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Working Paper
Drought and Cattle: Implications for Ranchers
Drought has occurred with greater intensity and frequency in many areas of the United States in recent years. Despite the growing concern surrounding the impacts of drought on the agricultural sector, few studies have quantified the impact of drought on the cattle industry. In this paper, we estimate the impacts of drought on cattle herd management, hay production, hay prices, and farm income in the United States from 2000 to 2022. Our results indicate that drought negatively impacts hay production and results in higher hay prices. Drought also contributes to herd liquidation and is ...
Journal Article
Corporate Leverage and Investment
In this article, we examine the relationship between high corporate leverage and future firm investment spending on structures, machinery, and equipment. In other words, we examine how debt influences the growth of a firm’s capital stock or fixed assets. We find that, on average, more leveraged firms across industries tend to have lower levels of investment activity in the future. Specifically, we find that the negative relationship between debt and investment is strongest for the most highly indebted firms and is evident in both economic downturns and expansions.
Working Paper
The Passthrough of Agricultural Commodity Prices to Food Prices
Food inflation has been excluded from core measures of inflation under the reasoning that it is a phenomenon of the supply side of the economy, driven by stochastic supply shocks to agricultural production that can affect the availability of farm products and increase food price volatility. However, the share of food costs related to agricultural production has fallen over the years as food value chains have become more complex and food prices tied more closely to value added downstream in the supply chain. We calculate the magnitude and extent of agricultural price passthroughs to food ...
Journal Article
Safe-Haven Performance in the Age of Bitcoin
In past periods of financial stress, investors seeking “safe havens” have shifted toward government bonds and gold. In recent years, some have questioned whether Bitcoin could also serve as a safe haven. We compare the behavior of government bonds, gold, and Bitcoin from January 1995 through February 2020 and find that the 10-year Treasury note behaved like a safe haven consistently, gold occasionally, and Bitcoin never. During March 2020, however, none of the assets can be classified with confidence as a safe haven.
Journal Article
Capital Reallocation and Capital Investment
Corporate debt levels have grown substantially during the 10-year recovery from the global financial crisis. This debt might be expected to finance investments that support firm expansion, as the U.S. economy has experienced strong growth over the last 10 years. However, much of the corporate debt has been used to reallocate capital through mergers and acquisitions rather than to fund investment activity. Perhaps as a result, some market watchers have expressed concerns that corporations are crowding out, rather than complementing, new investment. {{p}} David Rodziewicz and Nicholas Sly show ...
Journal Article
Do Adverse Oil Price Shocks Change Loan Contract Terms for Energy Firms?
This article examined whether the relationship between creditworthiness and loan spreads for energy firms in the syndicated loan market changed after the 2014 oil-price shock. {{p}} The authors use syndicated loans, which are jointly funded by several financial institutions, because the syndicated loan market is a major source of debt financing for oil firms. Credit conditions tightened following the oil-price shock in mid-2014.
Journal Article
Drilling Productivity in the United States: What Lies Beneath
We construct new measures of drilling productivity and find that productivity increased sixfold from the mid-2000s to early 2017. Gains in below-ground efficiency?the number of barrels produced per foot of drilled wells?have largely driven this increase in overall productivity. The large oil price declines during the Great Recession and from 2014 to 2016 also played a role. However, further large increases in productivity are unlikely absent additional improvements in technology or a subsequent large downturn in oil prices.
Journal Article
How Has Real Wage Growth in the Rocky Mountain Region Outpaced Other States?
Real wage growth in the United States has returned to positive territory on average, driven by growing economic activity, healthy labor markets, and subsiding inflationary pressures. Wage growth is above the current inflation rate, easing but not yet offsetting challenges from recent inflation shocks. Real wage growth is relatively higher in Rocky Mountain States due to the types of jobs being added.
Journal Article
Businesses in the Rocky Mountains Report Steady Employment Outlooks with Softer Wage Gains
Employers in the Rocky Mountain region expect stable employment levels over the next year on balance. Businesses where employment recently fell reduced their headcount mainly by not backfilling open positions. Lower hiring activity is accompanied by less competitive pressure on wages than in past years, especially for new hires.
Journal Article
First-Time Homeownership Became Less Affordable Across Most of the United States in Recent Years
New homeownership became less affordable across much of the United States over the last five years. Swiftly rising house prices and higher borrowing costs have not been fully offset by wage gains, making homeownership less affordable in both metropolitan and rural areas. Although new homeownership is less affordable than in years past, slower housing price gains and steadily rising wages may offer some reprieve for housing affordability in the coming year.