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On January 20, 2014, the U.S. Treasury introduced the floating-rate note, its first new marketable debt instrument since Treasury inflation-protected securities (TIPS) in 1997. The bloggers discuss Treasury’s reasons for adopting a floating-rate note (FRN) as well as the existing FRN markets, expected FRN market participants, and results of the first FRN Treasury security auction.
By Ezechiel Copic, Luis Gonzalez, Caitlin Gorback, Blake Gwinn, and Ernst Schaumburg
The authors present a new measure of underlying inflation—the FRBNY Staff Underlying Inflation Gauge (UIG). A less noisy series than CPI inflation or PCE inflation, the UIG is derived from a broad data set that includes asset prices and real variables (such as unemployment data) and that considers the specific and time-varying persistence of individual subcomponents of an inflation series.
By Marlene Amstad, Simon Potter, and Robert Rich, Staff Reports, Number 672, April 2014
This primer—a compilation of two papers—provides a detailed description of the GCF Repo Service, a financial service provided by the Fixed Income Clearing Corporation. The first paper focuses on how GCF Repo trades are cleared and settled, and describes how current reforms to the settlement of repos relate to this service; the second focuses on how dealers use this financial service.
By Paul Agueci, Leyla Alkan, Adam Copeland, Isaac Davis, Antoine Martin, Kate Pingitore, Caroline Prugar, and Tyisha Rivas, Number 671, April 2014
The authors build a model of a financial intermediary, in the tradition of Diamond and Dybvig (1983), and show that allowing the intermediary to impose redemption fees or gates in a crisis—a form of suspension of convertibility—can lead to preemptive runs.
By Marco Cipriani, Antoine Martin, Patrick McCabe, and Bruno M. Parigi , Staff Reports, Number 670, April 2014
The authors propose a way to assess whether national accounts or survey means perform better in capturing differences in income across countries and over time, creating a new measure of income per capita that is an optimal combination of national accounts and survey means data.
By Maxim Pinkovskiy and Xavier Sala-i-Martin, Staff Reports, Number 669, April 2014
Student loans have come to play an increasingly important role in financing higher education, but they are not well understood. The authors bring a new data set to bear on this important issue and present a brief analysis of historical and current levels of student debt and how that debt is performing.
Meta Brown, Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw, Staff Reports, Number 668, April 2014