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Working Paper
Examining the Financial Accelerator: Bank Responses to the 2014 Oil Price Shock
We exploit the 2014 decline in oil prices to understand how banks change contract terms for distressed firms. Using panel data on new and existing loans, we find that firms most financially affected by the 2010 oil price shock initially increased their use of credit. However, those same firms ultimately saw increased borrowing costs, smaller loan sizes, and fewer originations and renewals than less affected firms as the oil price decline persisted. We then demonstrate that credit spreads rose more than might be predicted based on changes in firm risk alone, suggesting that lending standards ...
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 extension of agricultural price passthroughs to food ...
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.
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
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.
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.
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
The Tight Labor Market in the Rocky Mountain Region is Showing Some Signs of Easing
Labor market conditions are showing some early signs of softening, as imbalances between labor demand and supply are improving. While labor markets remain strong in the Rocky Mountain Region, contacts suggest moderating labor market tightness in the coming year. This Rocky Mountain Economist provides an overview of recent regional labor market conditions, and prospects for the regional labor market in 2024 reported by businesses throughout the region.
Working Paper
Flood Risk Exposures and Mortgage-Backed Security Asset Performance and Risk Sharing
The distribution of risks for residential real estate, including flood risk, depends largely on how these risks are allocated across individual mortgages and within mortgage-backed securities (MBS). This paper is the first to document how flood risks relate not only to individual mortgage performance and underwriting, but also how flood risks correlate to MBS performance and structure. Across residential mortgages we find that defaults are concentrated among the most flood-prone properties and this risk is somewhat offset by larger down payments and slightly higher mortgage rates. Even when ...
Journal Article
Energy Investment Variability Within the Macroeconomy
Over the past 10 years, the U.S. energy sector has exerted substantial influence?both positive and negative?on overall U.S. business fixed investment. From 2010 to 2014, a time when energy production in the United States was expanding, investment in the energy sector was a boon to aggregate investment. However, following the sharp oil price decline in 2014, the energy sector was a drag on aggregate investment. {{p}} Assessing the energy sector?s contribution to aggregate investment requires an understanding of both the size of the sector as well as its individual segments. David Rodziewicz ...