Economic Policy Review - Federal Reserve Bank of New York

The Case for Tips: An Examination of the Costs and Benefits

Some studies suggest that the issuance of Treasury Inflation-Protected Securities (TIPS) -- inflation-indexed debt -- has not been as cost-effective for the Treasury as the issuance of nominal securities. The studies base their conclusions on ex post analysis, that is, they look back from the actual inflation outcome to determine whether TIPS issuance costs exceeded the costs of nominal Treasury issuances of similar durations. This article argues that the ex post approach has drawbacks when i...

Why Did Fdr's Bank Holiday Succeed?

After a month-long run on banks, on Mar 5, 1933, Pres Franklin Delano Roosevelt declared a nationwide Bank Holiday that shut down the banking system. The following week, in his first Fireside Chat, Roosevelt appealed directly to Americans to prevent a resumption of bank withdrawals; when the banks reopened on March 13, depositors stood in line to return their hoarded cash. The success of the Bank Holiday and the turnaround in public confidence can be attributed to the Emergency Banking Act of...

Below the Line: Estimates of Negative Equity Among Nonprime Mortgage Borrowers

Evidence from the current downturn suggests that declines in borrower equity are fundamental contributors to the rise in delinquencies and defaults on nonprime mortgage loans. Measures of housing units with negative equity-in which the mortgage balance exceeds the value of the collateral property- have become a key component in crafting policies to address the foreclosure crisis. An analysis of the prevalence and magnitude of negative equity in the US nonprime mortgage market finds that negat...