Federal Reserve System

About: Federal Reserve System is a other organization based out in Washington D.C., District of Columbia, United States. It is known for research contribution in the topics: Monetary policy & Inflation. The organization has 2373 authors who have published 10301 publications receiving 511979 citations.

Labor Force Participation: Recent Developments and Future Prospects

Abstract: Since 2007, the labor force participation rate has fallen from about 66 percent to about 63 percent. The sources of this decline have been widely debated among academics and policymakers, with some arguing that the participation rate is depressed due to weak labor demand while others argue that the decline was inevitable due to structural forces such as the aging of the population. In this paper, we use a variety of approaches to assess reasons for the decline in participation. Although these approaches yield somewhat different estimates of the extent to which the recent decline in participation reflects cyclical weakness rather than structural factors, our overall assessment is that much of the decline is structural in nature. As a result, while we believe some of the participation rate’s current low level is indicative of labor market slack, we do not expect the rate to substantially increase from current levels as labor market conditions continue to improve.

Exchange-rate Effects on China's Trade*

Abstract: Though China’s share of world trade exceeds that of Japan, little is known about the response of China’s trade to changes in exchange rates. The few estimates available have two limitations. First, the data for trade prices are based on proxies for prices from other countries. Secondly, the estimation sample includes the period of China’s transformation from a centrally-planned economy to a more market-oriented one. We address these limitations with an empirical model explaining the shares of China’s exports and imports in world trade in terms of the real effective value of the renminbi. The specifications control for foreign direct investment and for the role of imports of parts to assemble exports. Parameter estimation uses disaggregated monthly trade data and excludes China’s decentralization period. We find that a 10 percent real appreciation of the renminbi lowers the share of aggregate Chinese exports by nearly one percentage point. However, the estimated response of imports is negligible and lacks precision.

Sticky Prices, Marginal Cost, and the Behavior of Inflation

Abstract: In models with sticky prices and monopolistic competition, the cyclical behavior of real marginal cost is a key determinant of firms’ pricing decisions. Necessarily then, such behavior is closely linked to the corresponding cyclical behavior of inflation. Recent empirical work on this link provides support for the models. However, that support is weakened by the implausible assumption of an extreme form of price stickiness. More plausible forms of price stickiness may yet be shown to be consistent with the data but will require revised estimates of the behavior of marginal cost.

House Prices and Birth Rates: The Impact of the Real Estate Market on the Decision to Have a Baby

Abstract: This project investigates how changes in Metropolitan Statistical Area (MSA)- level housing prices affect household fertility decisions Recognizing that housing is a major cost associated with child rearing, and assuming that children are normal goods, we hypothesize that an increase in house prices will have a negative price effect on current period fertility This applies to both potential first-time homeowners and current homeowners who might upgrade to a bigger house with the addition of a child On the other hand, for current homeowners, an increase in MSA-level house prices will increase home equity, leading to a positive effect on birth rates Our results suggest that indeed, short-term increases in house prices lead to a decline in births among non-owners and a net increase among owners The estimates imply that a $10,000 increase leads to a 5 percent increase in fertility rates among owners and a 24 percent decrease among non-owners At the mean US home ownership rate, these estimates imply that the net effect of a $10,000 increase in house prices is a 08 percent increase in current period fertility rates Given underlying differences in home ownership rates, the predicted net effect of house price changes varies across demographic groups In addition, we find that changes in house prices exert a larger effect on current period birth rates than do changes in unemployment rates This project investigates how changes in Metropolitan Statistical Area (MSA)- level housing prices affect household fertility decisions Recognizing that housing is a major cost associated with child rearing, and assuming that children are normal goods, we hypothesize that an increase in house prices will have a negative price effect on current period fertility This applies to both potential first-time homeowners and current homeowners who might upgrade to a bigger house with the addition of a child On the other hand, for current homeowners, an increase in MSA-level house prices will increase home equity, leading to a positive effect on birth rates Our results suggest that indeed, short-term increases in house prices lead to a decline in births among non-owners and a net increase among owners The estimates imply that a $10,000 increase leads to a 5 percent increase in fertility rates among owners and a 24 percent decrease among non-owners At the mean US home ownership rate, these estimates imply that the net effect of a $10,000 increase in house prices is a 08 percent increase in current period fertility rates Given underlying differences in home ownership rates, the predicted net effect of house price changes varies across demographic groups In addition, we find that changes in house prices exert a larger effect on current period birth rates than do changes in unemployment rates

Repo runs: : evidence from the tri-party repo market

Abstract: The repo market has been viewed as a potential source of financial instability since the 2007 to 2009 financial crisis, based in part on findings that margins increased sharply in a segment of this market. This paper provides evidence suggesting that there was no system-wide run on repo. Using confidential data on tri-party repo, a major segment of this market, we show that, the level of margins and the amount of funding were surprisingly stable for most borrowers during the crisis. However, we also document a sharp decline in the tri-party repo funding of Lehman in September 2008.