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Author:Schwartzman, Felipe 

Working Paper
What Inventory Behavior Tells Us About How Business Cycles Have Changed

Beginning in the mid-1980s, the nature of U.S. business cycles changed in important ways, as made evident by distinctive shifts in the comovement and relative volatilities of key economic aggregates. These include labor productivity, hours, output, and inventories. Unlike the widely documented change in absolute volatility over that period, known as the Great Moderation, these shifts in comovement and relative volatilities persist into the Great Recession. To understand these changes, we exploit the fact that inventory data are informative about sources of business cycles. Specifically, they ...
Working Paper , Paper 14-6

Working Paper
What Do Sectoral Dynamics Tell Us About the Origins of Business Cycles?

We use economic theory to rank the impact of structural shocks across sectors. This ranking helps us to identify the origins of U.S. business cycles. To do this, we introduce a Hierarchical Vector Auto-Regressive model, encompassing aggregate and sectoral variables. We find that shocks whose impact originate in the "demand" side (monetary, household, and government consumption) account for 43 percent more of the variance of U.S. GDP growth at business cycle frequencies than identified shocks originating in the "supply" side (technology and energy). Furthermore, corporate financial shocks, ...
Working Paper , Paper 19-9

Briefing
Using Inventories to Help Explain Post-1984 Business Cycles

Real business cycle (RBC) models have been highly successful at explaining business cycles that occurred before 1984. But since then, shifts in comovements and relative volatilities of key economic aggregates have challenged their preeminence. One possible refinement of the standard RBC model is to include multiple stages of production. This extension allows researchers to use inventory data to estimate the discount rate that firms use to assess future income streams. The results indicate that variations in the discount rate reflect financial frictions that have become significant drivers of ...
Richmond Fed Economic Brief , Issue June

Journal Article
Inflation Target Zones as a Commitment Mechanism

Economic Quarterly , Volume 3Q , Pages 115-132

Journal Article
The Business Cycle Behavior of Working Capital

This article investigates the cyclical properties of different components of working capital, with special attention to the correlations across time with output and cash flow to firms. The findings are as follows: First, inventories lag business cycles before 1984 by about three quarters. However, the lead-lag relationship becomes shorter in the more recent period. Second, cash holdings broadly defined to include short-term investments commonly lead the business cycle, consistent with the cash-in-advance model for short-term production decisions. Finally, trade credit lags the business cycle ...
Economic Quarterly , Issue 4Q , Pages 287-303

Briefing
Will COVID-19 Leave Lasting Economic Scars?

Researchers and policymakers are wondering whether the economic losses associated with the COVID-19 pandemic will prove temporary or persistent. Examining the housing crisis of 2006–09 may provide some clues. Despite the fact that the housing crisis represented a temporary demand-side shock, it had lasting negative effects on employment and GDP in regions most exposed to the boom and bust in house prices.
Richmond Fed Economic Brief , Issue 20-07 , Pages 5

Working Paper
Cognitive Hubs and Spatial Redistribution

In the U.S., cognitive non-routine (CNR) occupations associated with higher wages are disproportionately represented in larger cities. To study the allocation of workers across cities, we propose and quantify a spatial equilibrium model with multiple industries that employ CNR and alternative (non-CNR) occupations. Productivity is city-industry-occupation specific and partly determined by externalities across local workers. We estimate that the productivity of CNR workers in a city depends significantly on both its share of CNR workers and total employment. Together with heterogeneous ...
Working Paper , Paper 19-16

Briefing
Are Firms Factoring Increasing Inflation Into Their Prices?

While inflation is low and stable, business leaders are well justified in paying little attention to aggregate inflation measures when making their own pricing decisions. In this article, we introduce a new set of quarterly questions in a business survey that help to ascertain the extent to which firms pay more attention to inflation measures as inflation rises. We find that, from July 2021 to January 2022, business leaders not only report paying more attention to aggregate inflation measures, but also report incorporating those measures into their own pricing decisions.
Richmond Fed Economic Brief , Volume 22 , Issue 08

Journal Article
When do credit frictions matter for business cycles?

Since the Great Recession there has been renewed interest in introducing credit frictions in business cycle models. However, in order for credit frictions to be quantitatively meaningful and qualitatively realistic in business cycles, it is necessary to depart from conventional assumptions about production technology or preferences and/or add additional frictions. This article reviews some of those departures and additions.
Economic Quarterly , Volume 98 , Issue 3Q , Pages 209-230

Briefing
How Much Does Household Consumption Impact Business Cycles?

Richmond Fed Economic Brief , Volume 21 , Issue 25

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