As computing power has grown, it has become easier to uncover information hidden inside data sets that seem totally unconnected. Some recent studies have used this approach to reveal business-related information flows.
One looked at the relationship between business activity and the movements of corporate jets. A third mined White House visitor logs for the names of executives and examined their companies’ subsequent stock market returns.
Earlier in this month, David Finer, a graduate student at University of Chicago’s Booth School of Business, released a paper after poring over a data set released by New York City covering more than 1 billion cab rides between 2009 and 2014. Finer extracted trips starting at big commercial banks and at the Federal Reserve Bank of New York that converged on the same destination around lunchtime, and those directly from banks to the Fed late in the evening.
The number of such journeys rose sharply around the dates of meetings when interest rates were determined by the Fed’s monetary-policy committee in Washington. The jump in journeys was especially marked in 2012, when the committee decided to extend quantitative easing, the purchase of securities with newly created money. That policy had a profound impact on financial markets.
Finer builds on a provocative paper by Anna Cieslak of Duke University and Adair Morse and Annette Vissing-Jorgensen of the University of California, Berkeley. They asserted that information on monetary policy could be used to profit from stock market movements, and that such information had leaked from the Fed.
Finer’s “assumptions are flawed and misleading,” the New York Fed responded. “It is simply not credible to imply that an increase of a few taxi rides by unknown passengers between densely populated areas of the city — business, transportation and hospitality hubs — increased the risk of inappropriate communication.”
It’s true that the data do have obvious shortcomings. But the tortuous way the Fed’s policymakers release information, through an initial announcement, then weeks later the release of minutes and years later transcripts, means that a direct meeting with its officials can be extremely useful.
The Fed has acknowledged that merely having a discussion can lead to accidental disclosure. And even lawful private discussions that transfer government information of value raise questions about fairness.