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Journal Article
From Gaps to Growth: Equity as a Path to Prosperity
The pandemic has shined a vivid light on the deep roots of economic inequity, showing that the rules are not the same for everyone. Persistent, unfair gaps in opportunity and well-being across different groups in our society limit people’s potential. Eliminating these inequities could substantially boost GDP and increase the economy’s long-run rate of growth, leading to greater prosperity for all.
Journal Article
“Bouncing Forward” from Disasters on Hawaiʻi’s Big Island: Lessons for Equitable Recovery and Future Resilience
Recovery planning and implementation on the island of Hawaiʻi following a federally declared disaster provides an example of equitable, forward-looking disaster preparation and resilience. Community development professionals in other geographies can learn from the way planners and nonprofits used a regional equity approach to improving household and community resilience, broke down silos to have flexible funding from multiple sources ready for future disasters, and worked to build community through “resilience hubs” that provide disaster-related and ongoing services that help promote ...
Working Paper
A margin call gone wrong: Credit, stock prices, and Germany's Black Friday 1927
Leverage is often seen as villain in financial crises. Sudden deleveraging may lead to fire sales and price pressure when asset demand is downward-sloping. This paper looks at the effects of changes in leverage on asset prices. It provides a historical case study where a large, well-identified shock to margin credit disrupted the German stock market. In May 1927, the German central bank forced banks to cut margin lending to their clients. However, this shock affected banks differentially; the magnitude of credit change differed across banks. Using the strong connections between banks and ...
Working Paper
Financial market reactions to the Russian invasion of Ukraine
This article analyzes financial market reactions to the Russia-Ukraine war with a focus on the opening weeks. Markets did not completely anticipate the war and asset price reactions strengthened from the first week—when there were hopes for a quick resolution—to the second week, when prices generally peaked and began to partially revert to pre-war values. Exposure to commodity trade and trade with Russia-Ukraine determined market perceptions of the riskiness of equity and foreign exchange assets. Credit default swap prices on sovereign debt and breakeven inflation rates indicate that ...
Speech
From Gaps to Growth: Equity as a Path to Prosperity
Presentation to UCLA Anderson Forecast Webinar, by Mary C. Daly, President and Chief Executive Officer, Federal Reserve Bank of San Francisco, September 29, 2021
Working Paper
Assessment Frequency and Equity of the Real Property Tax: Latest Evidence from Philadelphia
Philadelphia’s Actual Value Initiative, adopted in 2013, createsa unique opportunity for us to test whether reassessments at short intervals to true market value and taxing by such values improve equity. Based on a difference-in-differences framework using parcel-level data matched with transactions in Philadelphia and 15 comparable cities, this study finds positive evidence on equity outcomes from more regular revaluations. The quality of assessment, as measured by the coefficient of dispersion, improves substantially after 2014, although the extent of improvement varies across ...
Working Paper
Growing Electric Vehicle Adoption: Implications for Infrastructure Maintenance and the Tax Burden on Families of Different Funding Policies
This paper examines the distribution of the gasoline tax burden in the presence of increased electric vehicle adoption. Automobile manufacturers and even some states have ambitious goals to phase out gas-powered cars. However, in spite of these plans, the primary source of automobile infrastructure funding in the United States continues to be gasoline taxes. Less demand for gasoline threatens this source of revenue for maintaining roads and further shifts the burden of the tax toward consumers who can’t afford the still relatively expensive electric vehicles. The analysis here illustrates ...
Working Paper
Slow capital, fast prices: Shocks to funding liquidity and stock price reversals
A V-shaped price pattern is often observed in financial markets - in response to a negative shock, prices fall "too far" before reversing course. This paper looks at one particular channel of such patterns: the link between a liquidity provider's balance sheet and asset prices. I examine a well-identified historical case study where a large exogenous shock to a liquidity provider's balance sheet resulted in severe capital constraints. Using evidence from German universal banks, who acted as market makers for selected stocks in the interwar period, I show in a difference-in-differences ...
Speech
Good Intentions
Virtual Presentation at Uneven Outcomes in the Labor Market Conference, by Mary C. Daly, President and CEO, Federal Reserve Bank of San Francisco, Thursday, February 4, 2021
Discussion Paper
Houses as ATMs No Longer
Housing equity is the primary form of collateral that households use for borrowing. This makes it a potentially important source of consumption funding, especially for younger households. In a previous post we showed that owner’s equity in residential real estate has finally, thanks to increasing home prices, rebounded to and essentially re-attained its 2005 peak level. Yet in spite of a gain of more than $7 trillion in housing equity since 2012, so far homeowners haven’t been tapping this equity at anything like the pace we witnessed during the housing boom that ended in 2006. In this ...