Search Results
Journal Article
Liquidity Dries Up
The Federal Reserve has been increasing the federal funds rate, but the interest rate banks pay on deposits have stood still, leading to outflows of bank deposits and the drying up of liquidity.
Journal Article
Where Do You Keep Your Liquid Wealth—Bank Deposits or T-bills?
The beginning of 2022 saw bank deposits, such as CDs, paying similar interest rates to Treasury bills, but they now pay almost 4% less.
Journal Article
Assessing the Costs of Rolling Over Government Debt
The US government has $21.4 trillion in outstanding Treasury debt in bills, notes, and bonds. Given the federal funds rate is up 4-5% over the past year, how expensive will it be to roll over maturing Treasury debt at these higher rates?
Journal Article
Commercial Real Estate: Where Are the Financial Risks?
Large banks, with assets over $100 billion, tend to have significantly lower exposure to commercial real estate market risks than the average commercial bank in the US.
Journal Article
“Stress Testing” Banks on Commercial Real Estate
Recent research tests the effects of a large (hypothetical) drop in commercial real estate prices: Banks most affected would be small and the resulting noncompliance would apply to a small fraction of assets in the US banking system.
Journal Article
Pandemic Labor Force Participation and Net Worth Fluctuations
The US labor force participation rate (LFPR) experienced a record drop during the early pandemic. While it has since recovered to 62.2 percent as of December 2022, it was still 1.41 percentage points below its pre-pandemic peak. This gap is explained mostly by a permanent decline in the LFPR for workers older than 55. This article argues that wealth effects driven by the historically high returns in major asset classes such as stocks and housing may have influenced these trends. Combining an estimated model of wealth effects on labor supply with micro data on balance sheet composition, we ...
Working Paper
Pandemic labor force participation and net worth fluctuations
The U.S. labor force participation rate (LFPR) experienced a record drop during the early pandemic. While it has since recovered to 62.2% as of December 2022, it was still 1.41 pp below its pre-pandemic peak. This gap is explained mostly by a permanent decline in the LFPR for workers older than 55. This paper argues that wealth effects driven by the historically high returns in major asset classes such as stocks and housing may have influenced these trends. Combining an estimated model of wealth effects on labor supply with micro data on balance sheet composition, we show that changes in net ...
Working Paper
An Empirical Analysis of the Cost of Borrowing
We empirically study firm financing costs using a comprehensive dataset of corporate bonds and bank loans. We construct a measure of the cost of financing, the ExcessDebt Premium, which controls for observable debt characteristics. We document two key findings: first, bank loans are about 97 basis points cheaper than corporate bonds when controlling for observable characteristics. Second, there is significant dispersion in borrowing costs, even within the same firm and quarter. The analysis reveals that this within firm variation persists after accounting for instrument type, maturity, ...
Working Paper
An Empirical Analysis of the Cost of Borrowing
We empirically study firm financing costs using a comprehensive dataset of corporate bonds and bank loans. We construct a measure of the cost of financing, the Excess Debt Premium, which controls for observable debt characteristics. We document two key findings: first, bank loans are about 97 basis points cheaper than corporate bonds when controlling for observable characteristics. Second, there is significant dispersion in borrowing costs, even within the same firm and quarter. The analysis reveals that this within firm variation persists after accounting for instrument type, maturity, ...
Working Paper
An Empirical Analysis of the Cost of Borrowing
We empirically study firm financing costs using a comprehensive dataset of corporate bonds and bank loans. We construct a measure of financing costs, the Excess Debt Premium, which controls for observable debt characteristics. We document two key findings: first, bank loans are about 45 basis points cheaper than corporate bonds when controlling for observable characteristics. Second, there is significant dispersion in borrowing costs, even within the same firm and quarter. The analysis reveals that this within-firm variation persists after accounting for instrument type, maturity, amount, and ...