Central banks

FEDS Paper: Pretend or Amend? On Evergreening in CRE

05/04/2026 Federal Reserve Central banks

David GlancyLoan modifications can either amplify or mitigate credit losses depending on the strategy lenders employ. Using detailed supervisory data and a model incorporating various frictions that could encourage modifications (liquidity constraints, foreclosure costs, and loss recognition costs), I assess why banks extend CRE loans. I find that extensions predominantly address temporary payment frictions, both in normal times and following the Spring 2023 bank stress episode.

Beyond borders, within societies: inequality and the global transmission of US monetary policy

05/04/2026 European Central Bank Central banks

This paper provides novel evidence on how income inequality shapes the heterogeneity of US monetary policy spillovers to GDP across foreign economies. Using state-dependent local projections and exploiting variation in disposable income inequality across 87 countries over 1966-2020, we show that household heterogeneity influences how foreign GDP responds to a US monetary tightening. GDP contracts up to one and a half times more when inequality is above average. However, while higher inequality amplifies negative spillovers in advanced economies, it mitigates them in emerging markets.

FEDS Paper: Financial Well-being and Inclusion of Justice Involved Populations: Evidence from the SHED

05/01/2026 Federal Reserve Central banks

Kabir Dasgupta, Jennifer Fernandez, and Alicia LloroThis study examines financial challenges faced by justice-involved individuals using 2023-2024 Survey of Household Economics and Decisionmaking data. Individuals with justice system contact experience substantially worse financial outcomes than those without criminal records, with disparities widening by severity of involvement.

FEDS Paper: The Effect of the Federal Reserve on the Stock Market: Magnitudes, Channels and Shocks

05/01/2026 Federal Reserve Central banks

Benjamin Knox and Annette Vissing-JorgensenWe survey and extend work on the Federal Reserve’s effect on the stock market, focusing on three empirical findings: The effect of monetary policy surprises in a narrow window around announcements from the Federal Open Market Committee (FOMC), the pre-FOMC announcement drift, and the FOMC cycle in stock returns.

FEDS Paper: Price-Segmented Beliefs and the U.S. Housing Boom

05/01/2026 Federal Reserve Central banks

Margaret M. JacobsonThis paper shows that expected capital gains in several MSAs were higher for relatively lower-priced, rather than higher-priced, houses during the U.S. boom of the 2000s. Because buyers of lower-priced houses tend to be more sensitive to credit conditions than buyers of higher-priced houses, this paper documents patterns that are consistent with an interaction of beliefs and credit conditions in a time period where direct evidence on house price beliefs is scarce.

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