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Second Quarter 2020

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Posted 2020-05-01

Strategic Review and Beyond: Rethinking Monetary Policy and Independence

by John H. Cochrane

I survey monetary policy strategy, regulation, and central banks’ mandates and independence. I do not think strongly negative interest rates, vastly expanded quantitative easing, or extensive forward guidance can or should stimulate in the next recession. 

Posted 2020-05-01

Is the Phillips Curve Still Alive?

by Brian Reinbold and Yi Wen

A.W. Phillips’s discovery that inflation is negatively correlated with unemployment served as a heuristic model for conducting monetary policy; but the flattening of the Phillips curve post-1970 has divided debate on this empirical relation into two camps: “The Phillips curve is alive and well,” and “The Phillips curve is dead.” However, this dichotomy oversimplifies the issue. 

Posted 2020-05-01

Schools and Stimulus

by Bill Dupor and M. Saif Mehkari

This article analyzes the impact of the education funding component of the American Recovery and Reinvestment Act of 2009 (Recovery Act) on public school districts. We use cross-sectional differences in district-level Recovery Act funding to investigate the program’s impact on staffing, expenditures, and debt accumulation. 

Posted 2020-05-01

Taking Stock of the Evidence on Microfinancial Interventions

by Francisco J. Buera, Joseph P. Kaboski, and Yongseok Shin

We review the empirical evidence on microfinance and asset grants to the ultra poor or microentrepreneurs and use quantitative economic theory to account for this evidence. Properly executed, these interventions can help segments of the population increase their income and consumption, but neither literature gives much reason to believe that such interventions can lead to wide-scale, transformative impacts akin to escaping aggregate poverty traps.

Posted 2020-05-01

On the Aggregate Implications of Removing Barriers to Formality

by Catalina Granda and Franz Hamann

This article examines the aggregate implications of several policies aimed at removing barriers to formality. To this end, we build a dynamic equilibrium model in which heterogeneous agents choose to work for a wage or operate a technology in the formal or informal sector, based on the costs and benefits associated with these occupational choices.