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Newsletter
A Dollar’s Worth: Inflation Is Real
Understanding the reality of inflation can help consumers make decisions in personal finance. Learn more about inflation, how it’s measured, and how the inflation rate is calculated in the December 2021 issue of Page One Economics: Focus on Finance.
Journal Article
Childhood savings and college success
As the cost of postsecondary education continues to rise, many families, especially low-income families, are concerned about their ability to pay. A variety of initiatives are making it easier to start saving early.
Journal Article
Asset Diversification and Low Debt Are the Keys to Building and Maintaining Wealth
Greatly expanded access to home mortgages during the 1980s, 1990s, and 2000s appeared to make the American dream a reality for millions of families. Homeownership was attainable by many who, for the first time, were able to take out a mortgage with an extremely low or no down payment ? even if they had a blemished credit history or none at all. For those with access to their accumulated home equity through mortgage refinancing or other home-secured borrowing, as well as to other sources of credit, lack of available cash no longer meant that they had to delay making routine purchases, buying a ...
Journal Article
Time deposits in monetary analysis
Journal Article
Using financial innovation to support savers: from coercion to excitement
The simplest ideas for helping Americans save may be the most powerful. One process innovation would allow workers once again to purchase U.S. Savings Bonds on their tax returns. An example of a product innovation is a savings account tied to winning a prize.
Working Paper
Designing Unemployment Insurance for Developing Countries
The high incidence of informality in the labor markets of middle-income economies challenges the provision of unemployment protection. We show that, despite informational frictions, introducing an unemployment insurance savings account (UISA) system may provide substantial benefits. This system improves welfare by providing insurance to the unemployed and creating incentives to work in the formal sector. The optimal scheme generates a reduction in unemployment (from 4 to 3 percent), an increase in formality (from 68 to 72 percent), and a rise in total output (by 4 percent). Overall, ...
Journal Article
Savings account usage by low- and moderate-income people in the Chicago Metropolitan Area
Holding a savings vehicle with mainstream financial institutions carries several benefits including asset building opportunities, secure storage of income, a cushion against unforeseen financial events and the ability to establish or maintain a positive credit history. To better understand the demand for savings products among low- and moderate-income (LMI) people, the Federal Reserve Bank of Chicago sponsored a series of savings behavior questions in the 2001-2002 Metro Chicago Information Center?s annual household survey. Our findings offer evidence that lower-resource consumers accumulate ...
Briefing
Walmart Checking and Apple Savings: Different Motivations, Similar Outcomes?
Walmart and Apple have announced plans to offer traditional financial accounts. Walmart’s consumer checking account may advance financial inclusion by increasing account access to unbanked and underbanked consumers. Apple’s consumer savings account may change how credit card issuers offer rewards to their customers. Both offerings are likely to increase competition in the financial services industry, though whether they ultimately benefit consumers remains to be seen.
Journal Article
Kids Bank Encourages Early Saving in Fort Worth
A unique partnership between Unity One Federal Credit Union and Fort Worth's Washington Heights Elementary School created a "Kids Bank" that encourages savings and teaches children valuable financial skills that will benefit them for a lifetime.
Working Paper
Designing Unemployment Insurance for Developing Countries
The benefits of implementing Unemployment Insurance Savings Accounts (UISAs) are studied in the presence of the multiple sources of information frictions often existing in developing countries. A benchmark incomplete markets economy is calibrated to Mexico in the early 2000s. The unconstrained optimal allocation would imply very large welfare gains relative to the benchmark economy (similar to an increase in consumption of 23% in every period). More importantly, in presence of multiple sources of information frictions, about half of those potential gains can be accrued through the ...