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Discussion Paper
Assessing Contagion Risk in a Financial Network
Since the 2008 financial crisis, there has been an explosion of research trying to understand and quantify the default spillovers that can arise through counterparty risk. This first of two posts delves into the analysis of financial network contagion through this spillover channel. The authors introduce a framework, originally developed by Eisenberg and Noe, that is useful for thinking about default cascades.
Discussion Paper
How Large are Default Spillovers in the U.S. Financial System?
When a financial firm defaults on its counterparties, the counterparties may in turn become unable to pay their own creditors, and so on. This domino effect can quickly propagate through the financial system, creating undesirable spillovers and unnecessary defaults. In this post, the authors use the framework discussed in the first post of this two-part series to answer the question: How vulnerable is the U.S. financial system to default spillovers?
Viewing the U.S. Financial Structure from the Financial Crisis to the Pandemic
The 2007-08 crisis reshaped the U.S. financial sector, yet the makeup of asset holdings by key sectors remained largely unchanged between 2007 and 2019.
Discussion Paper
New York City’s Economic Recovery—Main Street Gets the Jump on Wall Street
After bottoming out in late 2009, New York City’s economy has been on the road to recovery. In this post, we call attention to an unprecedented feature of the current economic recovery: overall employment in the city began to rebound from the recession well before Wall Street started adding jobs. We also consider some questions that this development naturally raises: What took Wall Street employment so long to recover? What’s been driving job generation on Main Street? What does the recent pickup in Wall Street employment suggest about the outlook for the city’s economy?