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Discussion Paper
Banking Deserts, Branch Closings, and Soft Information
U.S. banks have shuttered nearly 5,000 branches since the financial crisis, raising concerns that more low-income and minority neighborhoods may be devolving into ?banking deserts? with inadequate, or no, mainstream financial services. We investigate this issue and also ask whether such neighborhoods are particularly exposed to branch closings?a development that, according to recent research, could reduce credit access, even with other branches present, by destroying ?soft? information about borrowers that influences lenders? credit decisions. Our findings are mixed, suggesting that further ...
Discussion Paper
A Discussion of Thomas Piketty's Capital in the Twenty-First Century: Does More Capital Increase Inequality?
My aim in the second post of this series on Thomas Piketty's Capital in the Twenty-First Century is to talk about the economist's research accomplishment in reconstructing capital-output ratios for developed countries from the Industrial Revolution to the present and using them to explain why wealth inequality will rise in developed countries. I will then provide a critical discussion of his interpretation of the history of capital in the developed world. Finally, I'll end by discussing Piketty's main policy proposal: the global tax on capital.
Discussion Paper
The ‘Banking Desert’ Mirage
Unbanked households are often imagined to live in urban neighborhoods devoid of banks, but is that really the case? Our map of U.S. banking deserts reveals that most are not in urban areas, where financial exclusion may be endemic, but in actual deserts?largely in the sparsely populated, rural West. Across states, we find that the share of the population in a banking desert is unrelated to the share that is unbanked. If distance from a bank is not what causes financial exclusion, then motivating banks to locate closer to the unbanked may not promote financial inclusion.
Discussion Paper
Was the 2021-22 Rise in Inflation Equitable?
In our previous post, we discussed how the labor market recovery—the “maximum employment” half of the Federal Reserve System’s dual mandate—featured not only a return of overall employment rates to pre-pandemic levels, but also a narrowing of racial and ethnic gaps in employment rates. In this post, we take up the second half of the dual mandate—price stability—and discuss heterogeneity in inflation rates faced by different demographic groups during the rise in inflation in2021-22. We find that, in contrast to inequalities in employment rates, disparities in inflation rates have ...
Journal Article
How Stable Is China’s Growth? Shedding Light on Sparse Data
Policymakers, academics, and market participants have raised many questions in recent years over the accuracy of China’s official economic growth rates, both in terms of levels and volatility. This issue is of considerable importance for policymakers because fluctuations in China’s economic activity can have significant impacts on growth, employment, inflation, and other policy objectives, given China’s large shares of world output, trade, and commodity demand, and its rapidly growing role in global financial markets. This study addresses the question of growth volatility using a set of ...
Discussion Paper
Racial and Income Gaps in Consumer Spending following COVID-19
This post is the first in a two-part series that seeks to understand whether consumer spending patterns during the COVID-19 pandemic evolved differentially across counties by race and income. As the pandemic hit and social distancing restrictions were put into place in March 2020, consumer spending plummeted. Subsequently, as social distancing restrictions began to be relaxed later in spring 2020, consumer spending started to rebound. We find that higher-income counties had a considerably steeper decline and a shallower recovery than low-income counties did. The differences by race were also ...
Report
Africa is on time
We present evidence that the recent African growth renaissance has reached Africa?s poor. Using survey data on African income distributions and national accounts GDP, we estimate income distributions, poverty rates, and inequality indices for African countries for the period 1990-2011. Our findings are as follows. First, African poverty is falling rapidly. Second, the African countries for which good inequality data exist are set to reach the Millennium Development Goal (MDG) poverty reduction target on time. The entire continent except for the Democratic Republic of Congo (DRC) will reach ...
Report
The Affordable Care Act and the COVID-19 Pandemic: A Regression Discontinuity Analysis
Did Medicaid expansion under the Affordable Care Act affect the course of the COVID-19 pandemic? We answer this question using a regression discontinuity design for counties near the borders of states that expanded Medicaid with states that did not. Relevant covariates change continuously across the Medicaid expansion frontier. We find that (1) health insurance changes discontinuously at the frontier, (2) COVID-19 testing is discontinuously larger in Medicaid-expanding states, and (3) the fraction of beds occupied in ICUs is discontinuously smaller in Medicaid-expanding states. We also find ...
Discussion Paper
Do Expansions in Health Insurance Affect Student Loan Outcomes?
The Patient Protection and Affordable Care Act (ACA) is arguably the biggest policy intervention in health insurance in the United States since the passage of Medicaid and Medicare in 1965. The Act was signed into law in March 2010, and by 2016 approximately 20 to 24 million additional Americans were covered with health insurance. Such an extension of insurance coverage could affect not only medical bills, but also educational, employment, and broader financial outcomes. In this post, we take an initial look at the relationship between the ACA and higher education financing choices and ...
Report
Health spending slowed down in spite of the crisis
We exploit plausibly exogenous regulatory changes in the mortgage lending market to estimate causal effects of the financial boom and bust on personal income in the health sector. We find that counties that were exogenously more exposed to the crisis because of the regulatory reforms experienced a greater rise in the size of the health sector over the course of the boom and the bust relative to control counties, with the differential persisting through the recovery. We provide suggestive evidence that increased mortality during the bust and greater capital investment during the boom ...