Deposits and the March 2023 Banking Crisis—A Retrospective
Liberty Street Economics
by Stephan Luck and Matthew Plosser
22h ago
Stephan Luck and Matthew Plosser In this post, we evaluate how deposits have evolved over the latter portion of the current monetary policy tightening cycle. We find that while deposit betas have continued to rise, they did not accelerate following the bank runs in March 2023. In addition, while overall deposit funding has remained stable, we find that the banks most affected by the March 2023 events are offering higher deposit rates and are growing their deposit funding relative to the broader banking industry. Monetary Policy and Banks’ Security Losses The beginning of 2022 saw unique condi ..read more
Visit website
What Happens to U.S. Activity and Inflation if China’s Property Sector Leads to a Crisis?
Liberty Street Economics
by Ozge Akinci, Hunter Clark, Jeff Dawson, Matthew Higgins, Silvia Miranda-Agrippino, Ethan Nourbash, and Ramya Nallamotu
22h ago
Ozge Akinci, Hunter Clark, Jeff Dawson, Matthew Higgins, Silvia Miranda-Agrippino, Ethan Nourbash, and Ramya Nallamotu A previous post explored the potential implications for U.S. growth and inflation of a manufacturing-led boom in China. This post considers spillovers to the U.S. from a downside scenario, one in which China’s ongoing property sector slump takes another leg down and precipitates an economic hard landing and financial crisis. China’s Policy Space Is Becoming More Constrained In this scenario, Chinese authorities’ policy space proves insufficient to forestall a deep and protrac ..read more
Visit website
What if China Manufactures a Sugar High?
Liberty Street Economics
by Ozge Akinci, Hunter Clark, Jeff Dawson, Matthew Higgins, Silvia Miranda-Agrippino, Ethan Nourbash, and Ramya Nallamotu
3d ago
Ozge Akinci, Hunter Clark, Jeff Dawson, Matthew Higgins, Silvia Miranda-Agrippino, Ethan Nourbash, and Ramya Nallamotu While the slump in China’s property sector has been steep, Chinese policymakers have responded to the falloff in property activity with policies designed to spur activity in the manufacturing sector. The apparent hope is that a pivot toward production-intensive growth can help lift the Chinese economy out of its current doldrums, which include weak household demand, high levels of debt, and demographic and political headwinds to growth. In a series of posts, we consider the i ..read more
Visit website
The New York Fed DSGE Model Forecast—March 2024
Liberty Street Economics
by Marco Del Negro, Pranay Gundam, Donggyu Lee, Ramya Nallamotu, and Brian Pacula
6d ago
Marco Del Negro, Pranay Gundam, Donggyu Lee, Ramya Nallamotu, and Brian Pacula This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. We describe very briefly our forecast and its change since December 2023. As usual, we wish to remind our readers that the DSGE model forecast is not an official New York Fed forecast, but only an input to the Research staff’s overall forecasting process. For more information about the model and variables discussed here, see our DSGE model Q & ..read more
Visit website
Stablecoins and Crypto Shocks
Liberty Street Economics
by Kenechukwu Anadu, Pablo D. Azar, Marco Cipriani, Thomas Eisenbach, Catherine Huang, Mattia Landoni, Gabriele La Spada, Marco Macchiavelli, Antoine Malfroy-Camine, and J. Christina Wang
2w ago
Kenechukwu Anadu, Pablo D. Azar, Marco Cipriani, Thomas Eisenbach, Catherine Huang, Mattia Landoni, Gabriele La Spada, Marco Macchiavelli, Antoine Malfroy-Camine, and J. Christina Wang In a previous post, we described the rapid growth of the stablecoin market over the past few years and then discussed the TerraUSD stablecoin run of May 2022. The TerraUSD run, however, is not the only episode of instability experienced by a stablecoin. Other noteworthy incidents include the June 2021 run on IRON and, more recently, the de-pegging of USD Coin’s secondary market price from $1.00 to $0.88 upon th ..read more
Visit website
Will the Moderation in Wage Growth Continue?  
Liberty Street Economics
by Martin Almuzara, Richard Audoly, Augustin Belin, and Davide Melcangi
3w ago
Martin Almuzara, Richard Audoly, Augustin Belin, and Davide Melcangi Wage growth has moderated notably following its post-pandemic surge, but it remains strong compared to the wage growth prevailing during the low-inflation pre-COVID years. Will the moderation continue, or will it stall? And what does it say about the current state of the labor market? In this post, we use our own measure of wage growth persistence – called Trend Wage Inflation (TWIn in short) – to look at these questions. Our main finding is that, after a rapid decline from 7 percent at its peak in late 2021 to around 5 perc ..read more
Visit website
Expectations and the Final Mile of Disinflation
Liberty Street Economics
by Richard K. Crump, Stefano Eusepi, and Ayşegül Şahin
3w ago
Richard K. Crump, Stefano Eusepi, and Ayşegül Şahin In the aftermath of the COVID-19 pandemic, the U.S. economy experienced a swift recovery accompanied by a sharp rise in inflation. Inflation has been gradually declining since 2022 without a notable slowdown in the labor market. Nonetheless, inflation remains above the Federal Reserve’s 2 percent target and the path of the so-called final mile remains uncertain, as emphasized by Chair Powell during his press conference in January. In this post, we examine the unemployment-inflation trade-off over the past few years through the lens of a New ..read more
Visit website
Global Supply Chains and U.S. Import Price Inflation
Liberty Street Economics
by Mary Amiti, Oleg Itskhoki, and David E. Weinstein
3w ago
Mary Amiti, Oleg Itskhoki, and David E. Weinstein Inflation around the world increased dramatically with the reopening of economies following COVID-19. After reaching a peak of 11 percent in the second quarter of 2021, world trade prices dropped by more than five percentage points by the middle of 2023. U.S. import prices followed a similar pattern, albeit with a lower peak and a deeper trough. In a new study, we investigate what drove these price movements by using information on the prices charged for products shipped from fifty-two exporters to fifty-two importers, comprising more than twe ..read more
Visit website
Can Electric Cars Power China’s Growth?
Liberty Street Economics
by Thomas Klitgaard
1M ago
Thomas Klitgaard China’s aggressive policies to develop its battery-powered electric vehicle (BEV) industry have been successful in making the country the dominant producer of these vehicles worldwide. Going forward, BEVs will likely claim a growing share of global motor vehicle sales, helped along by subsides and mandates implemented in the United States, Europe, and elsewhere. Nevertheless, China’s success in selling BEVs may not contribute much to its GDP growth, owing both to the maturity of its motor vehicle sector and the strong tendency for countries to protect this high-profile indust ..read more
Visit website
Businesses See Inflationary Pressures Moderating
Liberty Street Economics
by Jaison R. Abel and Richard Deitz
1M ago
Jaison R. Abel and Richard Deitz Shortly after the recovery from the pandemic recession began, the U.S. economy entered a period of high inflation as surging demand, severe supply disruptions, and worker shortages combined to create large imbalances and inflationary pressures in the economy. More recently, however, inflationary pressures have been moderating. Indeed, the inflation rate as measured by the consumer price index (CPI) has come down from its recent peak of 9.1 percent in the summer of 2022 to 3.1 percent at the start of 2024. Have inflationary pressures also moderated for loc ..read more
Visit website

Follow Liberty Street Economics on FeedSpot

Continue with Google
Continue with Apple
OR