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Journal Article
Predicting crises, part I: Do coming crises cast their shadows before?
The enormity of the current financial collapse, widely described as a bursting bubble, raises the question whether the crisis could have been predicted, possibly permitting action to offset its effects. In the first of two Economic Letters on the subject, we look at developments in the United States and find evidence suggesting that simple indicators based on asset market developments can provide early warnings about potentially dangerous financial imbalances.
Journal Article
Unanchored expectations? Interpreting the evidence from inflation surveys
This Economic Letter uses two surveys of inflation expectations, one based on household respondents and the other on professional forecasters, to examine whether there has been a change in the way households and firms perceive the inflation process.
Journal Article
Using monthly data to predict quarterly output
Some time ago, the Commerce Department changed the way it calculates real gross domestic product. In response to that change, this paper presents an update of a simple model that is used to predict the growth rate of current quarter real output based on available monthly data. After searching over a set containing more than 30 different variables, we find that a model that utilized monthly data on consumption and nonfarm payroll employment to predict contemporaneous real GDP does best.
Journal Article
Inflation targets and inflation expectations: some evidence from the recent oil shocks
A great deal of recent research has pointed out the benefits of adopting inflation targets, emphasizing, in particular, their role in helping to stabilize inflation expectations. These arguments suggest that inflation expectations in countries that target inflation should react differently to the recent oil price shocks than expectations in countries that do not target inflation. We examine whether this is indeed the case by comparing the recent behavior of inflation expectations in the U.S. - which does not have an explicit inflation target - with the behavior of inflation expectations in ...
Working Paper
Testing intertemporal budget constraints: theory and applications to U. S. federal budget and current account deficits
Previous tests of intertemporal budget balance and present value relationships have generally assumed either a constant discount rate or a constant expected discount rate. Empirical applications of these tests to the study of U.S. government deficits have produced conflicting results. This paper extends this recent work by deriving a testable condition that is sufficient to ensure intertemporal budget balance as long as the expected discount rate is strictly positive. ; We use our test to ask whether the U.S. budget and current account deficits are sustainable. Using postwar annual data, we ...
Journal Article
What does unemployment tell us about future inflation?
Journal Article
The financial crisis and inflation expectations
One measure of a successful monetary policy is its ability to anchor expectations about future inflation rates. Financial crises, such as that of 2008?09, can be considered natural experiments that test this anchoring. The effects of the crisis on inflation expectations were largely temporary in the United States, but longer-lasting in the United Kingdom. That is surprising because the United Kingdom had a formal inflation target during this period. Expectations may have been affected more because inflation stayed above the central bank?s target for extended periods following the crisis.
Conference Paper
New evidence on cyclical and structural sources of unemployment
Journal Article
Predicting contemporaneous output
Journal Article
Technological change
This Economic Letter summarizes the papers presented at the conference "Technological Change," held at the Federal Reserve Bank of San Francisco on November 14-15, 2002, under the joint sponsorship of the Bank and the Stanford Institute for Economic Policy Research. The papers are listed at the end and are available online http://www.frbsf.org/economics/conferences/0211/index.html