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The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
The Fed’s Monetary Tightening and the Risk Levels of US Banks image
  Between March 7, 2022, and March 6, 2023, the Federal Reserve increased the federal funds rate by nearly 4.5 percentage points. This led to a $2.2 trillion aggregate decline in the market value of long-term bank assets such as government bonds, mortgages, and corporate loans. These decreases are not fully reflected in banks’ book values. In Monetary Tightening and US Bank Fragility in 2023: Mark-to-Market Losses and Uninsured Depositor Runs? (NBER...

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The Unexpected Compression: Competition at Work in the Low Wage Labor Market figure
While the onset of the COVID-19 pandemic saw the sharpest drop in US employment of the post-WWII era, the post-2020 employment rebound has been as dramatic as the fall that preceded it. Amidst this labor market tightening, the relative standing of young, non-college-educated workers — who are disproportionately near the bottom of the earnings distribution — improved. Real wages of workers at the 10th percentile of the hourly earnings distribution rose by 6.4 percent...
Donor Contracting Conditions and Public Procurement: Causal Evidence from Kenyan Electrification figure
Governments and multilateral institutions often implement policies through procurement contracts: agreements with private companies for building a piece of infrastructure or delivering a good or service. Procurement contracts are usually complex, and they often leave substantial discretion to the winning bidder. Some contracts simply instruct a private company to procure the required goods or services, while others detail additional requirements such as suppliers that may...
Before rail and communication networks spurred the introduction of time zones in the late nineteenth century, most towns operated on “solar time,” with noon occurring around when the sun was at its apex. Today, solar noon occurs about an hour earlier in clock time at the east end of a time zone than at the west end. As a result, in winter, workers in Grand Rapids, Michigan, heading to work at 7:30 a.m. may be doing so in the dark, even though the sun has already risen on...
Many analyses of economic growth have focused on presumably relevant ratios in the innovation pipeline, such as research and development spending as a share of GDP and the proportion of the labor force employed in the research sector. Recent data from the US raise questions, however, about the links. Total factor productivity growth has slowed markedly since 2005 even though the share of inventors in the labor force has grown by over 70 percent. In Where Have All...
While it has been widely documented that financial conditions are correlated across countries, less is known about the origins of this comovement. A new study explores the effect of US macroeconomic news on global markets, and analyzes how such news contributes to the correlation of global stock returns. In The US, Economic News, and the Global Financial Cycle (NBER Working Paper 30994), Christoph E. Boehm and T. Niklas Kroner find that...
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