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.

Urban Growth and Housing Supply

Abstract: Cities are physical structures, but the modern literature on urban economic development rarely acknowledges that fact. The elasticity of housing supply helps determine the extent to which increases in productivity will create bigger cities or just higher paid workers and more expensive homes. In this paper, we present a simple model that provides a framework for doing empirical work that integrates the heterogeneity of housing supply into urban development. Empirical analysis yields results consistent with the implications of the model that differences in the nature of house supply across space are not only responsible for higher housing prices, but also affect how cities respond to increases in productivity.

Efficiency effects of horizontal (in-market) bank mergers

Abstract: This study conducts tests to determine whether banks involved in horizontal mergers achieve efficiency improvements relative to other firms. The analysis covers 898 bank mergers from 1981 to 1986. Efficiency is measured by various expense ratios. The results based on OLS and logit analysis are robust. They indicate that during 1981–1986, horizontal bank mergers did not yield efficiency gains. Notably, the findings are based on the mergers believed to be most likely to result in efficiency gains, i.e., they are horizontal mergers, the firms exhibit considerable deposit overlap, and the acquiring firms are, on average, more efficient than the acquired.

The Nature of Countercyclical Income Risk

Abstract: We study business cycle variation in individual earnings risk using a confidential and very large data set from the US Social Security Administration. Contrary to past research, we find that the variance of idiosyncratic shocks is not countercyclical. Instead, it is the left-skewness of shocks that is strongly countercyclical: during recessions, large upward earnings movements become less likely, whereas large drops in earnings become more likely. Second, we find that the fortunes during recessions are predictable by observable characteristics before the recession. Finally, the cyclicality of earnings risk is dramatically different for the top 1 percent compared with the rest of the population.

The Long-Run Relationship Between House Prices and Rents

Abstract: I use standard error-correction models and long-horizon regression models to examine how well the rent–price ratio predicts future changes in real rents and prices. I find evidence that the rent–price ratio helps predict changes in real prices over 4-year periods, but that the rent–price ratio has little predictive power for changes in real rents over the same period. I show that a long-horizon regression approach can yield biased estimates of the degree of error correction if prices have a unit root but do not follow a random walk, and I construct bootstrap distributions to conduct appropriate inference in the presence of this bias. The results lend empirical support to the view that the rent–price ratio is an indicator of valuation in the housing market.