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Are banking supervisory data useful for macroeconomic forecasts?
Some argue that central banks can improve monetary policy by including confidential supervisory assessments of banking organizations in their forecasts of inflation and unemployment. In this study we examine the extent to which forecasts of these variables would have been improved with the inclusion of supervisory data. We begin by reproducing the earlier results used to support the claim. We critically examine them and extend the analysis from in-sample to out-of-sample testing. Finally, we check the robustness of our findings by extending the analysis period, using a different methodology to determine the contribution to forecasts, and substituting a different measure of supervisory information. Our analysis does not support claims that confidential supervisory information would have improved forecasts of inflation. Confidential supervisory information improved forecasts of unemployment in some periods. It is unclear, however, if the frequency or level of improvement would have altered monetary policy in a nontrivial way.
AUTHORS: Feldman, Ron J.; Kim, Jangryoul; Schmidt, Jason; Miller, Preston J.
The affordable housing shortage: considering the problem, causes and solutions
Many observers claim that we are in the midst of an affordable housing shortage or, even worse, an affordable housing crisis. The primary concern is that too many households live in unaffordable rental units. We hope to clarify the current debate by first measuring the size of the problem, then diagnosing its underlying causes and, finally, discussing treatments that policymakers should consider. While our review is hardly exhaustive, we conclude that a shortage of income is largely behind the housing affordability problem despite the current focus on housing. Policymakers should recognize that government financing of new housing units is unlikely to be a cost-effective response to low household income.
AUTHORS: Feldman, Ron J.