Recent Research

Does the Recent Decline in Household Longer-Term Inflation Expectations Signal a Loss of Confidence in the FOMC?

By A. Lee Smith, Brent Bundick, Trenton Herriford and Emily Pollard THE MACRO BULLETINHouseholds have lowered their longer-term inflation outlooks, but they appear confident in the FOMC’s ability to achieve stable prices.

Forecasting the Stance of Monetary Policy under Balance Sheet Adjustments

By Troy Davig and A. Lee Smith THE MACRO BULLETINChanges in the Federal Reserve’s balance sheet only modestly substitute for changes in the federal funds rate.

Communicating Monetary Policy Rules

By Troy Davig and Andrew Foerster RESEARCH WORKING PAPERA central bank can achieve the gains of a rule-based policy without publicly stating a specific rule by establishing an inflation target, tolerance bands around the target, and providing economic projections.

Assessing Differences in Labor Market Outcomes Across Race, Age, and Educational Attainment

By Economic Research Department RESEARCH WORKING PAPERBroad indicators are often used to evaluate the health of the labor market, though do not necessarily reflect large disparities that exist in outcomes across age, education, gender, and race.

Waiting for a Pickup: GDP and the Sharing Economy

By Michael Redmond THE MACRO BULLETINCurrent measures of GDP may understate the contributions from ridesharing platforms and other dimensions of the sharing economy—a small but growing oversight for the national accounts.

The Large Unmet Demand for Housing

By Jordan Rappaport THE MACRO BULLETINA limited supply of housing available for sale or rent is significantly dampening household formation.

Bond Premiums and the Natural Real Rate of Interest

By Craig S. Hakkio and A. Lee Smith ECONOMIC REVIEWCraig S. Hakkio and A. Lee Smith find that bond premiums are an important determinant of the natural real rate of interest, or r*.

Crowdedness, Centralized Employment, and Multifamily Home Construction

By Jordan Rappaport

ECONOMIC REVIEWJordan Rappaport finds factors related to population, population density, and centralized employment have driven much of the recent variation in multifamily construction across metros.

Additional files: Data Supplement

Wage Leaders and Laggards: Decomposing the Growth in Average Hourly Earnings

By Willem Van Zandweghe THE MACRO BULLETINWage growth has accelerated gradually over the past two years, but only a few industries have driven the trend.

Stuck in Part-Time Employment

By Jonathan L. Willis THE MACRO BULLETINAlthough the share of workers employed part time for economic reasons has declined, it is unlikely to return to its pre-recession level in the near future.

Monetary Policy and Macroeconomic Stability Revisited

By Willem Van Zandweghe, Yasuo Hirose and Takushi Kurozumi RESEARCH WORKING PAPERThis paper revisits the question of how the Federal Reserve achieved macroeconomic stability after the Great Inflation of the 1970s.

Consumer Price Inflation and Rising Rents in the West

By Jordan Rappaport and Michael Redmond THE MACRO BULLETINRising home rents in four western metros have increasingly boosted consumer price inflation.

How Does a Rise in International Shipping Costs Affect U.S. Inflation?

By Nicholas Sly , A. Lee Smith, Trenton Herriford and Elizabeth M. Johnson THE MACRO BULLETINTrenton Herriford, Elizabeth M. Johnson, Nicholas Sly, and A. Lee Smith find that an increase in ocean shipping costs leads to a modest boost in core inflation after one year.

The Equilibrium Term Structure of Equity and Interest Rates

By Taeyoung Doh and Shu Wu RESEARCH WORKING PAPERDoh and Wu incorporate a time-varying market price of risk into an equilibrium asset-pricing model based on long-run consumption risks that generates the term structure of bond and equity risk premia consistent with U.S. data.

What is Behind the Recent Increase in Labor Force Participation?

By Didem Tuzemen and Jonathan L. Willis THE MACRO BULLETINDidem Tüzemen and Jonathan L. Willis find that the recent increase in labor force participation is due not to more workers entering the labor force, but to fewer workers exiting it.

The Multinational Wage Premium and Wage Dynamics

By Nicholas Sly , Gianluca Orefice and Farid Toubal RESEARCH WORKING PAPERMultinational firms often enter countries through cross-border mergers and acquisitions. For the domestic firms that are acquired, foreign ownership tends to reverse years of wage declines and even promote wage gains for employees.

Price Dispersion and Inflation Persistence

By Willem Van Zandweghe and Takushi Kurozumi RESEARCH WORKING PAPERThis paper proposes a model of monetary policy that relies on price dispersion to explain empirical evidence on inflation persistence.

The Weak Outlook for Residential Investment

By Jordan Rappaport
October 06, 2016
THE MACRO BULLETINJordan Rappaport suggests supply-side factors will continue to constrain single-family home construction and sales into 2017.

Consumer Spending in China: The Past and the Future

By Jun Nie and Andrew Palmer ECONOMIC REVIEWJun Nie and Andrew Palmer examine the recent rise in the share of consumer spending in Chinese GDP to assess whether China can become a consumption-driven economy.

Global Uncertainty in the Wake of Brexit

By Craig S. Hakkio and Nicholas Sly THE MACRO BULLETINCraig S. Hakkio and Nicholas Sly find that increased global uncertainty after Brexit will be a major concern for the United Kingdom, a modest concern for the euro area, and a minor concern for the United States.

Measuring the Stance of Monetary Policy on and off the Zero Lower Bound

By Taeyoung Doh and Jason Choi

ECONOMIC REVIEWTaeyoung Doh and Jason Choi propose a new “shadow” short-term interest rate to measure the stance of policy when the federal funds rate was constrained by the zero lower bound.

Additional files: Data Supplement

Optimal Monetary Policy Regime Switches

By Andrew Foerster and Jason Choi RESEARCH WORKING PAPERHow should monetary policy rules respond to shifts in the economy?

Recession Forecasting Using Bayesian Classification

By Troy Davig and Aaron Smalter Hall RESEARCH WORKING PAPERA new approach to recession forecasting outperforms competing methods up to 12 months in advance.

Tracking Consumer Credit Trends

By Troy Davig and William Xu THE MACRO BULLETINTroy Davig and William Xu find that a larger share of consumers with low credit scores are increasing their debt than those with high credit scores.

Consumption Growth Regimes and the Post-Financial Crisis Recovery

By Andrew Foerster and Jason Choi ECONOMIC REVIEWAndrew Foerster and Jason Choi find that consumption has grown more slowly after the Great Recession due to the continued influence of persistent factors unusual to see outside recessions.

Global Uncertainty and U.S. Exports

By Nicholas Sly ECONOMIC REVIEWNicholas Sly finds that periods of greater uncertainty and financial volatility within U.S. trading partners are associated with substantially lower demand for U.S. goods. 

The Drag of Energy and Manufacturing on Productivity Growth

By Willem Van Zandweghe THE MACRO BULLETINWillem Van Zandweghe finds a decline in manufacturing and mining activity has slowed overall productivity growth.

Monetary Policy at the Zero Lower Bound: Revelations from the Summary of Economic Projections

By George A. Kahn and Andrew Palmer THE MACRO BULLETINGeorge A. Kahn and Andrew Palmer assess how FOMC participants' projections that policy would lift off from its effective lower bound related to their projections for inflation and unemployment. 

Flowing into Employment: Implications for the Participation Rate

By Jose Mustre-del-Río, Michael Redmond and William Xu THE MACRO BULLETINJosé Mustre-del-Río, Michael Redmond, and William Xu find more prime-age individuals are flowing into employment from outside the labor force, though effects on the participation rate could be limited by educational attainment.

The Lasting Damage from the Financial Crisis to U.S. Productivity

By Michael Redmond and Willem Van Zandweghe THE MACRO BULLETINMichael Redmond and Willem Van Zandweghe find that tight credit conditions during the 2007–09 financial crisis dampened productivity, leaving it on a lower trajectory.

Debt-Dependent Effects of Fiscal Expansions

By Huixin Bi, Wenyi Shen and Shu-Chun S. Yang RESEARCH WORKING PAPERThe effects of an increase in government spending are not necessarily debt-dependent—instead, they may depend on general economic conditions as well as whether the government stabilizes debt through taxes or spending.

The Limited Supply of Homes

By Jordan Rappaport THE MACRO BULLETINJordan Rappaport finds that a limited supply of single-family homes will continue to constrain home sales and put upward pressure on home prices over the next few years.

Gauging the Strength of Chinese GDP Growth

By Jun Nie THE MACRO BULLETINJun Nie constructs an alternative measure to evaluate the strength of Chinese GDP growth and identifies potential risks to China’s growth in the near term.

Productivity, Congested Commuting, and Metro Size

By Jordan Rappaport RESEARCH WORKING PAPERA model of metropolitan areas shows that traffic congestion is the most important force constraining population.

The Dynamic Effects of Forward Guidance Shocks

By Brent Bundick and A. Lee Smith RESEARCH WORKING PAPERForward guidance that lowers the expected path of policy stimulates economic activity and prices.

How Much of the Fall in Inflation Can Be Explained by Energy and Import Prices?

By A. Lee Smith THE MACRO BULLETINA. Lee Smith finds that recent declines in inflation may be due to historically large movements in oil prices and the foreign exchange value of the dollar. 

Estimating the Monetary Policy Rule Perceived by Forecasters

By Brent Bundick Economic Review Brent Bundick examines whether the FOMC’s implicit monetary policy rule, as perceived by professional forecasters, changed when the federal funds rate reached its effective lower bound. The article is summarized in The Macro Bulletin.

Sentiment of the FOMC: Unscripted

By San Cannon ECONOMIC REVIEWSan Cannon applies text-mining techniques to FOMC transcripts to identify patterns in Committee discourse over time as well as changes in the relationship between participants' tone and economic activity.

Robust Permanent Income in General Equilibrium

By Jun Nie, Yulei Luo and Eric R. Young RESEARCH WORKING PAPERHow do concerns about possible model misspecifications influence the equilibrium real interest rate?

Cash Flow and Risk Premium Dynamics in an Equilibrium Asset-Pricing Model with Recursive Preferences

By Taeyoung Doh and Shu Wu RESEARCH WORKING PAPERA nonlinear extension of an equilibrium asset-pricing model based on long-run consumption risks allows us to more plausibly predict future cash flows and asset returns by stock prices.

Long-Term Survey-Based Inflation Expectations Have Become Better Anchored

By Craig S. Hakkio
The Macro Bulletin Craig S. Hakkio finds that while the median of some long-term inflation forecasts has declined, the distribution of individual forecasts suggests long-term inflation expectations have in fact become better anchored.

Health Care Reform or Labor Market Reform? A Quantitative Analysis of the Affordable Care Act

By Makoto Nakajima and Didem Tüzemen
Research Working Paper Analysis of the ACA predicts a significant reduction in the uninsured rate and gains in welfare. The reform may weaken the link between full-time work and health insurance, leading to 2.1M more part-time and 1.6M fewer full-time workers, with a small reduction in total hours.

Evaluating a Year of Oil Price Volatility

By Troy DavigNida Çakır MelekJun NieA. Lee Smith, and Didem Tüzemen 
The Macro Bulletin Troy Davig, Nida Çakır Melek, Jun Nie, Lee Smith, and Didem Tüzemen find changes in expectations of future oil supply relative to demand are the main drivers of the recent oil price decline. 

Global Capital Flows from China

By Jun Nie and Nicholas Sly
The Macro Bulletin Jun Nie and Nicholas Sly examine recent trends in capital flows from China and the implications for the United States.

Has Forward Guidance Been Effective?

By A. Lee Smith and Thealexa Becker
The Macro Bulletin A. Lee Smith and Thealexa Becker compare forward guidance announcements with changes in the effective federal funds rate and find the two policy measures have had similar macroeconomic effects. 

Global Tax Policy and the Synchronization of Business Cycles

By Nicholas Sly and Caroline Weber
Research Working Paper Congress may soon consider changing how the United States taxes multinational enterprises. Prior evidence suggests such changes in international tax policy facilitate the transmission of economic shocks across borders, leading to greater synchronization of global business cycles.

Monetary Policy and Firm Entry and Exit

Yoonsoo Lee and Willem Van Zandweghe
The Macro Bulletin Yoonsoo Lee and Willem Van Zandweghe find unusually accommodative monetary policy reduces the reallocation of capital and workers from exiting firms to new ones, potentially slowing productivity growth.

Taylor Rules or Target Rules?

By George A. Kahn 
The Macro Bulletin George A. Kahn assesses whether the Federal Open Market Committee's policy actions are better characterized as following a policy-rule or target-rule approach.

Monetary Policy Shocks and Aggregate Supply

By Willem Van Zandweghe
ECONOMIC REVIEW Willem Van Zandweghe examines whether monetary policy has had long-lasting effects on labor productivity and potential output. The article is summarized in The Macro Bulletin.
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