Short essays on the economic issues of the day written for a generally informed readership.
2011, No. 37
Why Is Employment Growth So Low?
Anemic investment in residential and commercial real estate has been a significant factor contributing to slow growth in employment.
2011, No. 35
Construction and the Great Recession
The boom in real estate prices during the early 2000s and the subsequent bust were key factors underlying the recessions in the United States and Europe.
2011, No. 34
Liquidity Crises in the Small and Large
Federal Reserve programs during
the recent financial crisis sought to
provide liquidity to individual firms
or industries. An interesting additional
question is whether the aggregate
amount of liquidity in the economy
was appropriate before and during
the recent financial crisis.
2011, No. 31
Immigration at the Extremes of the Skill Distribution
According to economists, in the 1980s and 1990s, immigration of low-skilled workers may have increased the labor supply of highly skilled women, and immigration of highly skilled workers may have increased the rate of innovation in the United States.
2011, No. 27
Capital Controls by Any Other Name
The embrace of ad hoc capital controls to address temporary market inefficiencies on a case-by-case basis, while pragmatic, perpetuates the view that each capital crisis is an isolated example of failed financial institutions.
2011, No. 26
Changes in the Mortgage Market Since the Crisis
It appears that mortgage origination and securitization is currently “in limbo”: Private securitization has all but disappeared and is being absorbed by government- sponsored enterprises.
2011, No. 25
The Gender Wage Gap
The actual gender wage disparity (which compares the wages of male and female workers with similar labor-force characteristics) is lower than the raw gender earnings gap.
2011, No. 24
Tax Rates and Revenue Since the 1970s
Before 2000, the tax burden shifted from the lowest 80% of earners to the highest 20%; since 2000, the burden has shrunk for all groups, but more so for the highest earners.
2011, No. 23
The Great Foreign Exchange Intervention of 2011
In response to volatile market conditions, the G-7 financial authorities announced late on March 17 that they would jointly intervene the next day to reduce the value of the yen, citing concerns about “excess volatility and disorderly movements.” The yen immediately depreciated and traded with much less volatility in the subsequent week.
Some Closure on Foreclosures?
Contrary to popular perception,
the foreclosure process can be
very costly for a lender…it remains
a puzzle as to why such large numbers
of mortgages in default enter into
foreclosure in the first place.
2011, No. 19
Oil Price Shocks and Inflation Risk
Oil price shocks appear to have only transitory effects on headline inflation and virtually no impact on measures of underlying trend inflation.
2011, No. 17
RMB Appreciation and U.S. Inflation Risk
If oil prices continue to rise and
the RMB continues to appreciate,
the U.S. inflation rate may increase
at a faster pace in the near future.
And this would have an unwelcome
impact on consumers’ wallets.
2011, No. 16
Core Versus Headline Inflation Again
Neither core nor headline inflation measures can consistently and reliably predict medium-term inflation well enough to be of much use to policymakers.
2011, No. 15
Income inequality statistics ignore temporal changes in household income.
2011, No. 13
CPI Inflation: Running on Motor Fuel
Fluctuations in the price of motor fuel
(mainly gasoline) have caused most of
the monthly noise and year-over-year
fluctuations of headline CPI inflation
over the past four years.
2011 No. 9
U.S. Trade Springs Back
The evidence suggests that the combination of a slowdown in trade finance and inventory adjustments likely explain the recent trade dynamics.
2011, No. 8
Fiscal Policy and Expected Inflation
Despite U.S. fiscal problems, the Fed appears to still retain excellent inflation credibility with financial markets… Although confidence in the Fed might explain the quiescence of inflation expectations, the structure of U.S. government debt may be more important… [I]nflating away the U.S. debt simply would not work because a high proportion of the debt is in short-term or inflation-protected securities.
2011, No. 7
Monetary Policy at the Zero Bound
The average relationship between
changes in the 10-year Treasury yield
and changes in the funds rate
over the 1987-2007 sample period
is not indicative of the relationship
between changes in the funds rate and
changes in the 10-year Treasury yield
that existed for more than a decade
prior to the financial crisis.
2011, No. 5
The Difference Between Currency Manipulation and Monetary Policy
But because this [Chinese] exchange rate policy is externally focused and relies heavily on regulations, which restrain normal market forces, it is reasonable to say that the policy constitutes currency manipulation for purposes of gaining an advantage in trade.
2011, No. 04
Are Bank Reserves and Bank Lending Connected?
As long as the strength of the recovery remains uncertain, there are few other investment opportunities, after adjusting for risk and taxes, with anticipated returns greater than the near-zero interest the Federal Reserve pays on deposits.
2011, No. 1
What Does the Change in the FOMC's Statement of Objectives Mean?
In contrast, most economists believe that central banks have little or no ability to directly affect employment. The effect of monetary policy actions on employment is indirect and stems from central banks’ ability to affect output growth in the short run and achieve price stability in the long run.