Federal Reserve Bank of St. Louis | research.stlouisfed.org Expected near-term stock volatility, as measured by the VIX index, has also increased to historic highs. We have witnessed days of sharp declines but also of big recoveries, and the stock market has been very sensitive to policy news (Figure 2). The stock market has partially recovered since March 23, recovering about 14 percent by March 27, based on news about Fed intervention and a deal on a fiscal stimulus package. The aftermath of the previous financial crisis witnessed increased financial regulation and oversight. Regulators now subject banks, bank-holding companies, and systemically important financial institutions to closer monitoring and supervision. The financial sector has moved toward more liquid and safe assets; in particular, asset holdings have shifted from loans to Treasuries, government-backed securities, and corporate equities. However, this consolidated view masks the risks present in some parts of the system. 2020 n Number 10
{"title":"Economic Realities and Consequences of the COVID-19 Pandemic—Part I: Financial Markets and Monetary Policy","authors":"F. Martin","doi":"10.20955/es.2020.10","DOIUrl":"https://doi.org/10.20955/es.2020.10","url":null,"abstract":"Federal Reserve Bank of St. Louis | research.stlouisfed.org Expected near-term stock volatility, as measured by the VIX index, has also increased to historic highs. We have witnessed days of sharp declines but also of big recoveries, and the stock market has been very sensitive to policy news (Figure 2). The stock market has partially recovered since March 23, recovering about 14 percent by March 27, based on news about Fed intervention and a deal on a fiscal stimulus package. The aftermath of the previous financial crisis witnessed increased financial regulation and oversight. Regulators now subject banks, bank-holding companies, and systemically important financial institutions to closer monitoring and supervision. The financial sector has moved toward more liquid and safe assets; in particular, asset holdings have shifted from loans to Treasuries, government-backed securities, and corporate equities. However, this consolidated view masks the risks present in some parts of the system. 2020 n Number 10","PeriodicalId":11402,"journal":{"name":"Economic Synopses","volume":"24 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-03-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89370553","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
infection-control actions have disrupted economic activity across the globe. In response, fiscal authorities are designing and implementing stabilization packages to mitigate the effects of rising unemployment and business closures.1 In this essay, I describe the analysis in a recent working paper (Faria-e-Castro, 2020) that uses a macroeconomic model to think about the effects of some of these fiscal policies in the event of a pandemic. The model is used to evaluate the effects of five types of policies on household income and consumption. I find that increases in unemployment insurance (UI) most effectively mitigate the effect of a pandemic on household income.
{"title":"Fiscal Policy and COVID-19: Insights from a Quantitative Model","authors":"Miguel Faria-e-Castro","doi":"10.20955/es.2020.8","DOIUrl":"https://doi.org/10.20955/es.2020.8","url":null,"abstract":"infection-control actions have disrupted economic activity across the globe. In response, fiscal authorities are designing and implementing stabilization packages to mitigate the effects of rising unemployment and business closures.1 In this essay, I describe the analysis in a recent working paper (Faria-e-Castro, 2020) that uses a macroeconomic model to think about the effects of some of these fiscal policies in the event of a pandemic. The model is used to evaluate the effects of five types of policies on household income and consumption. I find that increases in unemployment insurance (UI) most effectively mitigate the effect of a pandemic on household income.","PeriodicalId":11402,"journal":{"name":"Economic Synopses","volume":"141 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-03-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76612875","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
About half the U.S. population resides on less than 200,000 square miles; the rest is spread over more than 3 million square miles.
大约一半的美国人口居住在不到20万平方英里的土地上;其余的分布在超过300万平方英里的地方。
{"title":"Geographic Disparity in the U.S. Population","authors":"Ryan Mather, B. Ravikumar","doi":"10.20955/es.2020.27","DOIUrl":"https://doi.org/10.20955/es.2020.27","url":null,"abstract":"About half the U.S. population resides on less than 200,000 square miles; the rest is spread over more than 3 million square miles.","PeriodicalId":11402,"journal":{"name":"Economic Synopses","volume":"72 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76136732","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Renewable Sources of Electricity: Where Excess Capacity Is Built-In","authors":"Diego Mendez-Carbajo","doi":"10.20955/es.2020.42","DOIUrl":"https://doi.org/10.20955/es.2020.42","url":null,"abstract":"","PeriodicalId":11402,"journal":{"name":"Economic Synopses","volume":"85 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76337862","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Governors of the Federal Reserve System, tracks household balance sheets and other characteristics. Plotting the data allows us to compare the evolution of the net worth of households during and after the past three recessions (that is, before the current recession).1 Here, households are divided into quantiles according to wealth: the top 1%, the next 9%, the next 40%, and the bottom 50%. These quantiles were affected differently, which can be explained by the asset composition of household wealth,2 most notably during and after the “Great Recession.” Figure 1 shows gains in the nominal household net worth of all wealth quantiles during the eight-month recession from July 1990 to March 1991. By the time that recession ended, the top 1% and the bottom 50% of households had gained slightly more than 10% in their net worth. All of the wealth quantiles gained some net worth out to 20 quarters (5 years) after the business cycle peak, although the gains for the bottom 50% of households were uneven. How Recessions Have Affected Household Net Worth, 1990-2017: Uneven Experiences by Wealth Quantile
{"title":"How Recessions Have Affected Household Net Worth, 1990-2017: Uneven Experiences by Wealth Quantile","authors":"Diego Mendez-Carbajo","doi":"10.20955/es.2020.38","DOIUrl":"https://doi.org/10.20955/es.2020.38","url":null,"abstract":"Governors of the Federal Reserve System, tracks household balance sheets and other characteristics. Plotting the data allows us to compare the evolution of the net worth of households during and after the past three recessions (that is, before the current recession).1 Here, households are divided into quantiles according to wealth: the top 1%, the next 9%, the next 40%, and the bottom 50%. These quantiles were affected differently, which can be explained by the asset composition of household wealth,2 most notably during and after the “Great Recession.” Figure 1 shows gains in the nominal household net worth of all wealth quantiles during the eight-month recession from July 1990 to March 1991. By the time that recession ended, the top 1% and the bottom 50% of households had gained slightly more than 10% in their net worth. All of the wealth quantiles gained some net worth out to 20 quarters (5 years) after the business cycle peak, although the gains for the bottom 50% of households were uneven. How Recessions Have Affected Household Net Worth, 1990-2017: Uneven Experiences by Wealth Quantile","PeriodicalId":11402,"journal":{"name":"Economic Synopses","volume":"420 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79807081","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Laura E. Jackson, Kevin L. Kliesen, Michael T. Owyang
the measurement of uncertainty and its effects on economic outcomes and financial market developments. A rise in uncertainty is widely believed to have detrimental effects on macroeconomic, microeconomic, and financial market outcomes and induce responses from monetary, fiscal, and regulatory policymakers. For example, at his press conference following the January 29-30 Federal Open Market Committee meeting, Federal Reserve Chairman Jerome Powell said,
{"title":"A Bad Moon Rising? Uncertainty Shocks and Economic Outcomes","authors":"Laura E. Jackson, Kevin L. Kliesen, Michael T. Owyang","doi":"10.20955/ES.2019.6","DOIUrl":"https://doi.org/10.20955/ES.2019.6","url":null,"abstract":"the measurement of uncertainty and its effects on economic outcomes and financial market developments. A rise in uncertainty is widely believed to have detrimental effects on macroeconomic, microeconomic, and financial market outcomes and induce responses from monetary, fiscal, and regulatory policymakers. For example, at his press conference following the January 29-30 Federal Open Market Committee meeting, Federal Reserve Chairman Jerome Powell said,","PeriodicalId":11402,"journal":{"name":"Economic Synopses","volume":"18 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76720270","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
first declines and then exhibits a sharp rebound toward a stable trend line. Following the Great Recession of 2007-09, however, this rebound is missing; the missing recovery is what some economists call “secular stagnation.”1 For example, Figure 1 shows real gross domestic product (GDP) in the United States. The dashed line is a linear trend that fits data for 1950-2007. In 2015, real GDP was 12 percent below the trend; this is the so-called missing recovery. What caused the missing recovery after the Financial Crisis? In Part 1 of this three-part series, I argued that tail risk increased after the Great Recession; that is, the perceived probability that a large negative shock to the economy would occur increased after the 2007-09 recession. In this Part 2 essay, I discuss how this increase in tail risk can help us understand the missing recovery. Tail Risk: Part 2, The Missing Recovery After the Great Recession
{"title":"Tail Risk: Part 2, The Missing Recovery After the Great Recession","authors":"J. Kozlowski","doi":"10.20955/ES.2019.19","DOIUrl":"https://doi.org/10.20955/ES.2019.19","url":null,"abstract":"first declines and then exhibits a sharp rebound toward a stable trend line. Following the Great Recession of 2007-09, however, this rebound is missing; the missing recovery is what some economists call “secular stagnation.”1 For example, Figure 1 shows real gross domestic product (GDP) in the United States. The dashed line is a linear trend that fits data for 1950-2007. In 2015, real GDP was 12 percent below the trend; this is the so-called missing recovery. What caused the missing recovery after the Financial Crisis? In Part 1 of this three-part series, I argued that tail risk increased after the Great Recession; that is, the perceived probability that a large negative shock to the economy would occur increased after the 2007-09 recession. In this Part 2 essay, I discuss how this increase in tail risk can help us understand the missing recovery. Tail Risk: Part 2, The Missing Recovery After the Great Recession","PeriodicalId":11402,"journal":{"name":"Economic Synopses","volume":"438 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76673850","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"China’s Innovation and Global Technology Diffusion","authors":"Ana Maria Santacreu, M. Peake","doi":"10.20955/ES.2019.7","DOIUrl":"https://doi.org/10.20955/ES.2019.7","url":null,"abstract":"","PeriodicalId":11402,"journal":{"name":"Economic Synopses","volume":"71 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82867934","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
the Financial Crisis of 2007-09. This is not particularly surprising: There are many reasons, from an increased demand for safe assets to monetary policy responses, for why risk-free rates fall during a period of financial turmoil. However, even after financial markets calmed down, this state of affairs persisted. In fact, by 2018, several years after the crisis, government bond yields showed no sign of rebounding. Figure 1 shows the change in long-term government yields for Germany, Japan, the United States, and the United Kingdom.1 Intuitively, government bonds have two key attributes: safety and liquidity. Safety refers to the observation that, different from risks for other assets in the economy, the risk of default for U.S. government bonds is almost zero, implying that at maturity the investor will almost surely receive the principal amount. Liquidity refers to the fact that government bonds are quite similar to cash, implying that if the investor needs the money before maturity, he Tail Risk: Part 3, The Return on Safe and Liquid Assets
{"title":"Tail Risk: Part 3, The Return on Safe and Liquid Assets","authors":"J. Kozlowski","doi":"10.20955/es.2019.20","DOIUrl":"https://doi.org/10.20955/es.2019.20","url":null,"abstract":"the Financial Crisis of 2007-09. This is not particularly surprising: There are many reasons, from an increased demand for safe assets to monetary policy responses, for why risk-free rates fall during a period of financial turmoil. However, even after financial markets calmed down, this state of affairs persisted. In fact, by 2018, several years after the crisis, government bond yields showed no sign of rebounding. Figure 1 shows the change in long-term government yields for Germany, Japan, the United States, and the United Kingdom.1 Intuitively, government bonds have two key attributes: safety and liquidity. Safety refers to the observation that, different from risks for other assets in the economy, the risk of default for U.S. government bonds is almost zero, implying that at maturity the investor will almost surely receive the principal amount. Liquidity refers to the fact that government bonds are quite similar to cash, implying that if the investor needs the money before maturity, he Tail Risk: Part 3, The Return on Safe and Liquid Assets","PeriodicalId":11402,"journal":{"name":"Economic Synopses","volume":"70 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84120979","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Matthew Famiglietti, Carlos Garriga, Aaron Hedlund
the longest economic expansion on record. This long period of stable growth started after the 2007-09 Great Recession, which is remembered for both the turmoil in financial markets and the collapse in the housing market. Recent empirical work has documented that, in addition to large declines in housing prices (often exceeding 30 percent in some areas), selling delays rose significantly as average time on the market (TOM) increased by several months.1 For the purpose of this essay, we define housing Are U.S. Housing Markets Hot, Hot, Hot?
{"title":"Are U.S. Housing Markets Hot, Hot, Hot?","authors":"Matthew Famiglietti, Carlos Garriga, Aaron Hedlund","doi":"10.20955/ES.2019.21","DOIUrl":"https://doi.org/10.20955/ES.2019.21","url":null,"abstract":"the longest economic expansion on record. This long period of stable growth started after the 2007-09 Great Recession, which is remembered for both the turmoil in financial markets and the collapse in the housing market. Recent empirical work has documented that, in addition to large declines in housing prices (often exceeding 30 percent in some areas), selling delays rose significantly as average time on the market (TOM) increased by several months.1 For the purpose of this essay, we define housing Are U.S. Housing Markets Hot, Hot, Hot?","PeriodicalId":11402,"journal":{"name":"Economic Synopses","volume":"18 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72894360","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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