ECONOMY
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Measuring Labor Market Tightness: Data Update and New Web Feature
Sebastian Heise, Jeremy Pearce, and Jacob P. Weber Good measures of labor market tightness are essential to predict wage inflation and to calibrate monetary policy. In an October 2024 post, we introduced a new indicator of labor market tightness and showed that it tracked wage inflation best out of a broad range of tightness measures. In this post, we update…
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What Is a Carbon Tariff and Why Is the EU Imposing One?
Pierre Coster, Julian di Giovanni, and Isabelle Mejean The European Union has been an early adopter of carbon policies, with the introduction of the EU Emissions Trading System (ETS) in 2005. This scheme sets a common price for carbon and is applied to the most polluting manufacturing sectors. By increasing the cost of emissions-intensive production, the system incentivizes firms to…
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Which Entrepreneurs Boost Productivity? – Liberty Street Economics
Ufuk Akcigit, Harun Alp, Jeremy Pearce, and Marta Prato Why do some entrepreneurs drive economic growth while others do not? This piece discusses new work that studies entrepreneurs using a comprehensive dataset from Denmark. We study who becomes an entrepreneur, along with their hiring and business decisions, and find that a distinct minority are “transformative.” These individuals, who generate disproportionate…
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A New Public Data Source: Call Reports from 1959 to 2025
Sergio Correia, Tiffany Fermin, Stephan Luck, and Emil Verner Call Reports are regulatory filings in which commercial banks report their assets, liabilities, income, and other information. They are one of the most-used data sources in banking and finance. In this post, we describe a new dataset made available on the Federal Reserve Bank of New York’s website that contains time-consistent balance…
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Tariffs, Trade, and Tumbling Credit Scores: The Top 5 LSE Posts of 2025
Maureen Egan Each year brings a new set of economic challenges: In 2025, major areas of focus included tariffs and trade tensions, as well as the financial pressures facing younger adults. New York Fed economists contributed insightful research on both topics—and readers took notice. In fact, all five of the year’s most-read posts on Liberty Street Economics analyzed aspects of…
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Letters of Recommendation in the PhD Job Market: Lessons from Specialized Banks
Kristian S. Blickle and Cecilia Parlatore Banks must extract useful signals of a potential borrower’s quality from a large set of possibly informative characteristics when making lending decisions. A model that speaks to how banks specialize in lending to an industry in order to better extract signals from data, can potentially be applied to a number of real-world scenarios. In…
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Designing Bank Regulation with Accounting Discretion
Kinda Hachem Why does the banking industry remain prone to large and costly disruptions despite being so heavily regulated? Is there a need for more regulation, less regulation, or simply different regulation? Our recent Staff Report combines insights from academic research in economics, finance, and accounting to provide a deeper understanding of the challenges involved in designing and implementing bank…
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The New York Fed DSGE Model Forecast— December 2025
Marco Del Negro, Ibrahima Diagne, Keshav Dogra, Elena Elbarmi, Donggyu Lee, and Michael Pham This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. We describe very briefly our forecast and its change since September 2025. To summarize, growth in 2025 is expected to be stronger than…
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U.S. Banks Have Developed a Significant Nonbank Footprint
Nicola Cetorelli and Saketh Prazad In light of the rapid growth of nonbank financial institutions (NBFIs), many have argued that bank-led financial intermediation is on the decline, based on the traditional notion that banks operate to take in deposits and make loans. However, we argue that deposit-taking and loan-making have not accurately characterized U.S. banking operations in recent decades. Instead,…
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The Future of Payment Infrastructure Could Be Permissionless
Rod Garratt and Michael Junho Lee Following the recent passage of legislation in the U.S., payment stablecoins seem to be on the brink of wider-scale adoption and explosive growth in market capitalization. In this post, we contend that the driving factor is not their proximity to digital cash instruments, but rather how they are transferred—via global, open-access, peer-to-peer systems, or…
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