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Inflation: Drivers and Dynamics 2019 Conference Summary
To provide insights into the processes that drive inflationary dynamics, the Federal Reserve Bank of Cleveland holdsan annual conference on the topic of inflation: “Inflation: Drivers and Dynamics.” This Commentary summarizes thepapers presented at the 2019 conference.
Consumers and COVID-19: A Real-Time Survey
We summarize the results from an ongoing survey that asks consumers questions related to the recent coronavirus outbreak, including their expectations for how the economy is likely to be affected by the outbreak and how their own behavior has changed in response to it. The survey began in early March, providing a window into how consumers’ responses have evolved in real time since the early days of the acknowledged spread of COVID-19 in the United States. In updating and charting the survey’s findings on the Cleveland Fed’s website going forward, we seek to inform policymakers and ...
Inflation: Drivers and Dynamics 2020 Conference Summary
To provide insights into the processes that drive inflationary dynamics, the Federal Reserve Bank of Cleveland holds an annual conference on the topic of inflation: the Inflation: Drivers and Dynamics series. The 2020 installment of the conference was held on May 21-22, 2020. This Commentary summarizes the papers at the conference, which broadly fell into four categories: (1) empirical Phillips curves, (2) networks and Phillips curves, (3) expectations formation, and (4) price-setting behavior and inflation.
Expected Post-Pandemic Consumption and Scarred Expectations from COVID-19
The COVID-19 vaccination drive raises questions about the trajectory of the economic recovery and the pandemic’s impact on consumers’ longer-term behaviors. In this Commentary, we examine the evolution of consumers’ expectations for their post-crisis spending on services that have been dramatically curtailed by the pandemic: visiting restaurants, bars, and hotels, using public transportation, and attending crowded events. We document a U-shaped pattern of expected future use of these services, with growing pessimism in summer 2020 that had largely reversed by fall 2020—for most ...
Monetary policy through production networks: evidence from the stock market
Monetary policy shocks have a large impact on stock prices during narrow time windows centered around press releases by the FOMC. We use spatial autoregressions to decompose the overall effect of monetary policy shocks into a direct effect and a network effect. We attribute 50 to 85 percent of the overall impact to network effects. The decomposition is a robust feature of the data, and we confirm large network effects in realized cash-flow fundamentals. A simple model with intermediate inputs allows a structural interpretation of our empirical strategy. Our findings indicate that production ...
Inflation: Drivers and Dynamics 2020 CEBRA Annual Meeting Session Summary
The Cleveland Fed’s Center for Inflation Research sponsored a session on inflation dynamics at the 2020 CEBRA annual meeting. The presentations focused on inflation expectations and firms’ price-setting behavior. This Economic Commentary summarizes the papers presented during the session.
Consumers and COVID-19: Survey Results on Mask-Wearing Behaviors and Beliefs
Masks or cloth face coverings have the potential to help reduce the spread of COVID-19 without greatly disrupting economic activity if they are widely used. To assess the state of mask wearing, we surveyed US consumers about their recent and prospective mask-wearing behavior. We find that most respondents are wearing masks in public but that some respondents are less likely to follow social-distancing guidelines while doing so, indicating a potential tradeoff between two of the recommended methods that jointly reduce coronavirus transmission. While most respondents indicated that they were ...
The Propagation of Monetary Policy Shocks in a Heterogeneous Production Economy
Realistic heterogeneity in price rigidity interacts with heterogeneity in sectoral size and input-output linkages in the transmission of monetary policy shocks. Quantitatively, heterogeneity in price stickiness is the central driver for real effects. Input-output linkages and consumption shares alter the identity of the most important sectors to the transmission. Reducing the number of sectors decreases monetary non-neutrality with a similar impact response of inflation. Hence, the initial response of inflation to monetary shocks is not sufficient to discriminate across models and ignoring ...