Search Results
Journal Article
Do budget deficits cause inflation?
Keith Sill examines the theory and evidence on the link between fiscal and monetary policy and, thus, between deficits and inflation. Sill concludes that whether deficits lead to inflation depends on the extent to which a country?s monetary policy is independent.
Journal Article
The cyclical volatility of interest rates
Interest rates change in response to a variety of economic events, such as changes in Fed policy, crises in financial markets, and changes in prospects for long-term economic growth and inflation. But such events are sporadic, and interest rates show a more regular pattern of volatility that corresponds to the business cycle. In this article, Keith Sill examines some facts and theory about the cyclical volatility of short-term and long-term interest rates.
Journal Article
Restructuring during recessions: a silver lining in the cloud?
Recessions usually mean bad times for many workers and firms: companies close; jobs are lost. However, recessions can present certain opportunities for organizations. For example, restructuring can be less costly during a recession: workers can be retrained and machines upgraded. In turn, these actions position a company to take advantage of the next economic upturn. In this article, Keith Sill discusses the "creative destruction" that takes place during recessions and outlines some of the policy implications of restructuring
Working Paper
Measuring disagreement in probabilistic and density forecasts
In this paper, we introduce and study a class of disagreement measures for probability distribution forecasts based on the Wasserstein metric. We describe a few advantageous properties of this measure of disagreement between forecasters. After describing alternatives to our proposal, we use examples to compare these measures to one another in closed form. We provide two empirical illustrations. The first application uses our measure to gauge disagreement among professional forecasters about output growth and inflation rate in the Eurozone. The second application employs our measure to gauge ...
Working Paper
On the stability of employment growth: a postwar view from the U.S. states.
In 1952, the average quarterly volatility of U.S. state employment growth stood at 1.5 percent. By 1995, employment growth volatility came in at just under 0.5 percent. While all states shared in the decline, some states declined much more dramatically than others. We analyze aspects of this decline using new data covering industry employment by state during the postwar period. Estimates from a pooled cross-section/time-series model corrected for spatial dependence indicate that fluctuations in state-specific and aggregate variables have both played an important role in explaining volatility ...
Working Paper
Analyzing data revisions with a dynamic stochastic general equilibrium model
We use a structural dynamic stochastic general equilibrium model to investigate how initial data releases of key macroeconomic aggregates are related to final revised versions and how identified aggregate shocks influence data revisions. The analysis sheds light on how well preliminary data approximate final data and on how policy makers might condition their view of the preliminary data when formulating policy actions. The results suggest that monetary policy shocks and multifactor productivity shocks lead to predictable revisions to the initial release data on output growth and inflation.
Working Paper
Regional employment dynamics
There is a widespread belief that different geographic regions of the U.S. respond differently to economic shocks, perhaps because of factors such as differences in the composition of regional output, adjustment costs, or other frictions. The author investigates the comovement of regional employment series using a common features framework. Little evidence is found to suggest that regions move synchronously; rather, it takes about three quarters before regions respond in a similar fashion to a common shock. The author identifies leading and lagging regions. None of the regional employment ...
Working Paper
DSGE model-based forecasting of non-modelled variables
This paper develops and illustrates a simple method to generate a DSGE model-based forecast for variables that do not explicitly appear in the model (non-core variables). The authors use auxiliary regressions that resemble measurement equations in a dynamic factor model to link the non-core variables to the state variables of the DSGE model. Predictions for the non-core variables are obtained by applying their measurement equations to DSGE model- generated forecasts of the state variables. Using a medium-scale New Keynesian DSGE model, the authors apply their approach to generate and evaluate ...
Working Paper
The cyclical behavior of regional per capita incomes in the postwar period
This paper examines the cyclical dynamics of per capita personal income for the major U.S. regions during the 1953:3-95:2 period. The analysis reveals considerable differences in the volatility of regional cycles. Controlling for differences in volatility, the authors find a great deal of comovement in the cyclical response of four regions (New England, Southeast, Southwest, and Far West), which the authors call the core region, and the nation. The authors also find a great deal of comovement between the Mideast and Plains regions, but these regions are only weakly correlated with national ...