Federal Reserve Bank of St. Louis working papers are preliminary materials circulated to stimulate discussion and critial comment.
Subprime Mortgage Design by Geetesh Bhardwaj and Rajdeep Sengupta
Working Paper 2008-039E posted October 2008, updated October 2011
This paper offers evidence on the design of subprime mortgages as bridge-financing products. We show that the viability of subprime mortgages was uniquely predicated on the appreciation of house prices over short-horizons.
Subprime Loan Quality by Geetesh Bhardwaj and Rajdeep Sengupta
Working Paper 2008-036E posted October 2008, updated September 2011
This paper is an exploration of subprime mortgages over the cohorts from 2000 through 2006, especially those prior to 2004. In particular, this study contrasts subprime originations during the “boom years” of 2004-2006 with originations during an “early period” of 2000-2002.
A two-stage game depiction of counterterrorism is presented, where the emphasis is on the interaction between the preemptive and defensive measures taken by two targeted countries facing a common threat.
We explore the influence of city-level business cycle fluctuations on crime in 20 large cities in the United States. Our monthly time-series analysis considers seven crimes over an approximately 20-year period: murder, rape, assault, robbery, burglary, larceny, and motor vehicle theft.
Statistics on the size and growth of the U.S. federal government, along with the rhetoric of President Franklin Roosevelt, seem to indicate that the Great Depression was the event that started the dramatic growth in government spending and intervention in the private sector that has continued to the present day.
In standard economic theory, labor supply decisions depend on the complete set of prices: the wage and the prices of relevant consumption goods. Nonetheless, most of theoretical and empirical work ignores prices other than wages when studying labor supply. The question we address in this paper is whether the common practice of ignoring local price variation in labor supply studies is as innocuous as has generally been assumed.
We explore the relationship between disaggregated trading flows, the Canada/U.S. dollar (CAD/USD) market and U.S. macroeconomic announcements with a novel data set of unprecedented breadth and length. <a href="http://research.stlouisfed.org/econ/cneely/Data_Appendix_The_Dynamic_Interaction.pdf">Data Appendix</a>.
We present a model of crime where two municipalities exist within a metropolitan statistical area (MSA). Consistent with the literature, local law enforcement has a crime reduction effect and a crime diversion effect.
We estimate annual income elasticities of demand for lottery tickets using county-level panel data for three states and find that the income elasticity of demand (and thus the tax burden) for lottery tickets has changed over time.
Economists generally assume, implicitly, that “the return to schooling" is invariant across local labor markets. We demonstrate that this outcome pertains if and only if preferences are homothetic--a special case that seems unlikely.
Municipalities have revenue motives for enforcing traffic laws in addition to public safety motives because many traffic offenses are punished via fines and the issuing municipality often retains the revenue.
This paper describes a non-parametric, unconditional, hyperbolic quantile estimator that unlike traditional non-parametric frontier estimators is both robust to data outliers and has a root-n convergence rate.
Existing research has found an inverse relationship between urban density and the degree of income inequality within metropolitan areas, suggesting that, as cities spread out, they become increasingly segregated by income.
This paper examines what happens to mortgages in the subprime mortgage market once foreclosure proceeding are initiated. A multinominial logit model that allows for the interdependence of the possible outcomes or risks (cure, partial cure, paid off, and real estate owned) through the correlation of associated unobserved heterogeneities is estimated.
Using a theoretical extension of the Friedman and Savage (1948) utility function developed in Bhattacharyya (2003), we predict that for financial assets with negative expected returns, expected return will be a declining and convex function of skewness. Using a sample of U.S. state lottery games, we find that our theoretical conclusions are supported by the data.
Local authorities in North Carolina, and subsequently in at least 23 other states, have enacted laws intending to reduce predatory and abusive lending. While there is substantial variation in the laws, they typically extend the coverage of the Federal Home Ownership and Equity Protection Act (HOEPA) by including home purchase and open end mortgage credit, by lowering annual percentage rate (APR) and fees and points triggers, and by prohibiting or restricting the use of balloon payments and prepayment penalties.
State revenue variability is evaluated using a volatility model rooted in portfolio theory. The model evaluates how closely a state's revenue portfolio is constructed to minimize variability in total state tax revenue. The model complements parametric methods of revenue variability.
In early 2004, the U.S. Government initiated the Medicare Discount Drug Card Program (MDDCP), which created a market for drug cards that allowed elderly and handicapped subscribers to obtain discounts on their prescription drug purchases.
Human capital is typically viewed as generating a number of desirable outcomes, including economic growth. Yet, in spite of its importance, few empirical studies have explored why some economies accumulate more human capital than others. This paper attempts to do so using a sample of more than 200 metropolitan areas in the United States over the years 1980, 1990, and 2000.
This paper demonstrates that levels of entrepreneurship can be greatly affected by the general policy environment. Using a state-level panel, we estimate the effects of several policy variables on rates of entrepreneurship and find that bankruptcy exemptions, corporate tax rates, and the level of the minimum wage all affect a state's rate of entrepreneurship.