Recent Articles
Rising Interest Rates, Mortgage Interest Rates, and New York Home Prices
Richmond Kyei Fordjour
September 15, 2017
Rising interest rates are often assumed to cool housing markets, yet recent data suggest a more nuanced reality. In New York and nationwide, home prices continued to climb even as mortgage rates increased. Examining mortgage–Treasury spreads reveals that relative borrowing costs and housing demand have moved largely in tandem, helping explain why higher rates have not halted price appreciation.
Technical Note: Federal Funds Rate Hike and Sovereign Risk in Latin America
We conduct a country-by-country time series analysis of the government reaction function using impulse response of the country risk (Measured by the EMBIG) to an increase in de Federal Funds Rate.
Federal Funds Rate Hike and Sovereign Risk in Latin America
Miguel Acosta-Henao
August 31, 2017
As the Federal Reserve begins raising interest rates, memories of past turmoil in Latin America resurface. Although the region is better prepared than in the 1980s, higher U.S. rates still elevate sovereign risk through capital outflows and currency depreciation. Empirical evidence suggests that without stronger institutions and reforms, Fed tightening could again weigh heavily on growth.
How Bad Will It Be If We Hit the Debt Ceiling?
Paul Krugman
August 19, 2017
The risk of a U.S. debt default is no longer remote, and its consequences are deeply uncertain. American debt underpins the global financial system as the ultimate safe asset, a role built on trust in governance. A temporary lapse might be absorbed, but a perceived breakdown in political credibility could shatter confidence and trigger severe economic disruption.
Which U.S. Administration is Fiscally Responsible?
Merih Uctum
July 31, 2017
Recurring debt-ceiling crises obscure a consistent pattern in U.S. fiscal policy. Historical and econometric evidence shows that Democratic administrations have tended to reduce deficits and stabilize debt, while Republican administrations often leave higher debt burdens behind. As political brinkmanship intensifies and long-term pressures mount, uncertainty over governance risks raising borrowing costs and undermining fiscal sustainability.
Tech. Note: Which U.S. Administration is Fiscally Responsible?
Merih Uctum
July 31, 2017
We conduct a time series analysis of the government reaction function using impulse response of the primary surplus/GDP ratio to an increase in debt/GDP ratio. This is one of the metrics used in the fiscal policy literature to measure the sustainability of the public finances.
A Finger Exercise on Hyperglobalization
Paul Krugman
July 11, 2017
The surge in global trade after 1990 was driven less by tariffs than by falling transport costs and the rise of global value chains. Small reductions in trade barriers dramatically reshaped where production occurred by making cross-border assembly viable. This “hyperglobalization” fueled rapid trade growth—but its effects increasingly look like a one-time shift rather than a continuing trend.
The United States, Mexico, and NAFTA
The Economic Studies Group
June 28, 2017
U.S.–Mexico trade has expanded dramatically since NAFTA, with growth driven less by finished goods than by deeply integrated supply chains in autos, electronics, and other manufacturing sectors. Alongside these intra-industry flows, the U.S. runs a services surplus and engages in complementary agricultural trade. The evidence suggests that renegotiation risks disrupting established production networks whose benefits and costs vary sharply across industries and states.