Search Results
Working Paper
The Problem of Quality Change in Historical Price Statistics: An Illustrative Example Using Baedeker Travel Guides
The problem of accurately measuring inflation in the face of constant improvement in the quality of goods is a long-standing one in economics. This paper uses a novel dataset on the prices of the travel guidebooks published by the German publishing house Baedeker between 1832 and 1944 to construct a hedonic price index for guidebooks. Comparing these indexes to the list prices of these guidebooks, we show that the failure to adjust for improvements in the quality of the guidebooks over time imparts a substantial upward bias to measured inflation. For example, for German-language guidebooks, ...
Systemic Risks, Interdependencies Weigh on 2021 Global Outlook
The path of economic recovery from the COVID-19 recession remains far from clear. A fitful rollout of vaccines and governmental responses to new variants of the virus loom over a global growth rebound that private forecasters estimate at 5.7 percent for 2021.
Se Habla Español: U.S. Yet to Realize Many Benefits of a Growing Bilingual Population
The Spanish-only-speaking population in the U.S. faces many challenges that include overcoming often lesser income prospects compared with monolingual English speakers.
Fed’s New Inflation Targeting Policy Seeks to Maintain Well-Anchored Expectations
The Fed’s evolving understanding of the economy and its reassessment of the natural rate of interest have led to arguably the most significant policy change since 2012.
Working Paper
Flexible Average Inflation Targeting: How Much Is U.S. Monetary Policy Changing?
One major outcome of the Federal Reserve’s 2019–20 framework review was the adoption of a Flexible Average Inflation Targeting (FAIT) strategy in August 2020. Using synthetic control methods, we document that U.S. inflation rose post-FAIT considerably more than predicted had the strategy not changed (an average of 1.18 percentage points during 2020:M8-2022:M2). To explore the extent to which targeting average inflation delayed the Fed’s response and contributed to post-FAIT inflation, we adopt a version of the open-economy New Keynesian model in Martínez-García (2021) and document the ...
Real-Time Market Monitoring Finds Signs of Brewing U.S. Housing Bubble
There is growing cause for concern that U.S. house prices are again becoming unhinged from fundamentals.
Russia’s War on Ukraine Will Leave Scars on U.S., World Economies
The conflict may alter the global economic and geopolitical order, leading to a new era of deglobalization.
Spanish-Speaking Growth in Texas Reinforces Need to Close Education Gaps
The Eleventh Federal Reserve District has the second-largest native Spanish-language population in the Federal Reserve System. That population will grow further as the number of Hispanics exceeds 20 million in Texas alone by 2050.
COVID-19 Risks Expose Vulnerabilities, Downside Risks to U.S. Outlook
The COVID-19 crisis has adversely affected the U.S. economy, helping account for a projected 3.4 percent contraction in 2020. The Congressional Budget Office (CBO) anticipates a strong 4.6 percent rebound in 2021, making up for those losses.
Policymakers’ Response to COVID-19 Can Draw on Great Recession Lessons
Central banks’ experience before and during the 2007–09 Great Recession suggests that they have ample tools to support the economy.