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Conference Paper
Rethinking the International Monetary System: an overview
Conference Paper
Why the interest in reform?
Report
Reassessing the U.S. Economy’s Vulnerability to Oil Shocks
The impact of today’s oil price shocks may differ markedly from those of shocks in the 1970s. As noted in the minutes of the April 28–29, 2026, Federal Open Market Committee meeting, two structural changes to the U.S. economy could cushion the impact: the substantial increase in domestic oil production and the declining share of spending devoted to energy. This brief examines empirical evidence on how these transformations have altered the U.S. economy’s vulnerability to oil shocks.
Report
Predicting Recessions Using the Yield Curve: The Role of the Stance of Monetary Policy
The yield curve is often viewed as a leading indicator of recessions. While the yield curve’s predictive power is not without controversy, its ability to anticipate economic downturns endures across specifications and time periods. This note examines the predictive power of the yield curve after accounting for the current stance of monetary policy—a relevant issue given that monetary policy was unusually accommodative during the most recent yield curve inversion, in the third quarter of 2019. The results show that a yield curve inversion likely overstates the probability of a recession ...
Report
Population Aging and the US Labor Force Participation Rate
The labor force participation rate dropped sharply at the beginning of the pandemic, and as of November 2021 it had recovered only about half of its lost ground. The failure of the participation rate to get closer to its level immediately before the pandemic has puzzled many analysts. In this note, we show that the current participation rate is much less puzzling if one compares it with participation in November 2017 (the last time the unemployment rate was at its current level of 4.2 percent), rather than February 2020 (immediately before the pandemic). Since November 2017, population aging ...
Report
The Distribution of Sectoral Price Changes and Recent Inflation Developments
Inflation has declined across many sectors so far in 2023, but the distribution of sectoral price changes still shows atypical features, such as bimodality in which substantial masses of sectors record price changes both below and above the Federal Reserve’s 2 percent inflation target. Such bimodality was not typical before the pandemic, suggesting that sector-specific price adjustments are now playing a more important role in inflation developments. The recent slowdown in inflation was partly caused by a larger-than-normal share of the consumption basket being located in the left tail of ...
Report
Productivity Improvements and Markup Normalization Can Support Further Wage Gains without Inflationary Pressures
Wage inflation remains higher than it was before the onset of the COVID-19 pandemic, raising concerns that it could hinder progress toward a return of price inflation to the Federal Reserve’s 2 percent target. The impact of wage inflation on price inflation, however, cannot be considered independently of the behavior of productivity and firms’ markups. In that context, there are scenarios in which wage inflation could stay above trend for a few more quarters without contributing to higher price inflation.
Journal Article
Why the interest in reforming the International Monetary System?
The recent spate of severe financial crises has provoked an interest in international monetary reform not seen since the breakdown of the fixed exchange rate system 30 years ago. Indeed, the crises have forced both academic economists and policymakers to question some of their most basic assumptions about the appropriate design of the international monetary system. This article was the introductory paper at the Federal Reserve Bank of Boston's conference on "Rethinking the International Monetary System," held in June 1999. The article reviews recent changes in the economic environment that ...
Journal Article
Rethinking the International Monetary System: an overview
When the Federal Reserve Bank of Boston chose "Rethinking the International Monetary System" as the topic for its 43rd Economic Conference, it was clear that the worst international financial crisis in decades had caused tremors within the economics profession and the policymaking establishment. The miracle countries of Asia had suffered sharp currency devaluation and deep economic downturns, the turmoil had spilled over into Russia and Latin America, and a severe liquidity crisis had briefly threatened banking systems in the advanced countries. Not surprisingly, then, the events of the ...