Search Results
Journal Article
House prices and the quality of public schools: what are we buying?
Do house prices reflect the quality of the local public schools? To what extent do school district policies determine how well students perform? How do such factors as neighborhood, family, and peers affect school quality and house prices? Ted Crone examines these questions, and others, to determine whether house prices do, indeed, include a school premium.
Working Paper
Consistent economic indexes for the 50 states.
In the late 1980s James Stock and Mark Watson developed an alternative coincident index for the U.S. economy. They used the Kalman filter to estimate a latent dynamic factor for the national economy and designated the common factor as the coincident index. This paper uses the Stock/Watson methodology to estimate a consistent set of coincident indexes for the 50 states. The indexes are consistent in the following sense. (1) The input variables for estimating the common factor are the same for each state. (2) The timing of the coincident indexes is set to coincide with the same observable ...
Working Paper
An alternative definition of economic regions in the U.S. based on similarities in state business cycles
Since the 1950s the Bureau of Economic analysis (BEA) has grouped the states into eight regions based primarily on cross-sectional similarities in their socioeconomic characteristics. This is the most frequently used grouping of states in the U.S. for economic analysis. Since several recent studies concentrate on similarities and differences in regional business cycles, this paper groups states into regions based not on a broad set of socioeconomic characteristics but on the similarities in their business cycles. The analysis makes use of a consistent set of coincident indexes estimated from ...
Working Paper
The CPI for rents: a case of understated inflation.
Until the end of 1977, the method used in the U.S. consumer price index (CPI) to measure rent inflation tended to omit rent increases when units had a change of tenants or were vacant. Since such units typically had more rapid increases in rents than average units, this response bias biased inflation estimates downward. Beginning in 1978, the Bureau of Labor Statistics (BLS) implemented a series of methodological changes that reduced response bias but substantial bias remained until 1985. We set up a model of response bias, parameterize it, and test it using a BLS microdata set for rents. We ...
Working Paper
Measuring American rents: a revisionist history.
Until the end of 1977, the method used to measure changes in rent of primary residence in the U.S. consumer price index (CPI) tended to omit price changes when units changed tenants or were temporarily vacant. Since such units typically had more rapid increases in rents than average units, omitting them biased inflation estimates downward. Beginning in 1978, the Bureau of Labor Statistics (BLS) implemented a series of methodological changes that reduced this bias. The authors use data from the American Housing Survey to check the success of the corrections. They compare estimates of the ...
Journal Article
A new look at economic indexes for the states in the Third District
If we want to know how things are going in the economy, which measures should we look at? Unemployment? GDP? Or something else? One solution is to combine several measures into a composite index of current or future economic activity. Several years ago, the Philadelphia Fed did just that for the states in the Third District. Now, a number of factors suggest that revisions of those indexes are in order. This article explains what those revisions entail and why the new indexes are better than the old ones.
Working Paper
Core measures of inflation as predictors of total inflation
Policymakers tend to focus on core inflation measures because they are thought to be better predictors of total inflation over time horizons of import to policymakers. The authors find little support for this assumption. While some measures of core inflation are less volatile than total inflation, core inflation is not necessarily the best predictor of total inflation. The relative forecasting performance of models using core inflation and those using only total inflation depends on the inflation measure and time horizon of the forecast. Unlike previous studies, the authors provide a measure ...
Journal Article
The long and the short of it: recent trends and cycles in the Third District states
Most discussions of business cycles focus on the national economy. But regional cycles are also important, and they can vary significantly from one region to another. Analysis of regional cycles can help businesses plan investments and project sales, among other things. A look at the economies of the Third District states - Pennsylvania, New Jersey, and Delaware -illustrates how trends and cycles can differ even among neighboring states. In "The Long and the Short of It: Recent Trends and Cycles in the Third District States," Ted Crone traces the historical patterns of the three states' ...
Journal Article
The condominium trend: response to inflation
Working Paper
Measuring housing services inflation
Recent papers have questioned the accuracy of the Bureau of Labor Statistics? methodology for measuring implicit rents for owner-occupied housing. We propose cross-checking the BLS statistics by using data on owner-occupied and rental housing from the American Housing Survey.