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Journal Article
High unemployment points to below-target (but still stable) inflation
The Federal Reserve has a mandate to promote price stability and full employment. Generally, ?price stability? is given a forward-looking interpretation. Policy should be conducted so that expected medium-term (two- to five-year) inflation is low and stable or, less strictly, so that expected inflation beyond the next few years is low and stable. Households and businesses, too, are generally more interested in where prices are headed than in where they have been.
Dallas Fed Mobility and Engagement Index Gives Insight into COVID-19’s Economic Impact
To gain insight into the economic impact of the pandemic, we developed an index of mobility and engagement, based on geolocation data collected from a large sample of mobile devices.
Working Paper
The Zero Lower Bound and Estimation Accuracy
During the Great Recession, many central banks lowered their policy rate to its zero lower bound (ZLB), creating a kink in the policy rule and calling into question linear estimation methods. There are two promising alternatives: estimate a fully nonlinear model that accounts for precautionary savings effects of the ZLB or a piecewise linear model that is much faster but ignores the precautionary savings effects. Repeated estimation with artificial datasets reveals some advantages of the nonlinear model, but they are not large enough to justify the longer estimation time, regardless of the ...
Working Paper
Mobility and Engagement Following the SARS-Cov-2 Outbreak
We develop a Mobility and Engagement Index (MEI) based on a range of mobility metrics from Safegraph geolocation data, and validate the index with mobility data from Google and Unacast. We construct MEIs at the county, MSA, state and nationwide level, and link these measures to indicators of economic activity. According to our measures, the bulk of sheltering-in-place and social disengagement occurred during the week of March 15 and simultaneously across the U.S. At the national peak of the decline in mobility in early April, localities that engaged in a 10% larger decrease in mobility than ...
Journal Article
Assessing the costs and consequences of the 2007–09 financial crisis and its aftermath
There are few estimates of what society gave up due to the crisis: Our conservative estimate is $50,000 to $120,000 for every U.S. household.
Discussion Paper
Inflation, slack, and Fed credibility
It is generally agreed that slack has some impact on inflation. There is much less agreement on what form the relationship takes and whether it is stable enough to reliably help predict inflation. This analysis focuses on the Great Moderation period. We find that slack (as measured by the unemployment rate) and changes in slack are negatively correlated with changes in inflation and also deviations of inflation from long-forward inflation expectations.> ; These relationships could have been exploited to produce forecasts of trimmed mean PCE inflation more accurate than rule-of-thumb ...
U.S. Economic Rebound Uneven amid Resurgent Local COVID-19 Outbreaks
A full recovery to pre-pandemic levels of economic activity appears unlikely until the virus is under control.
What the Trimmed Mean Says About Future Inflation: Broadening Price Pressures Ahead
As we look ahead to the rest of this year and into 2022, we expect that even as some of the extreme price increases responsible for the recent surge in headline inflation fade, a broader swath of goods and services will show meaningful price increases.
Discussion Paper
How bad was it? The costs and consequences of the 2007–09 financial crisis
The 2007?09 financial crisis was associated with a huge loss of economic output and financial wealth, psychological consequences and skill atrophy from extended unemployment, an increase in government intervention, and other significant costs. Assuming the financial crisis is to blame for these associated ills, an estimate of its cost is needed to weigh against the cost of policies intended to prevent similar episodes. We conservatively estimate that 40 to 90 percent of one year's output ($6 trillion to $14 trillion, the equivalent of $50,000 to $120,000 for every U.S. household) was foregone ...
Average Inflation over the Pandemic Avoids 'Base-Effect' Distortions
Since the start of the COVID-19 pandemic early last year, the nation has seen enormous swings in consumer prices, with extraordinary declines last spring giving way to similarly eye-popping increases as the economy has reopened.