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F e d e r a l R e s e r v e B a n k o f N e w Yo r k

Number 1

2008

ResearchUpdate
Research and Statistics Group

www.newyorkfed.org/research

Challenges of Risk Management Evolve with Retail Payment Landscape

A

ultimate success of these methods will
s retail payments shift increasingly
depend on the ability of providers to
from paper to electronic form, paymanage and mitigate risk; new payment
ment products, services, rules, and
methods that fail to do so face rejection
technologies are changing rapidly. So too
in the market.
are the risks associated with operational
The study presents an economic
disruptions, fraud, illicit use, and breaches
framework for understanding risk control
of data security. However, emerging—and
in retail payments and applies it to the
even established—providers of payment
risk associated with three types of paymethods can manage these risks by
ments: general-purpose prepaid cards,
employing the right techniques, according
e-check payments made through the
to a forthcoming study in the Economic
Automated Clearinghouse system, and
Policy Review.
proprietary online balance-transfer
In “Understanding Risk Management
systems. The payment types incorporate
in Emerging Retail Payments,” Michele
new technologies, new networks, and
Braun, James McAndrews, William
new rules to create an entirely new payRoberds, and Richard Sullivan consider
ment method. They are used in different
whether, in an evolving payment environvenues, employ different means for initiating
ment, providers of emerging payment
payments, and clear and settle transactions
methods have sufficient incentives and
tools to control risk before
problems materialize.
Also in this issue…
The authors explain that
emerging payment methods New study examines financial institutions’
pro-cyclical leverage..............................................................3
are making retail transacUpcoming in the Economic Policy Review ............................4
tions less expensive and
Staff Reports: New titles ............................................................6
easier to process, while
Papers recently published by Research
opening new commercial
Group economists ..................................................................9
venues for the transactions.
Papers presented at conferences..............................................9
As with more established
Publications and papers: January-March ............................10
forms of payment, the

RV oe ls ue ma rec h9 , U Np du amtbee r■ 4N, u 2m0b0e 6r 1 , 2 0 0 8

2

differently—yet they rely on similar risk
mitigation strategies.
Braun et al. argue that containment
programs are critical to payment risk
management. These programs include
coordinated industry efforts to develop
and maintain risk mitigation standards,
monitor compliance with standards, and
enforce penalties for noncompliance.
Limiting access to the payments system is
an essential tool, with exclusion from the
system serving as the ultimate penalty.
The authors caution that containment
alone does not eliminate risk. However, a
payments system can successfully manage
risk if it recognizes problems quickly,
encourages commitment from all participants to control risk, and uses an appropriate mix of market and public policy
mechanisms to align risk management
incentives.

An important lesson to be taken from
the study, the authors observe, is that the
techniques for mitigating the risks associated with fraud and data breaches are
thus far meeting with success. “Generally,
market mechanisms appear to encourage
providers to mitigate risks appropriately,”
they note. “Most private sector providers
have the tools to manage many of these
risks, particularly because they treat the
integrity of the network as a “club good”;
in other words, they retain the option to
exclude any party that fails to comply
with the network’s safeguards.”
The study is available at www.newyork
fed.org/research/epr/forthcoming/
0711brau.html.

Publications and Papers
The Research and Statistics Group produces a wide range of publications:
■

The Economic Policy Review—a policy-oriented journal focusing on economic
and financial market issues.

■

EPR Executive Summaries—online versions of selected Economic Policy Review
articles, in abridged form.

■

Current Issues in Economics and Finance—concise studies of topical economic
and financial issues.

■

Second District Highlights—a regional supplement to Current Issues.

■

Staff Reports—technical papers intended for publication in leading economic
and finance journals, available only online.

■

Publications and Other Research—an annual catalogue of our research output.

F e d e r a l R e s e r v e B a n k o f N e w Yo r k

www.newyorkfed.org/research

New Study Examines Financial Institutions’ Pro-cyclical Leverage

T

he financial turmoil of 2007-08
has dramatically underscored the
significance of financial intermediaries’ balance sheets for financial market
and macroeconomic performance. In
“Liquidity, Monetary Policy, and
Financial Cycles” (Current Issues in
Economics and Finance, vol. 14, no. 1),
Tobias Adrian and Hyun Song Shin
examine how banks and other financial
intermediaries manage their balance
sheets in response to market price fluctuations. In particular, the authors track how
these institutions adjust their leverage
when the value of their balance sheet
assets rises or falls.
The authors find that, contrary to common assumptions, financial institutions
increase their leverage during asset price
booms and reduce it during downturns—
in other words, financial institution leverage is pro-cyclical. Such behavior, the
authors argue, tends to exacerbate the
fluctuations of the financial cycle.
How does this occur? As Adrian and
Shin explain, the balance sheet adjustments of individual institutions have the
potential to set adverse feedback effects
in motion. During a boom, institutions
react to the increase in the value of their
assets by using borrowed funds to buy
more of the assets. The increased
demand for these assets pushes up the
price, strengthening the institutions’ balance sheets, and prompts the institutions
to boost their leverage and further
expand their asset holdings.

During downturns, this dynamic is
reversed: Institutions react to a decline in
asset value and the weakening of their
balance sheets by reducing leverage. To
pay down debt, they may sell assets; such
sales depress the price of the assets and
weaken balance sheets further, setting off
another round of selling and price declines.
These institutional behaviors can affect
the economy as a whole: Balance sheet
adjustments that result in pro-cyclical
leverage will amplify shocks to asset prices.
According to Adrian and Shin, the tool
that financial institutions use to adjust
their leverage is collateralized borrowing
or, more specifically, the repurchase
agreement (repo). The authors suggest
that the growth rate of the stock of repos
may consequently be a very useful measure of liquidity in a market-based system.
Taking their analysis a step further,
Adrian and Shin show a close correlation
between the growth rate of repos and the
degree of ease in monetary policy: “When
monetary policy is loose, the stock of repos
grows rapidly and market liquidity is
high; when monetary policy is tight, repo
growth is slow and market liquidity declines
markedly.” This correlation leads the
authors to observe that the federal funds
rate—the short-term rate targeted by policymakers—could be an important determinant of the growth of balance sheets and
the liquidity of the financial system.
The article is available at www.newyorkfed
.org/research/current_issues/ci14-1.html.

Research and Statistics Group

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Research Update

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Number 1, 2008

Upcoming in the Economic Policy Review

T

he articles below are now available
on our website (www.newyorkfed
.org/research/epr/index.html).
All but the first one will be part of an
upcoming volume devoted to payments
systems.

Signal or Noise? Implications of the Term
Premium for Recession Forecasting
Joshua V. Rosenberg and Samuel Maurer

4

Since the 1970s, an inverted yield curve
has been a reliable signal of an imminent
recession. One interpretation of this signal
is that markets expect monetary policy to
ease as the Federal Reserve responds to an
upcoming deterioration in economic conditions. Some have argued that the yield
curve inversion in August 2006 did not signal an imminent recession, but instead was
triggered by an unusually low level of the
term premium. This article examines
whether changes in the term premium can
distort the recession signal given by an
inverted yield curve. The authors use the
Kim and Wright (2005) decomposition of
the term spread into an expectations component and a term premium component to
compare recession forecasting models with
and without the term premium. They find
that the expectations component of the
term spread is a leading indicator of recession, while the term premium component
is not. Their analysis of recession forecasting performance provides some evidence
that a model based on the expectations
component is more accurate than the standard model that uses the term spread.

Changes in the Timing Distribution
of Fedwire Funds Transfers
Olivier Armantier, Jeffrey Arnold,
and James McAndrews
The Federal Reserve’s Fedwire funds transfer service—the biggest large-value payments system in the United States—has
long displayed a peak of activity in the late

F e d e r a l R e s e r v e B a n k o f N e w Yo r k

afternoon. Theory suggests that the concentration of late-afternoon Fedwire activity
reflects coordination among participating
banks to reduce liquidity costs, delay costs,
and credit risk; as these costs and risk
change over time, payment timing most
likely will be affected. This article seeks to
quantify how the changing environment in
which Fedwire operates has affected the
timing of payment value transferred within
the system between 1998 and 2006. It
finds that the peak of the timing distribution has become more concentrated, has
shifted to later in the day, and has actually
divided into two peaks. The authors suggest that these trends can be explained by
a rise in the value of payments transferred
over Fedwire, the settlement patterns of the
private settlement institutions that use the
system, and an increase in industry concentration. Although the study’s results provide no specific evidence of heightened
operational risk attributable to activity
occurring later in the day, they point to a
high level of interaction between Fedwire
and private settlement institutions.

The Timing and Funding of CHAPS
Sterling Payments
Christopher Becher, Marco Galbiati,
and Merxe Tudela
Real-time gross settlement (RTGS) systems
such as CHAPS Sterling require large
amounts of liquidity to support payment
activity. To meet their liquidity needs,
RTGS participants borrow from the central
bank or rely on incoming payments from
other participants. Both options can prove
costly—the latter in particular if participants
delay outgoing payments until incoming
ones arrive. This article presents an empirical analysis of the timing and funding of
payments in CHAPS. The authors seek to
identify the factors driving the intraday
profile of payment activity and the extent
to which incoming funds are used as a
funding source, a process known as liquidity

www.newyorkfed.org/research

recycling. They show that the level of liquidity recycling in CHAPS is high and
stable throughout the day, and attribute
this result to several features of the system.
First, the settlement of time-critical payments provides liquidity to the system early
in the settlement day; this liquidity can be
recycled for the funding of less urgent payments. Second, CHAPS throughput guidelines provide a centralized coordination
mechanism, in effect limiting any tendency
toward payment delay. Third, the relatively
small direct membership of CHAPS facilitates coordination between members, for
example, through the use of bilateral net
sender limits. Coordination encourages
banks to maintain a relatively constant flux
of payments throughout the day. The
authors also argue that the high level of
recycling helps to reduce liquidity risk, and
that the relatively smooth intraday distribution of payments serves to mitigate operational risk associated with highly concentrated payment activity. They note, however,
that the benefits of liquidity recycling are
not evenly distributed among members
of CHAPS.

An Economic Analysis of LiquiditySaving Mechanisms
Antoine Martin and James McAndrews
A recent innovation in large-value payments systems has been the design and
implementation of liquidity-saving mechanisms (LSMs), tools used in conjunction
with real-time gross settlement (RTGS) systems. LSMs give system participants, such
as banks, an option not offered by RTGS
alone: they can queue their outgoing payments. Queued payments are released if
some prespecified event occurs. LSMs can
reduce the amount of central bank balances necessary to operate a payments system as well as quicken settlement. This
article analyzes the performance of RTGS
systems with and without the addition of
an LSM. The authors find that, in terms of
settling payments early, these mechanisms
typically outperform pure RTGS systems.
However, there are times when RTGS systems can be preferable to LSMs, such as
when many banks that send payments early
in RTGS choose to queue their payments
when an LSM is available. The authors
also show that the design of a liquiditysaving mechanism has important implications for the welfare of system participants,
even in the absence of payment netting. In
particular, the parameters specified determine whether the addition of an LSM
increases or decreases welfare. ■

Other New Publications
■

Publications and Other Research. The 2007 edition of our catalogue lists all of the
papers published in our research series as well as many papers published by our
economists in economic and finance journals, conference volumes, and scholarly books.
www.newyorkfed.org/research/publication_annuals/publications_otherresearch.html

Research and Statistics Group

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Research Update

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Number 1, 2008

New Titles in the Staff
Reports Series

not discriminate among theories that differ
in the quantitative importance of nominal
frictions.

The following new staff reports are
available at www.newyorkfed.org/
research/staff_reports.

No. 321, March 2008
Monetary Policy Analysis with Potentially
Misspecified Models
Marco Del Negro and Frank Schorfheide

MACROECONOMICS
AND GROWTH

Policy analysis with potentially misspecified
dynamic stochastic general equilibrium
(DSGE) models faces two challenges: estimation of parameters that are relevant for
policy trade-offs, and treatment of estimated
deviations from the cross-equation restrictions. This paper develops and explores
policy analysis approaches that are based
on either the generalized shock structure
for the DSGE model or the explicit modeling of deviations from cross-equation
restrictions. Using post-1982 U.S. data, the
authors first quantify the degree of misspecification in a state-of-the-art DSGE
model and then document the performance
of different interest rate feedback rules.
They find that many of the policy prescriptions derived from the benchmark DSGE
model are robust to the various treatments
of misspecifications considered in this
paper, but that quantitatively the cost of
deviating from such prescriptions varies
substantially.

No. 313, January 2008
Monetary Policy Implementation
Frameworks: A Comparative Analysis
Antoine Martin and Cyril Monnet

6

Martin and Monnet compare two stylized
frameworks for the implementation of
monetary policy. The first framework relies
only on standing facilities, and the second
one relies only on open market operations.
They show that the Friedman rule cannot
be implemented in the first framework, but
can be implemented using the second
framework. However, for a given rate of
inflation, they show that the first framework unambiguously achieves higher welfare than the second one. The authors conclude that an optimal system of monetary
policy implementation should contain elements of both frameworks. Their results
also suggest that any such system should
pay interest on both required and excess
reserves.
No. 320, March 2008
Forming Priors for DSGE Models
(and How It Affects the Assessment
of Nominal Rigidities)
Marco Del Negro and Frank Schorfheide
This paper discusses prior elicitation for the
parameters of dynamic stochastic general
equilibrium (DSGE) models and provides a
method for constructing prior distributions
for a subset of these parameters from
beliefs about the moments of the endogenous variables. The empirical application
studies the role of price and wage rigidities
in a New Keynesian DSGE model and
finds that standard macro time series can-

F e d e r a l R e s e r v e B a n k o f N e w Yo r k

No. 322, March 2008
Investment Shocks and Business Cycles
Alejandro Justiniano, Giorgio E. Primiceri,
and Andrea Tambalotti
Shocks to the marginal efficiency of investment are the most important drivers of
business cycle fluctuations in U.S. output
and hours. Moreover, like a textbook
demand shock, these disturbances drive
prices higher in expansions. The authors
reach these conclusions by estimating a
dynamic stochastic general equilibrium
(DSGE) model with several shocks and
frictions. They also find that neutral technology shocks are not negligible, but their
share in the variance of output is only
around 25 percent and even lower for

www.newyorkfed.org/research

hours. Labor supply shocks explain a large
fraction of the variation of hours at very
low frequencies, but not over the business
cycle. Finally, the study shows that imperfect competition and, to a lesser extent,
technological frictions are key to the transmission of investment shocks in the model.

INTERNATIONAL
No. 316, February 2008
Macroeconomic Interdependence
and the International Role of the Dollar
Linda Goldberg and Cédric Tille
The U.S. dollar plays a key role in international trade invoicing along two complementary dimensions. First, most U.S.
exports and imports are invoiced in dollars;
second, trade flows that do not involve the
United States are often invoiced in dollars,
a fact that has received relatively little
attention. Using a simple center-periphery
model, Goldberg and Tille show that the
second dimension magnifies the exposure
of periphery countries to the center’s monetary policy, even when direct trade flows
between the center and the periphery are
limited. When intra-periphery trade volumes are sensitive to the center’s monetary
policy, the model predicts substantial welfare gains from coordinated monetary policy.
The model also shows that although
exchange rate movements are not fully efficient, flexible exchange rates are a central
component of optimal monetary policy.

MICROECONOMICS
No. 315, January 2008
Impact of Voucher Design on Public School
Performance: Evidence from Florida
and Milwaukee Voucher Programs
Rajashri Chakrabarti

can be viewed as a “voucher shock” program that suddenly made low-income students eligible for vouchers. The 1999
Florida program can be viewed as a “threat
of voucher” program, in which schools getting an “F” grade for the first time are
exposed to the threat of vouchers, but do
not face vouchers unless and until they get
a second “F” within the next three years.
In the context of a theoretical model, the
study argues that the threatened public
schools will unambiguously improve under
the Florida-type program, and this
improvement will exceed that achieved
under the Milwaukee-type program. It then
shows that these findings are validated
empirically.

BANKING AND FINANCE
No. 312, January 2008
Run Equilibria in a Model
of Financial Intermediation
Huberto M. Ennis and Todd Keister
The authors study the Green and Lin
(2003) model of financial intermediation
with two new features: traders may face a
cost of contacting the intermediary, and
consumption needs may be correlated
across traders. They show that each feature
is capable of generating an equilibrium in
which some (but not all) traders “run” on
the intermediary by withdrawing their
funds at the first opportunity regardless of
their true consumption needs. Their results
also provide some insight into elements of
the economic environment that are necessary for a run equilibrium to exist in general
models of financial intermediation. In
particular, the findings highlight the
importance of information frictions that
cause the intermediary and traders to have
different beliefs, in equilibrium, about the
consumption needs of traders who have yet
to contact the intermediary.

This paper examines the impact of vouchers
and voucher design on public school performance. The 1990 Milwaukee experiment

Research and Statistics Group

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Research Update

8

■

Number 1, 2008

No. 314, January 2008
What Can We Learn from Privately Held
Firms about Executive Compensation?
Rebel A. Cole and Hamid Mehran

No. 319, March 2008
Settlement Delays in the Money Market
Leonardo Bartolini, Spence Hilton,
and James McAndrews

This study examines the determinants of
CEO compensation using data from a
nationally representative sample of privately
held U.S. corporations. It finds that 1) paysize elasticity is much larger for privately
held firms than for the publicly traded
firms on which previous research has
almost exclusively focused; 2) executives at
C-corporations are paid significantly more
than executives at S-corporations; 3) executive pay is inversely related to CEO ownership; 4) executive pay is inversely related to
leverage; and 5) executive pay is associated
with a number of CEO characteristics,
including age, education, and gender; it is
inversely related to CEO age and positively
related to educational attainment, and
female executives are paid significantly less
than their male counterparts.

The authors track 38,000 money market trades
from execution to delivery and return to provide a first empirical analysis of settlement
delays in financial markets. In line with predictions from recent models showing that
financial claims are settled strategically, they
document a tendency by lenders to delay
delivery of loaned funds until the afternoon
hours. The authors find that banks follow a
simple strategy to manage the risk of account
overdrafts—delaying the settlement of large
payments relative to that of small payments.
They also find evidence of strategic delay
in the return of borrowed funds, although
they can explain a smaller fraction of the
dispersion in delays in the return than in
the delivery leg of money market lending.

No. 318, March 2008
Understanding the Securitization
of Subprime Mortgage Credit
Adam B. Ashcraft and Til Schuermann
Ashcraft and Schuermann provide an
overview of the subprime mortgage securitization process and the seven key informational frictions that arise. They discuss the
ways that market participants work to minimize these frictions and speculate on how
this process broke down. They continue
with a complete picture of the subprime
borrower and the subprime loan, discussing both predatory borrowing and
predatory lending. The authors present the
key structural features of a typical subprime securitization, document how rating
agencies assign credit ratings to mortgagebacked securities, and outline how these
agencies monitor the performance of mortgage pools over time. Throughout the
paper, they draw upon the example of a
mortgage pool securitized by New Century
Financial during 2006.

F e d e r a l R e s e r v e B a n k o f N e w Yo r k

QUANTITATIVE METHODS
No. 317, February 2008
Forecasting Economic and Financial
Variables with Global VARs
M. Hashem Pesaran, Til Schuermann,
and L. Vanessa Smith
The authors use a global vector autoregressive (GVAR) model to generate out-of-sample
one-quarter- and four-quarters-ahead forecasts of real output, inflation, real equity
prices, exchange rates, and interest rates
over the period 2004:1-2005:4 for 134
variables from twenty-six regions made up
of thirty-three countries covering about 90 percent of world output. The forecasts are
compared with typical benchmarks, and
the effects of model and estimation uncertainty on forecast outcomes are examined
by pooling forecasts obtained from different
GVAR models estimated over alternative
sample periods. The authors find that
averaging forecasts across both models and
windows makes a significant difference.
Indeed, the double-averaged GVAR forecasts performed better than the benchmark
forecasts, especially for output, inflation,
and real equity prices. ■

www.newyorkfed.org/research

Recently Published
Mary Amiti. 2008. “Trade Costs and
Location of Foreign Firms in China,” with
Beata S. Javorcik. Journal of Development
Economics 85, no. 1-2 (February): 129-49.
Leonardo Bartolini. 2008. “Money Market
Integration,” with Spence Hilton and
Alessandro Prati. Journal of Money, Credit,
and Banking 40, no. 1 (February): 193-214.
Charles Steindel. 2008. “Propensity to
Consume, Marginal.” In William A. Darity, Jr.,
ed., International Encyclopedia of the

Social Sciences, 2nd ed., 544-6. Farmington
Hills, Mich.: Macmillan Reference USA.
Charles Steindel. 2008. “Propensity to
Save, Marginal.” In William A. Darity, Jr.,
ed., International Encyclopedia of the
Social Sciences, 2nd ed., 546-7. Farmington
Hills, Mich.: Macmillan Reference USA.
Tanju Yorulmazer. 2008. “Information
Contagion and Bank Herding,” with Viral
V. Acharya. Journal of Money, Credit, and
Banking 40, no. 1 (February): 215-32. ■

9

Papers Presented by Economists in the Research and Statistics Group
“Intertemporal Distortions in the Second
Best,” Roc Armenter. Duke University seminar, Durham, North Carolina, January 18.
With Stefania Albanesi.
“Gains from a Redrawing of Political
Boundaries: Evidence from State
Reorganization in India,” Rajashri
Chakrabarti. 120th Annual Meeting of
the American Economic Association,
New Orleans, Louisiana, January 4.
With Joydeep Roy.
“The Intended and Unintended
Consequences of No Child Left Behind:
Evidence from Wisconsin,” Rajashri
Chakrabarti. 120th Annual Meeting of
the American Economic Association,
New Orleans, Louisiana, January 5.
“Optimal Monetary Policy under Sudden
Stops,” Vasco Cúrdia. Econometric Society
North American Winter Meeting,
New Orleans, Louisiana, January 6.
“Current Account Dynamics and Monetary
Policy,” Andrea Ferrero. Workshop cosponsored by DEFAP (Graduate School in the
Economics and Finance of Public Administration) and the Economic Research
Department of the Bank of Italy, Università
Cattolica, Milan, Italy, December 20, 2007.
With Mark Gertler and Lars Svensson.

Also presented at the CEPR (Centre for
Economic Policy Research) – CREI (Centre
de Recerca en Economia Internacional)
Third Annual Workshop on Global
Interdependence, Barcelona, Spain, March 28.
“The Long-Run Determinants of the U.S.
External Imbalances,” Andrea Ferrero.
120th Annual Meeting of the American
Economic Association, New Orleans,
Louisiana, January 4.
“How Do Treasury Dealers Manage Their
Positions?” Michael Fleming and Joshua
Rosenberg. American Finance Association
annual meeting, New Orleans, Louisiana,
January 4.
“The Lending Channel in Emerging
Markets: Are Foreign Banks Different?”
Linda Goldberg. European Central Bank
conference, Frankfurt, Germany,
November 16, 2007.
“Macroeconomic Interdependence and the
International Role of the Dollar,” Linda
Goldberg. City University of New York
Graduate Center seminar, New York City,
March 4.

Research and Statistics Group

Research Update

■

Number 1, 2008

“The Optimal Level of International
Reserves for Emerging Market Countries:
A New Formula and Some Applications,”
Linda Goldberg. 120th Annual Meeting of
the American Economic Association, New
Orleans, Louisiana, January 4. With Olivier
Jeanne and Romain Rancière.
“Market Turmoil: Is It Liquidity or Is It
Credit?” Til Schuermann. Conference
sponsored by Trader Monthly and World
Research Group, New York City, January 29.

10

“The Seven Deadly Frictions of Mortgage
Credit Securitization,” Til Schuermann.
PRMIA (Professional Risk Managers’
International Association) 2008 New York
Credit Risk Forum, New York City,
February 13. With Adam Ashcraft.

“Investment Shocks and Business Cycles,”
Andrea Tambalotti. NBER Economic
Fluctuations and Growth Program meeting,
New York City, February 11. With
Alejandro Justiniano and Giorgio Primiceri.
“Place of Work and Place of Residence:
Informal Hiring Networks and Labor
Market Outcomes,” Giorgio Topa. Seminar
cosponsored by Dijon University, CESAER
(Conference of European Schools for
Advanced Engineering Education and
Research), and INRA-ENESAD (Institut
National de la Recherche Agronomique—
Etablissement National d’Enseignement
Supérieur Agronomique de Dijon), Dijon,
France, October 22, 2007. With Patrick
Bayer and Stephen L. Ross. ■

Research and Statistics Group Publications and Papers:
January-March 2008
Publications are available at
www.newyorkfed.org/research/
publication_annuals/index.html.

The Timing and Funding of CHAPS
Sterling Payments
Christopher Becher, Marco Galbiati,
and Merxe Tudela

ECONOMIC POLICY REVIEW,
FORTHCOMING

An Economic Analysis of LiquiditySaving Mechanisms
Antoine Martin and James McAndrews

Signal or Noise? Implications of
the Term Premium for Recession
Forecasting
Samuel Maurer and Joshua V. Rosenberg

CURRENT ISSUES IN
ECONOMICS AND FINANCE,
VOL. 14

Understanding Risk Management
in Emerging Retail Payments
Michele Braun, James McAndrews,
William Roberds, and Richard Sullivan

No. 1, January/February 2008
Liquidity, Monetary Policy,
and Financial Cycles
Tobias Adrian and Hyun Song Shin

Changes in the Timing Distribution
of Fedwire Funds Transfers
Olivier Armantier, Jeffrey Arnold,
and James McAndrews

No. 2, March 2008
Trends and Developments in
the Economy of Puerto Rico
Jason Bram, Francisco E. Martínez,
and Charles Steindel
Second District Highlights

F e d e r a l R e s e r v e B a n k o f N e w Yo r k

www.newyorkfed.org/research

STAFF REPORTS
No. 312, January 2008
Run Equilibria in a Model of Financial
Intermediation
Huberto M. Ennis and Todd Keister
No. 313, January 2008
Monetary Policy Implementation
Frameworks: A Comparative Analysis
Antoine Martin and Cyril Monnet
No. 314, January 2008
What Can We Learn from Privately
Held Firms about Executive
Compensation?
Rebel A. Cole and Hamid Mehran
No. 315, January 2008
Impact of Voucher Design on Public
School Performance: Evidence from
Florida and Milwaukee Voucher
Programs
Rajashri Chakrabarti
No. 316, February 2008
Macroeconomic Interdependence and
the International Role of the Dollar
Linda Goldberg and Cédric Tille

No. 317, February 2008
Forecasting Economic and Financial
Variables with Global VARs
M. Hashem Pesaran, Til Schuermann,
and L. Vanessa Smith
No. 318, March 2008
Understanding the Securitization
of Subprime Mortgage Credit
Adam B. Ashcraft and Til Schuermann
No. 319, March 2008
Settlement Delays in the Money Market
Leonardo Bartolini, Spence Hilton,
and James McAndrews
No. 320, March 2008
Forming Priors for DSGE Models
(and How It Affects the Assessment
of Nominal Rigidities)
Marco Del Negro and Frank Schorfheide
No. 321, March 2008
Monetary Policy Analysis with
Potentially Misspecified Models
Marco Del Negro and Frank Schorfheide
No. 322, March 2008
Investment Shocks and Business Cycles
Alejandro Justiniano, Giorgio E. Primiceri,
and Andrea Tambalotti

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