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Working Paper
The Politics of Flat Taxes
We study the determination of flat tax systems using a workhorse macroeconomic model of inequality. Our first result is that, despite the multidimensional policy space, equilibrium policies are typically unique (up to a fine grid numerical approximation). The majority voting outcome features (i) zero labor income taxation, (ii) simultaneous use of capital income and consumption taxation, and (iii) generally low transfers. We discuss the role of three factors?the initial heterogeneity in sources of income, the mobility of income and wealth, and the forward-looking aspect of voting?in ...
Journal Article
Health care services depress recent PCE inflation readings
Health care services, which historically helped push core measures of inflation higher, have restrained recent readings. Among them is the personal consumption expenditures price index, favored by Federal Reserve policymakers deliberating interest rate changes.
Journal Article
Inflation measurement gives us food for thought
Global food prices are soaring. Since February 2009, the United Nations Food and Agriculture Organization world food price index has risen roughly 67 percent, surpassing the previous peak in June 2008 (Chart 1). The last food price surge, from early 2007 to mid-2008, prompted riots in many countries; the latest rise has also fueled riots and may have been a factor in political unrest sweeping through North Africa and the Middle East.
The Labor Market May Be Tighter than the Level of Employment Suggests
Nonfarm payroll employment disappointed in April, increasing just 266,000, well below consensus expectations of nearly 1 million new jobs. With payroll employment remaining well below its prior peak, slow job growth would typically suggest weak demand for labor from firms and limited employment opportunities for job seekers. Current conditions in the labor market, however, may be far from typical.
Journal Article
On the record: The art and science of measuring inflation: a conversation with Jim Dolmas
At a time when many Americans worry about rising prices, Dallas Fed Senior Economist Jim Dolmas discusses the numbers we use to track inflation in the U.S. economy.
Journal Article
Monetary policy in a zero-interest-rate economy
Journal Article
Two Measures of Core Inflation: A Comparison
Trimmed-mean personal consumption expenditure (PCE) inflation does not clearly dominate PCE inflation excluding food and energy in real-time forecasting of headline PCE inflation. However, trimmed-mean inflation is the superior communications and policy tool because it has been a less-biased real-time estimator of headline inflation and because it more successfully filters out headline inflation?s transitory variation, leaving only cyclical and trend components.
Another Benefit of Trimming: Smaller Inflation Revisions
With the Dallas Fed’s Trimmed Mean Personal Consumption Expenditures (PCE) inflation rate, what you see in real time is closer to what you get after revision than is the case with the more conventional measure of core inflation, PCE excluding food and energy.
Discussion Paper
Excluding items from personal consumption expenditures inflation
Core inflation measures constructed by excluding particularly volatile items from the price index have a long history. The most common such measures are indexes excluding the prices of food and energy items. This paper attempts to shed some statistical light on the impact of excluding certain items from the personal consumption expenditures (PCE) price index. In particular, I am interested in the trade-off between reducing shortrun volatility (relative to the volatility of the headline index) and possibly distorting the measurement of inflation over longer horizons. Some of the questions this ...
Working Paper
Real business cycle dynamics under first-order risk aversion
This paper incorporates preferences that display first-order risk aversion (FORA) into a standard real business cycle model. Although FORA preferences represent a sharp departure from the expected utility/constant relative risk aversion (EU/CRRA) preferences common in the business cycle literature, the change has only a negligible effect on the model s second moment implications. In fact, for what I argue is an empirically reasonable "ballpark" calibration of the FORA preferences, the moment implications are essentially identical to those under EU/CRRA, while the welfare cost of aggregate ...