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Newsletter
Using payment innovations to improve transportation networks: a conference summary
On June 12, 2007, Chicago Metropolis 2020 and the Federal Reserve Bank of Chicago jointly hosted a conference to discuss road pricing strategies, as well as other issues related to reducing transportation congestion and improving economic efficiency in the Chicago region and around the world. On June 12, 2007, Chicago Metropolis 2020 and the Federal Reserve Bank of Chicago jointly hosted a conference to discuss road pricing strategies, as well as other issues related to reducing transportation congestion and improving economic efficiency in the Chicago region and around the world.
Working Paper
Expectations of risk and return among household investors: Are their Sharpe ratios countercyclical?
Data obtained from special questions on the Michigan Survey of Consumer Attitudes over several years are used to analyze stock market beliefs and portfolio choices of household investors. Consistent with other survey results, expected future returns appear to be extrapolated from past realized returns. The data also indicate that expected risk and return are strongly influenced by economic prospects. When investors believe macroeconomic conditions are more expansionary, they tend to expect both higher returns and lower volatility, which implies that household Sharpe ratios are procyclical. ...
Newsletter
Helping Homeowners During the Covid-19 Pandemic: Lessons from the Great Recession
The Covid-19 public health crisis has sharply reduced the earnings of millions of U.S. households, following the severe curtailment of economic activity needed to contain the spread of the virus. Meanwhile, households continue to confront their ongoing financial obligations. The ability of households to manage these obligations has important consequences for the speed at which the U.S. economy can recover from the current crisis. Households that are wiped out financially in the coming months will not be in a position to strongly resume spending once the virus containment issues have passed. ...
Newsletter
Detroit’s bankruptcy: the uncharted waters of Chapter 9
On July 18, 2013, Detroit became the largest municipality to seek protection under Chapter 9 of the U.S. Bankruptcy Code. This article describes several ways in which Detroit?s bankruptcy filing has the potential to alter some of the key assumptions of municipal bond (muni) finance, and examines the market reaction to date.
Working Paper
Debit card and cash usage: a cross-country analysis
During the last decade, debit card transactions grew rapidly in most advanced countries. While check usage declined and has almost disappeared in some countries, the stock of currency in circulation has not declined as fast. We use panel estimation techniques to analyze the change in transactional demand for cash resulting from greater usage of debit cards in 13 countries from 1988 to 2003. We are able to disentangle cash?s store of value function from its payment function by separating cash into three denomination categories. We find that the demand for low denomination notes and coins ...
Newsletter
Helping Homeowners During the Covid-19 Pandemic: Lessons from the Great Recession
The Covid-19 public health crisis has sharply reduced the earnings of millions of U.S. households, following the severe curtailment of economic activity needed to contain the spread of the virus. Meanwhile, households continue to confront their ongoing financial obligations. The ability of households to manage these obligations has important consequences for the speed at which the U.S. economy can recover from the current crisis. Households that are wiped out financially in the coming months will not be in a position to strongly resume spending once the virus containment issues have passed. ...
Working Paper
How did the 2003 dividend tax cut affect stock prices?
We test the hypothesis that the 2003 dividend tax cut boosted U.S. stock prices and thus lowered the cost of equity. Using an event- study methodology, we attempt to identify an aggregate stock market effect by comparing the behavior of U.S. common stock prices to that of European stocks and real estate investment trusts. We also examine the relative cross-sectional response of prices on high-dividend versus low-dividend paying stocks. We do not find any imprint of the dividend tax cut news on the value of the aggregate U.S. stock market. On the other hand, high-dividend stocks outperformed ...
Newsletter
Inducing more efficient payment on the Illinois Tollway
Historically, an important part of Chicago?s economic strength derived from its geographic location at the nexus of the country?s transportation networks. Yet, until quite recently, the payment options on the Illinois Tollway seemed incongruous with the remarkably efficient transportation network that has kept Chicago on the country?s economic forefront.
Journal Article
Transforming payment choices by doubling fees on the Illinois Tollway
Using data from the Illinois Tollway, the authors study the effectiveness of a particular application of pricing incentives, in conjunction with a mass-marketing campaign, to foster adoption of electronic toll collection. Dissecting the consumer response by income level, the authors reveal interesting heterogeneity of consumer payment choice in this environment.