sovereign currencies. Third, we calculate the welfare maximizing composition of the basket, finding that optimal weights depend on the pattern of international acceptance, but that basket composition does not significantly affect welfare. Fourth, despite potential welfare improvements, low demand for the basket currency from buyers limits sellers' incentives to invest in accepting it, suggesting that fears of a so-called global stablecoin replacing domestic sovereign currencies may be overstated.
Kyungmin Kim, Thomas Laubach, and Min Wei | We examine the macroeconomic effect of large-scale asset purchases (LSAPs) and forward guidance (FG) using a proxy structural VAR estimated on data through 2015, where the stance of the LSAP policy is measured using primary dealer expectations of the Federal Reserve's asset holdings. Monetary policy shocks are identified using instruments constructed from event study yield changes, and additional assumptions are employed to separately identify LSAP and FG shocks. We find that unexpected expansions in the Federal Reserve's asset holdings during the ZLB period between 2008 and 2015 had significant expansionary effects on the macroeconomy, with real activity and inflation rising and unemployment declining notably following the shock. The policy accommodation appears to be transmitted to the economy both through financial markets—including Treasury yields, credit spreads and equity prices—and through bank lending. The effects on Treasury yields and term premiums appear to be longer-lived than previously documented, while the effects on credit spreads and especially bank lending also appear persistent. These results appear fairly robust to alternative identification and econometric methodologies, alternative policy indicators and instruments, and controlling for any possible Federal Reserve information effect. A counterfactual analysis shows that absent the LSAP3 program implemented between late 2012 and 2014, CPI inflation would have been about 1 percentage point lower, while the unemployment rate would have been about 4 percentage points higher, by the end of 2015.
David Benson, Matthew A. Masten, Alexander Torgovitsky | We present the ivcrc command, which implements an instrumental variables (IV) estimator for the linear correlated random coefficients (CRC) model. This model is a natural generalization of the standard linear IV model that allows for endogenous, multivalued treatments and unobserved heterogeneity in treatment effects. The proposed estimator uses recent semiparametric identification results that allow for flexible functional forms and permit instruments that may be binary, discrete, or continuous. The command also allows for the estimation of varying coefficients regressions, which are closely related in structure to the proposed IV estimator. We illustrate this IV estimator and the ivcrc command by estimating the returns to education in the National Longitudinal Survey of Young Men.
Elena Afanasyeva | Yes, they can. I propose a new method to detect credit booms and busts from multivariate systems -- monetary Bayesian vector autoregressions. When observed credit is systematically higher than credit forecasts justified by real economic activity variables, a positive credit gap emerges. The methodology is tested for 31 advanced and emerging market economies. The resulting credit gaps fit historical evidence well and detect turning points earlier, outperforming the credit-to-GDP gaps in signaling financial crises, especially at longer horizons. The results survive in real time and can shed light on the drivers of credit booms.
Raven Molloy, Charles G. Nathanson and Andrew Paciorek | We examine how housing supply constraints affect housing affordability, which we define as the quality-adjusted price of housing services. In our dynamic model, supply constraints increase the price of housing services by only half has much as the purchase price of a home, since the purchase price responds to expected future increases in rent as well as contemporaneous rent increases. Households respond to changes in the price of housing services by altering their housing consumption and location choices, but only by a small amount. We evaluate these predictions using common measures of housing supply constraints and data from US metropolitan areas from 1980 to 2016. We find sizeable effects of supply constraints on house prices, but modest-to-negligible effects on rent, lot size, structure consumption, location choice within metropolitan areas, sorting across metropolitan areas, and housing expenditures. We conclude that housing supply constraints distort housing affor dability, and therefore housing consumption and location decisions, by less than their estimated effects on house prices suggest.
François de Soyres and Alexandre Gaillard | We revisit the association between trade and GDP comovement for 135 countries from 1970 to 2009. Guided by a simple theory, we introduce two notions of trade linkages: (i) the usual direct bilateral trade index and (ii) new indexes of common exposure to third countries capturing the role of similarity in trade networks. Both measures are economically and statistically associated with GDP correlation, suggesting an additional channel through which GDP fluctuations propagate through trade linkages. Moreover, high income countries become more synchronized when the content of their trade is tilted toward inputs while trade in final goods is key for low income countries. Finally, we present evidence that the density of the international trade network is associated with an amplification of the association between global trade flows and bilateral GDP comovement, leading to a significant evolution of the trade comovement slope over the last two decades.
Saeed Ghasseminejad and Mohammad R. Jahan-Parvar | This study provides a detailed analysis of the impact of financial sanctions on publicly traded companies. We consider the effect of imposing and lifting sanctions on the target country's traded equities and examine the differences in the reaction of politically connected firms and those without such connections. The paper focuses on Iran due to (1) its sizable financial markets, (2) imposition of sanctions of varying severity and duration on private and state-owned companies, (3) the significant presence of politically connected firms in the stock market, and (4) the unique event of the 2015 nuclear deal, resulting in fairly rapid lifting of a sizable portion of imposed sanctions. We find that sanctions affect politically connected firms more than ordinary firms, have lasting negative effects on profitability ratios, and that politically connected firms stock prices bounce back more slowly after removal of sanctions. Firms targeted by financial sanctions decrease their leverage and increase their cash holding to manage their perceived increase in risk profile.
Anil K. Jain and Robert M. Townsend | We present a tractable model of platform competition in a general equilibrium setting. We endogenize the size, number, and type of each platform, while allowing for different user types in utility and impact on platform costs. The economy is Pareto efficient because platforms internalize the network effects of adding more or different types of users by offering type-specific contracts that state both the number and composition of platform users. Using the Walrasian equilibrium concept, the sum of type-specific fees paid cover platform costs. Given the Pareto effciency of our environment, we argue against the presumption that platforms with externalities need be regulated.
Danilo Cascaldi-Garcia and Marija Vukotić | We exploit firm-level data on patent grants and subsequent reactions of stocks to identify technological news shocks. Changes in stock market valuations due to announcements of individual patent grants represent expected future increases in the technology level, which we refer to as patent-based news shocks. Our patentbased news shocks resemble diffusion news, in that they do not affect total factor productivity in the short run but induce a strong permanent effect after five years. These shocks produce positive comovement between consumption, output, investment, and hours. Unlike the existing empirical evidence, patent-based news shocks generate a positive response in inflation and the federal funds rate, in line with a standard New Keynesian model. Patenting activity in electronic and electrical equipment industries, within the manufacturing sector, and computer programming and data processing services, within the services sector, play crucial roles in driving our results.
The New York Fed today updated its Statement of Compliance with the IOSCO Principles for Financial Benchmarks.
The New York Fed today announced that the Primary Market Corporate Credit Facility (PMCCF) is operational and available for use beginning June 29.
The Securities Industry and Financial Markets Association recommends a market close on Friday, July 3, 2020, which will be widely treated as a holiday in the repo market. As a result, there will be no publication of the Tri-Party General Collateral Rate (TGCR), the Broad General Collateral Rate (BGCR), the Secured Overnight Financing Rate (SOFR), or the SOFR Averages and Index on that day.
Due to the Securities Industry and Financial Markets Association’s recommended market close on Friday, July 3, 2020, all overnight repurchase and reverse repurchase agreements and securities lending trades executed on Thursday, July 2 will mature on Monday, July 6, 2020. Additionally, any Treasury security purchases executed on Thursday, July 2 will settle on Monday, July 6, 2020. While the Open Market Trading Desk does not intend to conduct operations on July 3, the Fedwire Securities Service will operate during its regular hours on that date.
The New York Fed today announced that the Secondary Market Corporate Credit Facility (SMCCF) will begin buying corporate bonds on June 16.
The New York Fed today announced a new format for the High School Fed Challenge, an annual competition designed to enhance and promote economic education. Starting in September 2020, the High School Fed Challenge will transition from its current in-person format to an academic paper competition in which teams of students will submit a paper based on an economic theme selected by the New York Fed.
The New York Fed today announced the first loan subscription date for the Term Asset-Backed Securities Loan Facility (TALF) and released an expanded set of Frequently Asked Questions (FAQs) and other documents pertaining to the facility's operations.
The New York Fed today released a Notice of Interest (NOI) for Eligible Issuers to express interest in selling notes to the special purpose vehicle (SPV) Municipal Liquidity Facility LLC.
Following the Federal Reserve Board's announcement establishing the Term Asset-Backed Securities Loan Facility, and the announcement of updated terms and conditions, the New York Fed has released an initial set of Frequently Asked Questions to address programmatic inquiries about the facility.
The Federal Reserve Bank of New York today announced that the Secondary Market Corporate Credit Facility (SMCCF) will begin purchases of exchange-traded funds (ETFs) on May 12.
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