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Fourth Quarter 2019

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Posted 2019-10-15

Two Measures of Core Inflation: A Comparison

by Jim Dolmas and Evan F. Koenig

Trimmed-mean personal consumption expenditure (PCE) inflation does not clearly dominate PCE inflation excluding food and energy in real-time forecasting of headline PCE inflation. However, trimmed-mean inflation is the superior communications and policy tool because it has been a less-­biased real-time estimator of headline inflation and because it more successfully filters out headline inflation’s transitory variation, leaving only cyclical and trend components.

Posted 2019-10-15

Growth and the Kaldor Facts

by Berthold Herrendorf, Richard Rogerson, and Akos Valentinyi

We revisit the Kaldor growth facts for the United States and the United Kingdom during the postwar period. We find that while overall the original Kaldor facts continue to hold, deviations occurred along several dimensions: Instead of staying constant, the growth rates of real GDP per worker and of real capital per worker have slowed down in the United States and the United Kingdom since the 1970s, the capital-to-output ratio has increased in the United Kingdom, and the share of income paid to labor has decreased in the United States since 1990.

Posted 2019-10-15

Should Capital Flow from Rich to Poor Countries?

by Alexander Monge-Naranjo, Juan M. Sánchez, Raul Santaeulalia-Llopis, and Faisal Sohail

Are human and physical capital stocks allocated efficiently across countries? To answer this question, we need to differentiate misallocation from factor intensity differences. 

Posted 2019-10-15

Is College Still Worth It? The New Calculus of Falling Returns

by William R. Emmons, Ana H. Kent, and Lowell R. Ricketts

The college income premium is the extra income earned by a family whose head has a college degree over the income earned by an otherwise similar family whose head does not have a college degree. This premium remains positive but has declined for recent graduates.