Working Papers - Federal Reserve Bank of Atlanta - FRB Atlanta Several series of papers presenting the scholarly research of Atlanta Fed staff economists and visiting scholars. Community Affairs discussion papers address topical issues in community development. http://www.frbatlanta.org/rss/ en-us http://www.frbatlanta.org/ Atlanta Fed Logo http://www.frbatlanta.org/~/media/Images/assets/image_gallery/frba_logo_rss http://www.frbatlanta.org/rss/ The "Matthew Effect" and Market Concentration: Search Complementarities and Monopsony Power https://www.frbatlanta.org:443/research/publications/wp/2021/01/15/04-matthew-effect-market-concentration-search-complementarities-and-monopsony-power?item=96F30446-A7E4-4756-BC7C-BEA3F9009F8E 96F30446-A7E4-4756-BC7C-BEA3F9009F8E Fri, 15 Jan 2021 10:02:00 EST The authors of this working paper show that search complementarities amplify small differences in productivity among firms. Market concentration fosters monopsony power in the labor market, magnifying profits and further enhancing the output share of high-productivity firms. COVID-19 Is a Persistent Reallocation Shock https://www.frbatlanta.org:443/research/publications/wp/2021/01/15/03-covid-19-persistent-reallocation-shock?item=B816ED39-F2D8-4EEE-8D4A-D4860AA433D4 B816ED39-F2D8-4EEE-8D4A-D4860AA433D4 Fri, 15 Jan 2021 10:01:00 EST Discussing evidence of COVID-19's effects as a reallocation shock, the authors of this working paper find, among other effects, that the pandemic has shifted relative employment growth trends in favor of industries with a high capacity of employees to work from home and against those with a low capacity for teleworking. Pandemic-Era Uncertainty on Main Street and Wall Street https://www.frbatlanta.org:443/research/publications/wp/2021/01/15/02-pandemic-era-uncertainty-on-main-street-wall-street?item=B9F25DF9-991D-4EC3-87B8-51F06A657543 B9F25DF9-991D-4EC3-87B8-51F06A657543 Fri, 15 Jan 2021 10:00:00 EST Using data from the Survey of Business Uncertainty, the authors of this working paper make observations about pandemic-era uncertainty in the U.S. economy, including how overall uncertainty continues to substantially dampen capital spending plans, pointing to a source of weak growth in demand and potential gross domestic product. How Important Is Health Inequality for Lifetime Earnings Inequality? https://www.frbatlanta.org:443/research/publications/wp/2021/01/06/01-how-important-is-health-inequality-for-lifetime-earnings-inequality?item=6E2716A8-0EE8-4679-959E-B831FA0C1FA1 6E2716A8-0EE8-4679-959E-B831FA0C1FA1 Wed, 06 Jan 2021 10:00:00 EST The authors of this working paper show that poor health accounts for nearly one third of the variation in lifetime earnings at age 65, primarily because it increases eligibility for social security disability benefits. Despite this, they find that these benefits are valuable and should be even more generous. Mortgage Prepayment, Race, and Monetary Policy https://www.frbatlanta.org:443/research/publications/wp/2020/12/18/22-mortgage-prepayment-race-monetary-policy?item=6DEA506B-D258-4513-B65E-E59AA945045C 6DEA506B-D258-4513-B65E-E59AA945045C Fri, 18 Dec 2020 11:31:00 EST During the period 2005 to 2020, Black borrowers paid higher interest rates on their mortgages than non-Hispanic white borrowers did. The authors of this working paper find that policies that reduce barriers to refinancing for minority borrowers can decrease this racial mortgage pricing inequality. COVID-19 and SME Failures https://www.frbatlanta.org:443/research/publications/wp/2020/12/03/21-covid-19-and-sme-failures?item=7A34E5B6-A5CB-4D28-A26C-ED02A9B24182 7A34E5B6-A5CB-4D28-A26C-ED02A9B24182 Thu, 03 Dec 2020 15:08:00 EST Evaluating the impact of COVID-19 on small business failures in 17 countries, the authors of this working paper estimate that, absent government intervention, 3.1 percent of private sector employment is at risk. While the fiscal cost of interventions targeting at-risk firms is modest (0.54 percent of GDP), nontargeted subsidies are costly (1.82 percent of GDP). Limited Household Risk Sharing: General Equilibrium Implications for the Term Structure of Interest Rates https://www.frbatlanta.org:443/research/publications/wp/2020/11/09/20-general-equilibrium-implications-for-term-structure-of-interest-rates?item=0CB89694-5EB0-43AC-927F-ACE4BE480C2A 0CB89694-5EB0-43AC-927F-ACE4BE480C2A Mon, 09 Nov 2020 11:31:00 EST The authors of this working paper present a theory in which nondiversifiable labor income risk plays an important role in the aggregate demand for Treasury securities. Their production-based model relates interest rate dynamics to observable labor market variables. They provide evidence for their predictions. Stock-Bond Return Correlation, Bond Risk Premium Fundamentals, and Fiscal-Monetary Policy Regime https://www.frbatlanta.org:443/research/publications/wp/2020/10/02/19-stock-bond-return-correlation-bond-risk-premium-fundamentals-fiscal-monetary-policy-regime?item=942601B8-EF57-4199-9E38-53172974154B 942601B8-EF57-4199-9E38-53172974154B Fri, 02 Oct 2020 08:41:00 EST Using a general equilibrium model with monetary and fiscal policies, the authors of this working paper show that two distinctive types of shocks technology and investment drive both positive and negative correlations between stock and bond returns under two policy regimes. The Fed Takes On Corporate Credit Risk: An Analysis of the Efficacy of the SMCCF https://www.frbatlanta.org:443/research/publications/wp/2020/09/15/18-analysis-of-efficacy-of-smccf?item=62672645-3976-4DFD-A09E-CBAE10374EE3 62672645-3976-4DFD-A09E-CBAE10374EE3 Tue, 15 Sep 2020 08:41:00 EST The authors of this working paper assess the efficacy of the Fed's Secondary Market Corporate Credit Facility (SMCCF), a program designed to stabilize the corporate bond market in the wake of the COVID-19 shock. Using a variety of identification strategies, they quantify the significant beneficial effects of the SMCCF on credit spreads and liquidity. The Impact of the COVID-19 Pandemic on Business Expectations https://www.frbatlanta.org:443/research/publications/wp/2020/09/04/17-impact-of-covid-19-pandemic-on-business-expectations?item=5ED970F9-5DEE-459B-9064-17578D7B0F87 5ED970F9-5DEE-459B-9064-17578D7B0F87 Fri, 04 Sep 2020 10:34:00 EST Evaluating businesses' reactions to the COVID-19 crisis, the authors of this working paper find that firms view the pandemic largely as a demand shock rather than a supply shock. Further, they have responded to it by lowering their one-year-ahead inflation expectations, in stark contrast to household inflation expectations.