We study how frictions impact haircut setting in repo markets. Using transaction-level supervisory data and exploiting the 2021 introduction of the binding leverage ratio requirement, we show that three frictions jointly shape haircuts in the bilateral dealer-to-client segment: dealer balance sheet constraints, collateral convenience yields, and client outside options. In collateral-driven repos, binding leverage constraints and broader client outside options both raise haircuts, while higher convenience yields push them down.

September’s Consumer Price Index report will keep pressure on President Trump and the Federal Reserve to tame intensifying price pressures.

ViDI Studio/ShutterstockHurry! Only two left! Fourteen people bought this in the last hour! Fifty people are looking at this item!

Anyone who shops online will be familiar with these kinds of messages popping up on their screen. The online equivalent of a pushy salesperson, they are designed to create a sense of urgency around making a purchase.

Isabel Cairó, Shigeru Fujita, and Camilo Morales-JimenezThe fiscal transfers deployed during the COVID-19 pandemic were unprecedented in scale and strongly progressive. Using CPS/ASEC data, we document that the decline in employment during the pandemic was larger for low-income households and tightly linked to the intensity of transfer receipt, a pattern absent during the Global Financial Crisis.