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Journal Article
Consequences of the Euro: monetary union, economic disunion?
Forming a monetary union brings the benefits of a shared currency but also?as the experience of the euro area shows in the years following the global financial crisis?significant costs associated with the loss of monetary policy independence and exchange rate flexibility.
Working Paper
Ties That Bind: Estimating the Natural Rate of Interest for Small Open Economies
This paper estimates the natural interest rate for six small open economies (Australia, Canada, South Korea, Sweden, Switzerland and the U.K.) with a structural New Keynesian model using Bayesian techniques. Our empirical analysis establishes the following four novel findings: First, we show that the open-economy framework provides a better fit of the data than its closed-economy counterpart for the six countries we investigate. Second, we also show that, in all six countries, a monetary policy rule in which the domestic real policy rate tracks the Wicksellian domestic short-term natural rate ...
Working Paper
On the Nexus of Monetary Policy and Financial Stability: Novel Asset Market Monitoring Tools for Building Economic Resilience and Mitigating Financial Risks
In this note we argue that asset pricing bubbles are an important source of financial instabilities. First, the literature has tended to overlook bubbles and their consequences under the premise that they are hard to detect in real time. We suggest that novel statistical techniques allow us to overcome those prejudices as they provide valuable signals of emerging exuberance in real‐time. Second, monetary policy has been slow to recognize that financial instability arising from bubbles can have adverse effects on the transmission mechanism of monetary policy itself and on the types of risks ...
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.
Journal Article
Go Figure: Texas Home Prices Head Through the Roof
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.
Journal Article
Deindustrialization redeploys workers to growing service sector
The decline of industrial employment in advanced economies is part of a long-term structural transition. A growing service sector, with an increasing share of jobs, has become key to long-run productivity growth.
Working Paper
Explosive Dynamics in House Prices? An Exploration of Financial Market Spillovers in Housing Markets Around the World
Asset prices in general, and real house prices in particular, are often characterized by a nonlinear data-generating process which displays mildly explosive behavior in some periods. Here, we investigate the emergence of explosiveness in the dynamics of real house prices and the role played by asset market spillovers. We establish a timeline of periodically-collapsing episodes of explosiveness for a panel of 23 countries from the Federal Reserve Bank of Dallas? International House Price Database (Mack and Martnez-Garca (2011)) between first quarter 1975 and fourth quarter 2015 using 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.
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.