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Journal Article
The Evolution of Household Leverage during the Recovery
Recent research has shown that geographic areas that experienced greater household deleveraging during the recession also experienced relatively severe economic contractions and slower recoveries. This analysis explores geographic variations in household debt over the past recession and recovery. It fi nds that regions that had very high household leverage at the start of the recession have shifted back toward national norms, while the variation of leverage within metro areas has maintained steady relationships with neighborhood characteristics such as location,demographics, and the age of ...
Working Paper
Internal Migration in the United States: A Comparative Assessment of the Utility of the Consumer Credit Panel
This paper demonstrates that credit bureau data, such as the Federal Reserve Bank of New York Consumer Credit Panel/Equifax (CCP), can be used to study internal migration in the United States. It is comparable to, and in some ways superior to, the standard data used to study migration, including the American Community Survey (ACS), the Current Population Survey (CPS), and the Internal Revenue Service (IRS) county-to-county migration data. CCP-based estimates of migration intensity, connectivity, and spatial focusing are similar to estimates derived from the ACS, CPS, and IRS data. The CCP can ...
Working Paper
Land Bank 2.0: an empirical evaluation
Cuyahoga County created a land bank in 2009 explicitly intended to acquire low-value properties, mitigate blighted housing, help stabilize neighborhoods, and slow the decline of property values. This paper evaluates the effectiveness of the land bank by estimating spatially-corrected hedonic price models using sales near the land bank homes. Homes that sold within 500 feet of a property that would be acquired by the land bank in the next six months show a 3 to 5 percent discount versus observationally similar homes. Homes that sold within 500 feet of a land bank owned home sold at prices ...
Were Fourth District Local Governments Ready for a Recession? How the Great Recession Influenced How Much They Save
While almost no one anticipated the pandemic-induced shutdown of economic activity experienced this year, local government officials know that the business cycle will sooner or later pull down tax revenues. During years of expansion, cities and counties should be setting aside resources that will enable them to lessen the cuts necessary to balance their budgets during a recession. How prepared were the local governments of the Cleveland Fed’s Fourth District for the COVID-19 crisis?1 Looking at the most recent data available for a sample of the District’s largest cities and counties, we ...
Journal Article
Making financial markets safer for consumers: lessons from consumer goods markets and beyond
In the wake of the mortgage meltdown, policymakers are discussing how best to protect consumers in financial product markets.
Working Paper
Private-activity municipal bonds: the political economy of volume cap allocation
State governments allocate authority, under a federally imposed cap, to issue tax-exempt bonds that fund ?private activities? such as industrial expansion, student loans, and low-income housing. This paper presents political economy models of the allocation process and an empirical analysis. Due to an idiosyncrasy of the tax code, the annual per capita volume cap varies widely across states. I estimate that, on average, there is an additional $0.80 per capita per year of borrowing for each additional dollar per capita of volume cap. This confirms that the cap is a binding constraint in most ...
Journal Article
Overvaluing residential properties and the growing glut of REO
Swelling REO inventories are the latest fallout of the housing crisis, costing lenders money and contributing to neighborhood blight. Yet lenders could avoid taking on so much REO if they could more accurately estimate the value of the homes they foreclose on, especially in weak housing markets. Correcting this apparent misunderstanding of the market could speed the clearing of REO inventories, save lenders money, and help stabilize housing markets.
Working Paper
Financial Innovations and Issuer Sophistication in Municipal Securities Markets
When local governments default or file for bankruptcy, it is often because public officials misunderstood the risks associated with innovative financial products. If unsophisticated municipal bond issuers were to widely adopt a high risk financial product, this could harm taxpayers and investors, as well as destabilize the financial system. This analysis uses municipal bond issuers? total debt outstanding as a proxy for their sophistication and investigates the relationship between sophistication and adoption of financial innovations. Using comprehensive data on securities issued between 1992 ...
How Much Help Do State and Local Governments Need? Updated Estimates of Revenue Losses from Pandemic Mitigation
I estimate that state and local governments have lost $141 billion of revenue from all sources in fiscal year 2020 (FY20) due to the COVID-19 mitigation shutdowns. Under three scenarios of increasing severity, I estimate that state and local governments will need to cut expenditures by between $59 billion and $350 billion in fiscal year 2021 (FY21) to offset impending loses of revenue. Some of the revenue losses can be offset by the rainy day funds that state and local governments have set aside during the expansion, but jurisdictions that lack a fiscal buffer may face painfully deep service ...
Journal Article
Foreclosure-related vacancy rates
The national foreclosure crisis has caused there to be millions more vacancies in our housing stock than before. Vacant homes lower their community?s property values and quality of life. Neighbors and public officials know foreclosed homes sit empty for months, but precise measures of foreclosure-related vacancy are rare. Using data from Cuyahoga County, Ohio, I trace the rise and fall in the vacancy rates of homes during the 18 months following their foreclosure. Ominously, the data suggest that foreclosure may permanently scar some homes. Foreclosed homes still have higher vacancy rates ...