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Discussion Paper
Consumer behavior and payment choice : 2006 conference summary
This paper summarizes the proceedings of the second Consumer Behavior and Payment Choice conference, held at the Federal Reserve Bank of Boston on July 25?27, 2006. These conferences are unique in featuring the collaboration of two groups of payments experts ? the private-sector payments industry on the one hand, and the academic, research, and policymaking communities on the other ? to stimulate more research and understanding of consumer payment behavior. The central focus of this second conference was learning more about the numerous consumer payments data sources that are available ? but ...
Discussion Paper
Shifting confidence in homeownership: the Great Recession
The authors study the responses to several questions related to real estate that were added to the Michigan Survey of Consumers in July and August 2011. In particular, they asked about attitudes toward renting versus buying a home, about commuting, and about how much to spend on a mortgage. By matching the results to data (at the ZIP-code level) about relative house price declines during the recent crisis, they can study the relationship between the U.S. housing crash and the attitudes of individual consumers. They find that younger respondents are relatively less confident about ...
Discussion Paper
The 2009 survey of consumer payment choice
This paper presents results of the 2009 Survey of Consumer Payment Choice (SCPC), along with revised 2008 SCPC data. In 2009, the average U.S. consumer held 5.0 of the nine payment instruments available, including cash, and used 3.8 of them during a typical month. Between the 2008 and 2009 surveys, a period that includes the trough of the latest recession, consumers significantly increased their use of cash and close substitutes for cash, such as money orders and prepaid cards. At the same time, consumers reduced their use of credit cards and (to a lesser extent) debit cards, as well as ...
Discussion Paper
Alternative measures of the Federal Reserve banks' cost of equity capital
The Monetary Control Act of 1980 requires the Federal Reserve System to provide payment services to depository institutions through the twelve Federal Reserve Banks at prices that fully reflect the costs a private-sector provider would incur, including a cost of equity capital (COE). Although Fama and French (1997) conclude that COE estimates are ?woefully? and ?unavoidably? imprecise, the Reserve Banks require such an estimate every year. We examine several COE estimates based on the Capital Asset Pricing Model (CAPM) and compare them using econometric and materiality criteria. Our results ...
Discussion Paper
The role of banks in the transmission of monetary policy
The transmission of monetary policy, especially in light of recent events, has received increased attention, especially with respect to the efficacy of the bank lending channel. This paper summarizes the issues associated with isolating the bank lending channel and determining the extent to which it is operational. Evidence on the effectiveness of the bank lending channel is presented, both in the United States and abroad. The paper then provides observations about the likely consequences for the effectiveness of the lending channel of the changes in the financial environment associated with ...
Discussion Paper
The Supplemental Security Income Program and welfare reform
Over the past 20 years, the Supplemental Security Income Program (SSI), which provides federally funded income support for disabled individuals, has become one of the most important means-tested cash aid programs in the United States. However, little research has examined the determinants of growth in SSI caseloads across states and over time. In this paper I use state panel data, exploiting variation both across states and over time, to determine what factors determine SSI disabled caseloads. I examine the relative importance of a number of factors, including economic conditions, health ...
Discussion Paper
An economic analysis of the 2010 proposed settlement between the Department of Justice and credit card networks
In 2010, the Department of Justice (DOJ) filed a lawsuit against the credit card networks American Express, MasterCard, and Visa for alleged antitrust violations. We evaluate the extent to which the recently proposed settlement between the DOJ and Visa and MasterCard (henceforth, "Proposed Settlement") is likely to achieve its central objective: "?to allow Merchants to attempt to influence the General Purpose [Credit] Card or Form of Payment Customers select by providing choices and information in a competitive market." In word and spirit, the Proposed Settlement represents a significant ...
Discussion Paper
Wives' work and family income mobility
Over the past 30 years, married women in the United States have significantly increased their labor market activity and become an integral factor in their families? ongoing economic wellbeing. This change raises questions about the economic impact of two-earner families becoming the norm. Do American families now need both a working husband and a working wife to have any hope of getting ahead or to keep from falling behind? How much does a wife?s labor market activity (participation, hours, and earnings) matter in her family?s ability to make income gains, hold its place relative to other ...
Discussion Paper
Labor-market polarization over the business cycle
During the last few decades, labor markets in advanced economies have become ?polarized? as relative labor demand grows for high- and low-skill workers while it declines for middle-skill workers. This paper explores how polarization has interacted with the U.S. business cycle since the late 1970s. Consistent with previous work, the authors find that recessions are strongly synchronized across workers with different skills. Even high-skill workers favored by polarization suffer during recessions; this is particularly true during the last two downturns. Additionally, there is no evidence that ...
Discussion Paper
Oil and the macroeconomy in a changing world: a conference summary
Analysis of oil-price movements is once again an important feature of economic policy discussions. To provide some background for this analysis, this paper summarizes a conference on the oil market held at the Federal Reserve Bank of Boston in June 2010. Four cross-cutting themes emerged from this symposium, which included scientific experts, market participants, business leaders, academics, and policymakers. First, the decline in real oil prices that followed the 1970s' oil shocks is unlikely to be repeated today, because there are fewer ways in which oil-importing countries can reduce oil ...