Ana Patricia Muñoz

Economic Distress and Resurgence in U.S. Central Cities: Concepts, Causes, and Policy Levers

The authors provide a review of the literature on U.S. central city growth and distress during the second half of the twentieth century. The literature reveals that city growth tended to be higher in metropolitan areas with favorable weather, higher growth, and greater human capital, whereas distress was strongly correlated with city-level manufacturing legacy. The article affirms that distress has been highly persistent but that some cities have achieved resurgence through a combination of strong leadership, collaboration across sectors and institutions, clear and broad-based strategies, and significant infrastructure investments. Finally, the article explores measurement issues by comparing two methodologies used to identify poorly performing central cities: comparisons across a comprehensive national cross-section of cities and comparisons within smaller samples of similar cities. It finds that these approaches have produced similar assessments of a city’s status, except in some cases where the city’s progress has been uneven across time or with respect to alternative criteria.

The Color of Wealth in Boston

The widening wealth gap in the United States is a worrisome sign that millions of families nationwide do not have enough in assets to offer better opportunities for future generations. Wealth allows families to make investments in homes, in education, and in business creation. On the basis of data collected using the National Asset Scorecard for Communities of Color (NASCC) survey, we report that, when analyzed by race, wealth accumulation is vastly unequal. By means of the NASCC survey, researchers have collected, for the first time, detailed data on assets and debts among subpopulations, according to race, ethnicity, and country of origin — granular detail ordinarily unavailable in public datasets. In this analysis we focus on estimates for U.S. born blacks, Caribbean blacks, Cape Verdeans, Puerto Ricans, and Dominicans in the Boston Metropolitan Statistical Area (MSA). Our analysis shows that with respect to types and size of assets and debt held, the data collected on white households and nonwhite households exhibit large differences. The result is that the net worth of whites as compared with nonwhites is staggeringly divergent.

Does Springfield Receive its Fair Share of Municipal Aid? Implications for Aid Formula Reform in Massachusetts

This paper examines the distribution of unrestricted municipal aid in Massachusetts, which has been a major concern to civic leaders and elected officials of many communities, including Springfield. The paper develops a measure of the municipal fiscal gap indicating the relative need of municipalities for state aid. The analysis shows that in recent years, unrestricted municipal aid has not been distributed in proportion to the gap measure among the 10 largest cities in Massachusetts. For example, despite having the largest municipal gap, Springfield received almost the lowest per capita amount of Additional Assistance -- a key component of municipal aid. This pattern is the result of deep and uneven aid cuts in the past that distorted the distribution of municipal aid. This paper therefore suggests that state government consider adopting a formula that provides more aid to communities facing larger municipal gaps. To avoid disrupting local budgets, the state could consider holding existing aid harmless, and using the gap-based formula to distribute new aid. The simulations show that if the state commits to reasonably large increases in municipal aid, this new approach can be both equalizing and beneficial to a majority of municipalities in the Commonwealth within a relatively short time period. The paper provides various formula evaluations and policy recommendations that could support efforts to reform state aid in Massachusetts.

Using Credit Reporting Agency Data to Assess the Link between the Community Reinvestment Act and Consumer Credit Outcomes

We use a regression discontinuity design to investigate the effect of the Community Reinvestment Act on consumer credit outcomes using data from the Federal Reserve Bank of New York’s Consumer Credit Panel database (Equifax data) for the years 2004 to 2012. A bank’s activities in census tracts with median family incomes less than 80 percent of the metropolitan statistical area (MSA) median family income count toward a lending institution’s compliance with CRA rules. Assuming census tracts with median incomes at 79.9 percent of the MSA median are the same as census tracts at 80 percent — except for CRA eligibility — discontinuous changes in consumer credit outcomes at that threshold are evidence of the CRA’s impact. We find no statistically significant effects of the CRA on mortgages or foreclosures, either before or after the financial crisis. However, we do find evidence that CRA expanded broad measures of credit market activity: at the CRA threshold, there is a 9 percent increase in the total number of loans, an increase in the number of people covered by the Equifax data, and an increase in the fraction of individuals with a valid risk score. Despite expanded credit activity, which may increase consumers’ risk for adverse outcomes, there is no significant increase in delinquencies at the CRA threshold.

Home-Mortgage Lending Trends in New England in 2010

This brief analysis of home-mortgage lending trends in New England is based on data collected under the Home Mortgage Disclosure Act (HMDA). HMDA provides information on mortgage lending trends and includes data by loan purpose, type of loan, income, and the race and ethnicity of borrowers. In this report we focus on home-purchase and refinance loans in New England.