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Economic Research

Liberty Street Economics
Banks and Nonbanks Are Not Separate, but Interwoven
Building on previous evidence of the dependence of nonbank financial institutions (NBFIs) on banks for funding, the authors explain that the observed growth of NBFIs reflects banks optimally changing their business models in response to factors such as regulation, rather than banks stepping away from lending and risky activities, and then being substituted by NBFIs. The enduring bank-NBFI connection is best understood as an ever-evolving transformation of bank risks that are now being repackaged between banks and NBFIs.
By Viral V. Acharya, Nicola Cetorelli, and Bruce Tuckman
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Nonbanks Are Growing but Their Growth Is Heavily Supported by Banks
Traditional approaches to financial sector regulation view banks and nonbank financial institutions (NBFIs) as substitutes, one inside and the other outside the perimeter of prudential regulation, with the growth of one implying the shrinking of the other. However, the authors argue that banks and NBFIs are better described as intimately interconnected, with NBFIs being especially dependent on banks both for term loans and lines of credit.
By Viral V. Acharya, Nicola Cetorelli, and Bruce Tuckman
decorative illustration: chart and stock prices background.
The New York Fed DSGE Model Forecast—June 2024
The authors present an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. They describe their forecast and its change since March 2024.
By Marco Del Negro, Pranay Gundam, Donggyu Lee, Ramya Nallamotu, and Brian Pacula
Can Discount Window Stigma Be Cured?
The Federal Reserve has been operating as a lender of last resort through its “discount window” (DW) for more than a century. However, the DW has been plagued by stigma, based on concerns that it could be interpreted as a sign of financial weakness. The authors report on new research showing that once a DW facility is stigmatized, removing that stigma is difficult.
By Olivier Armantier
Taking Stock: Dollar Assets, Gold, and Official Foreign Exchange Reserves
Does an observed decline in the share of U.S. dollar assets in official reserve portfolios, along with the apparent increase in official demand for gold holdings by central banks, represent the leading edge of the dollar’s loss of status in the international monetary system? Drawing on recent research and analytics, the authors argue instead that the observed aggregate trends largely reflect the behavior of a small number of countries.
By Patrick Douglass, Linda S. Goldberg, and Oliver Z. Hannaoui 
Do Exchange-Traded Products Improve Bitcoin Trading?
Spot bitcoin exchange-traded products (ETPs) began trading in the U.S. on January 11, 2024. For investors, these ETPs provide improved liquidity, price efficiency, and more convenient access compared to other means of trading bitcoin in spot markets. Others argue that bitcoin remains a speculative asset and that ETPs increase its interconnections with the traditional financial system. The authors examine the initial performance, trading costs, and price efficiency of spot bitcoin ETPs in the U.S.
By Ken Armstrong, Asani Sarkar, and Leslie Conner Warren
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.

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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
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Equitable Growth Indicators (EGIs)   
A measure of disparities across four economic outcomes—inflation, real and nominal earnings, employment, and real and nominal consumer spending.
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.

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Empire State Manufacturing Survey
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Business Leaders Survey
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Supplemental Survey Report
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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 for recent college graduates continued to cool in the first quarter of 2024 but generally remained solid. Though the unemployment rate was little changed at 4.7 percent, the underemployment rate rose to 40.8 percent—in line with pre-pandemic levels but the highest reading in nearly two years.
Recent Publications
Insurance, Weather, and Financial Stability
Global warming will affect risks of bank lending and potentially the stability of the banking sector. The authors introduce a model to study the interaction between insurance and banking, building on the Federal Crop Insurance Act of 1980 -- banks increased lending to the agricultural sector in counties with higher insurance coverage after 1980. They discuss the implications of their results in light of potential changes to insurance availability as a consequence of global warming.
Charles M. Kahn, Ahyan Panjwani, and João A. C. Santos, Staff Report 1107, May 2024
The Financial Consequences of Undiagnosed Memory Disorders
For households with older adults, financial decisions—and the importance of cognitive function to those decisions—are particularly consequential. However, older households are also the most vulnerable to memory disorders such as Alzheimer’s disease. The authors examine the effect of undiagnosed memory disorders on credit outcomes using nationally representative credit reporting data merged with Medicare data. They find that the harmful financial effects of undiagnosed memory disorders exacerbate the financial pressures that these households already face.
Carole Roan Gresenz, Jean M. Mitchell, Belicia Rodriguez, R. Scott Turner, and Wilbert van der Klaauw, Staff Report 1106, May 2024
Wage Insurance for Displaced Workers
The authors study the effects of an innovative policy known as wage insurance, which temporarily subsidizes the earnings of displaced workers whose new job pays less than their old one. They find that wage insurance eligibility increases short-run employment probabilities and leads to higher long-run cumulative earnings. The program's effectiveness primarily results from shorter non-employment spells, which enables workers to avoid the negative consequences of duration-dependent wage offers.
Benjamin Hyman, Brian Kovak, and Adam Leive, Staff Report 1105, May 2024
Tracing Bank Runs in Real Time
Economists still have a limited understanding of how bank runs unfold. The authors offer novel insights on modern bank runs using confidential data on wholesale and retail payments from the bank runs of March 2023. Their findings suggest that these runs were driven by large depositors, rather than many small depositors, and that the banks that survived a run did so by borrowing new funds and then raising deposit rates—not by selling liquid securities.
Marco Cipriani, Thomas M. Eisenbach, and Anna Kovner, Staff Report 1104, May 2024
Can Discount Window Stigma Be Cured? An Experimental Investigation
The Federal Reserve has been operating as a lender of last resort through its “Discount Window” (DW) for more than a century. Because it aims to address liquidity problems before they have systemic consequences, the DW is the Fed’s first line of defense against financial crises. However, the DW has been plagued by stigma, based on concerns that it could be interpreted as a sign of financial weakness. The authors study how such stigma can be cured.
Olivier Armantier and Charles Holt, Staff Report 1103, May 2024
Information and Market Power in DeFi Intermediation
The decentralized nature of blockchain markets has given rise to a complex and highly heterogeneous market structure. The authors introduce the Decentralized Finance (DeFi) intermediation chain and provide theoretical and empirical evidence that private information is the key determinant of intermediation rents. They propose a repeated bargaining model that predicts that the block builder’s share of the surplus is proportional to the value of their private information.
Pablo Azar, Adrian Casillas, and Maryam Farboodi, Staff Report 1102, May 2024
Do Mortgage Lenders Respond to Flood Risk?
Using property-level mortgage data, property-level risk data, and country-wide FEMA flood maps, the authors identify the effects of flood risk on mortgage lending. Focusing on properties that face flood risk but are not in a FEMA flood zone, they find that lenders are less willing to originate mortgages and charge higher rates for lower LTV loans for properties that face “un-mapped” flood risk. Their results suggest that lenders are aware of flood risk outside FEMA’s identified flood zones.
Kristian S. Blickle, Evan Perry, and João A. C. Santos, Staff Report 1101, May 2024
The Nonlinear Case Against Leaning Against the Wind
The authors study the benefits and costs of leaning against the wind (LAW)—that is, changing the conduct of monetary policy in response to a build-up of financial vulnerabilities—in a flexible, non-parametric model of the dynamic interactions between monetary policy, financial conditions, and macroeconomic outcomes. They find that downside risk to growth increases in response to a counterfactual tightening of the path of monetary policy, suggesting there is limited evidence to support LAW.
Nina Boyarchenko, Richard K. Crump, Keshav Dogra, Leonardo Elias, and Ignacio Lopez Gaffney, Staff Report 1100, May 2024
RESEARCH SERIES
Economic Inequality
This ongoing Liberty Street Economics series analyzes disparities in economic and policy outcomes by race, gender, age, region, income, and other factors.
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