Showing results 1 to 7 of approximately 7.(refine search)
The parts are more than the whole: separating goods and services to predict core inflation
Economists have not been altogether successful in their efforts to forecast ?core? inflation?an inflation measure that typically excludes volatile food and energy prices. One possible explanation is that the models used to make these forecasts fail to distinguish the forces influencing price changes in core services from those affecting price changes in core goods. While core services inflation depends on long-run inflation expectations and the degree of slack in the labor market, core goods inflation depends on short-run inflation expectations and import prices. By using a composite model ...
The Long and Short of It: The Impact of Unemployment Duration on Compensation Growth
How tight is the labor market? The unemployment rate is down substantially from its October 2009 peak, but two-thirds of the decline is due to people dropping out of the labor force. In addition, an unusually large share of the unemployed has been out of work for twenty-seven weeks or more?the long-duration unemployed. These statistics suggest that there remains a great deal of slack in U.S. labor markets, which should be putting downward pressure on labor compensation. Instead, compensation growth has moved modestly higher since 2009. A potential explanation is that the long-duration ...
The Effect of Superstorm Sandy on the Macroeconomy
The Bureau of Economic Analysis (BEA) of the U.S. Department of Commerce has reported that real Gross Domestic Product (GDP) increased at a very sluggish 0.4 percent annual rate in the final quarter of 2012. A natural question to ask is to what extent, if any, did superstorm Sandy contribute to this weak performance. While not a particularly intense storm, it was the largest Atlantic storm on record with a diameter of roughly 1,100 miles. The storm severely disrupted economic activity from late October until well into November along the eastern seaboard from the Mid-Atlantic region into New ...
Compensation Growth and Slack in the Current Economic Environment
Following a significant slowing during the recent recession, growth in various labor compensation measures has stabilized during the past two to three years. This stabilization is puzzling because it’s widely held that a significant amount of slack remains in the economy. Accordingly, this large amount of slack should result in a further slowing in compensation (wage) growth. In this post, we show that there’s a very mild trade-off between compensation growth and resource slack, even though slack is sizable. Consequently, the observation that there’s slow but steady growth in labor ...
The FRBNY DSGE model
The goal of this paper is to present the dynamic stochastic general equilibrium (DSGE) model developed and used at the Federal Reserve Bank of New York. The paper describes how the model works, how it is estimated, how it rationalizes past history, including the Great Recession, and how it is used for forecasting and policy analysis.
Drilling Down into Core Inflation: Goods versus Services
Among the measures of core inflation used to monitor the inflation outlook, the series excluding food and energy prices is probably the best known and most closely followed by policymakers and the public. While the conventional ?ex food and energy? measure is a composite of the price changes of a large number of different products and services, almost all models developed to explain and forecast its behavior do not distinguish between the goods and services categories. Is the distinction important? Here, we highlight the different behavior and determinants of goods inflation and services ...
An Assessment of the FRBNY DSGE Model's Real-Time Forecasts, 2010-2013
The previous post in this series showed how the Federal Reserve Bank of New York?s DSGE model can be used to provide an interpretation of the Great Recession and the slow recovery. In this post, we look at the role of the model as a forecasting tool and evaluate its forecasting performance since 2010. This analysis will give context for the last post, which will present the model?s current forecast for the U.S. economy.