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The Future of Payment Infrastructure Could Be Permissionless

Following the recent passage of legislation in the U.S., stablecoins seem to be on the brink of wider-scale adoption and explosive growth in market capitalization. Although requirements that make stablecoins more like digital cash and less like tokenized deposit liabilities may hinder their adoption, the authors show that stablecoins are thriving because of how they are transferred: via global, open-access, peer-to-peer systems—or “permissionless systems,” for short.

By Rod Garratt and Michael Junho Lee

How Businesses Set Prices—In Their Own Words

There has been a lot of interest in firms’ pricing decisions in the past few years. In an analysis based on research about how businesses set prices and the extent of passthrough of cost increases, the authors let firms speak for themselves about what factors they consider when adjusting prices in response to various shocks. A very nuanced picture emerges of businesses trying to balance competing objectives while keeping an eye on demand conditions for their products.

By Wändi Bruine de Bruin, Keshav Dogra, Sebastian Heise, Edward S. Knotek II, Brent H. Meyer, Robert W. Rich, Raphael S. Schoenle, Giorgio Topa, and Wilbert van der Klaauw

Is Monetary Policy Still Seasonal?

A 2012 Liberty Street Economics post noted that from 1987-2008, the Federal Reserve was much more likely to lower interest rates (or abstain from raising rates) in the first month of each quarter than in the two subsequent months. Does the seasonal pattern in monetary policy still hold today? The authors find that it has indeed continued; however, unlike in the earlier sample period, it can be completely explained by the timing of the FOMC calendar.

By Richard K. Crump, Keshav Dogra, and Dennis Kongoli

Banks Develop a Nonbank Footprint to Better Manage Liquidity Needs

In a companion post, the authors documented that over the past five decades the typical U.S. bank has evolved from mainly focusing on deposit taking and loan making to becoming a more diversified conglomerate incorporating a variety of nonbank activities. Here they show that an important driver of this evolution is the desire of banks to efficiently manage liquidity needs, offering a new perspective on the evolution of financial intermediation and the rise of nonbanks.

By Nicola Cetorelli and Saketh Prazad

U.S. Banks Have Developed a Significant Nonbank Footprint

In light of the rapid growth of nonbank financial institutions (NBFIs), many have argued that bank-led financial intermediation is on the decline, based on the traditional notion that banks operate to take in deposits and make loans. However, the authors argue that deposit-taking and loan-making have not accurately characterized U.S. banking operations in recent decades. In fact, absent regulatory restrictions, banks naturally expand their boundaries to include NBFI subsidiaries.

By Nicola Cetorelli and Saketh Prazad

How Has Treasury Market Liquidity Fared in 2025?

In 2025, the Federal Reserve cut interest rates, trade policy shifted abruptly, and economic policy uncertainty increased. How have these developments affected the functioning of the key U.S. Treasury securities market? The authors return to some familiar metrics to assess the recent behavior of Treasury market liquidity and find that liquidity briefly worsened around the April 2025 tariff announcements, but its relation to Treasury volatility has been similar to what it was in the past.

By Michael Fleming

RESEARCH TOPICS

Applied Macroeconomics
and Econometrics Center

The mission of the Applied Macroeconomics and Econometrics Center (AMEC) is to provide intellectual leadership in the central banking community in the fields of macro and applied econometrics.

Data Releases
Global Supply Chain Pressure Index
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Measuring the Natural Rate of Interest
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Multivariate Core Trend Inflation
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The New York Fed DSGE Model
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New York Fed Staff Nowcast
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Outlook-at-Risk
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Treasury Term Premia
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Yield Curve as a Leading Indicator
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Center for Microeconomic Data

Photo: a four-panel picture of people cleaning up after natural disasters

Losses from Natural Disasters

Losses from Natural Disasters provides county-level estimates of the economic and human impact of extreme weather events in the United States.

Reserve Demand Elasticity (RDE)

RDE estimates provide a quantitative measure of the ampleness of reserves in the U.S. banking system in real time. New data are published monthly.

Economic Heterogeneity Indicators (EHIs)

The EHIs are broad-based economic indicators that measure macroeconomic outcomes experienced by different demographic, economic, and geographic groups on both a regional and national level.

Corporate Bond Market Distress Index (CMDI)

The CMDI is a summary metric of corporate bond market functioning based on information from multiple sources including measures of primary market issuance and pricing, secondary market pricing and liquidity conditions, and the relative pricing between traded and nontraded bonds. It updates monthly.

Regional Surveys

Monthly surveys conducted by the New York Fed track the sentiment of executives at regional manufacturing and service-sector firms regarding business conditions.

Data Releases
Empire State Manufacturing Survey
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Business Leaders Survey
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Regional Business Surveys:
Special Topics
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Regional Employment Trends

These interactive charts track employment in state and metro regions in the Federal Reserve’s Second District, utilizing the New York Fed’s early benchmarks of payroll employment data. It updates monthly.

Mapping Home Price Changes

Explore year-over-year changes in home prices since 2003, both regionally and nationally, using this dynamic map — updated with new home price index data on a monthly basis. Hover over a county for granular data.

Early Benchmarked Employment Data

Monthly releases of early benchmarked employment figures for New York State, New Jersey, Puerto Rico, and the U.S. Virgin Islands, as well as the metropolitan areas in New York and Northern New Jersey

The Labor Market for Recent College Graduates

Labor market conditions remained challenging for recent college graduates during the third quarter of 2025. The unemployment rate remained elevated at an average of 5.3 percent and the underemployment rate rose to 41.8 percent—its highest level since 2020.

Recent Publications

How Do Banks Build Equity Capital?

We examine the evolution of equity capital in the U.S. banking industry over the past 35 years. Earnings are the major driver of increases in equity capital in the banking industry. While common stock issuance is frequent, amounts issued are generally small and do not contribute meaningfully to equity capital growth in most cases. Common stock dividends and repurchases are significant drains on equity capital. It is not uncommon for banks to pay out more than they earn, driven both by capital planning motivations and negative shocks to earnings. It is also common for banks to both issue new common stock and make repurchases in the same year, with these offsetting actions related to employee stock-based compensation.

Lily Gordon and Beverly Hirtle, Staff Report 1174, December 2025

Less for You, More for Me: Credit Reallocation and Rationing Under Usury Limits

Many states have capped consumer loan interest rates to protect households from high-cost lenders. Studying three states that capped rates, the authors investigate how these usury limits affect the availability and allocation of credit across households. They find that credit to the riskiest borrowers contracts under usury limits without improving delinquencies. More surprisingly, credit to lower risk borrowers expands under usury limits, suggesting that usury limits have unintended effects that are not entirely explained by standard price theory.

Rajashri Chakrabarti, Daniel Garcia, Donald Morgan, and Lee Seltzer, Staff Report 1173, December 2025

Navigating Geoeconomic Risk: Evidence from U.S. Mutual Funds

Geoeconomic risk—the risk that firms incur valuation losses when countries deploy economic, trade, or financial leverage for geopolitical aims—has become a first-order concern for investors. The authors study this in the context of U.S. export controls that restrict sales of cutting-edge technology to selected Chinese firms for national security reasons. They find that mutual funds holding stocks of affected firms experience higher volatility and lower returns, indicating that firm-level geoeconomic risk can penetrate even a well-diversified portfolio.

Matteo Crosignani, Lina Han, and Marco Macchiavelli, Staff Report 1172, November 2025

Economics of Property Insurance

Homeowners’ property insurance is one of the most widely held financial contracts, with U.S. households paying about $150 billion per year to insure personal property against catastrophe. The authors study the economics of this insurance by examining how contract design balances the trade-off between incentive alignment and risk sharing. They develop and structurally estimate a model that provides, to their knowledge, the first large-scale contract level structural measures of risk aversion, risk premia, and the cost of moral hazard.

Hyeyoon Jung and Jaehoon (Kyle) Jung, Staff Report 1171, November 2025

Liquidity and Trading Dynamics in the Off-the-Run U.S. Treasury Market

Off-the-run Treasuries are seasoned securities and account for about 98 percent of all Treasuries outstanding. They also played a central role in the pandemic-fueled dash-for-cash in March 2020. The authors document and discuss the evolution of trading activity and liquidity for off-the-run securities and how these attributes differ from on-the-run securities. They also consider several potential market structure changes that could improve the liquidity of off-the-run Treasuries.

Alain Chaboud, Ellen Correia Golay, Michael Fleming, Yesol Huh, Frank Keane, and Or Shachar, Staff Report 1170, November 2025

Cognitive Health, Household Financial Decision-Making, and Intrahousehold Financial Spillovers

This study examines how the approach a couple uses for household financial decision-making affects the financial outcomes of each partner when one member experiences a decline in cognitive health from the onset of Alzheimer’s disease or a related dementia. They assess whether these effects are amplified or diminished depending on the couple’s approach to financial organization, focusing on financial outcomes related to debt and debt management.

Carole Roan Gresenz, Jean M. Mitchell, R. Scott Turner, Wilbert van der Klaauw, and Crystal Wang, Staff Report 1169, October 2025

Supervising Failing Banks

Banking supervision seeks to safeguard the health of the financial system by monitoring financial institutions and enforcing regulatory compliance. The effectiveness of banking supervision, however, is hotly debated. The authors study the role of banking supervision in anticipating, monitoring, and disciplining failing banks. They document that supervisors anticipate most bank failures with a high degree of accuracy. Supervisors also play an important role in requiring troubled banks to recognize losses, taking enforcement actions, and ultimately closing failing banks.

Sergio Correia, Stephan Luck, and Emil Verner, Staff Report 1168, October 2025

Understanding Consumer Demand for “Buy Now, Pay Later”

Buy Now, Pay Later (BNPL) services typically split the purchase price into an upfront payment followed by interest-free installments. But despite BNPL’s rapid growth since the pandemic, little is known about which of its features draws consumers to use it. The authors conduct a novel probabilistic stated choice experiment, varying BNPL attributes across hypothetical scenarios to estimate consumers’ underlying preferences. Their estimates shed light on which features cause consumers to choose (or avoid) BNPL.

Felix Aidala, Gizem Koşar, Daniel Mangrum, and Wilbert van der Klaauw, Staff Report 1167, October 2025

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