Potential effects of an increase in debit card fees
Recently announced changes to debit card interchange fees could lead to an increase in the cost of debit cards to consumers. This brief analyzes the potential effects of an increase in debit card fees or in bank account fees by using the results of the 2008 and 2009 Survey of Consumer Payment Choice (SCPC). The main findings are that: 1) consumers with the least amount of education (less than a high school diploma), the lowest annual income (below $25,000), and the youngest age (under 25 years) consider cost to be the most important payment characteristic. It is probable that these consumers ...
What can we learn by disaggregating the unemployment-vacancy relationship?
This policy brief explores the nature of the recent change in the vacancy-unemployment relationship by disaggregating the data by industry, age, education, and duration of unemployment, and by examining blue- and white-collar groups separately.
Domestic and foreign announcements on unconventional monetary policy and exchange rates
This brief studies the effects that announcements about unconventional monetary policies (large-scale asset purchases, refinancing operations, and forward guidance) have on nominal exchange rates. To this end, the authors use high-frequency intra-daily data and look at the variations in government future yields and in nominal exchange rates over a narrow window around the time of the announcements. They find that expansionary monetary policy shocks embedded in announcements made by the Federal Reserve depreciate the U. S. dollar. In contrast, the authors also find that similar unexpected ...
Inflation targeting: central bank practice overseas
This policy brief, which is based on an internal memo, summarizes the institutional and operational features observed in the 27 countries that have gained experience with inflation targeting (IT). It finds considerable convergence in many IT practices across countries over the past 10 to 15 years but much variation in policymakers? choices concerning such key issues as how they treat the borders of the target range. On the whole, most IT banks have chosen to practice inflation targeting in a more flexible and, thus, resilient fashion than many analysts once feared?seemingly without much loss ...
Inflation expectations and the evolution of U. S. inflation
Much recent commentary has centered on the importance of well-anchored inflation expectations serving as the foundation of a well-behaved inflation rate. But the difficulty in relying on this principle is that inflation expectations are not directly observable, and thus it is hard to know whether expectations truly play such an anchoring role in the evolution of inflation. In the current circumstances this question is of much more than academic interest, as widely used measures suggest the coincidence of a large unemployment gap and muted production costs with fairly stable long-run inflation ...
Long-term inequality and mobility
This brief investigates the mobility and income situation of family heads and spouses who have low long-term incomes, where long-term refers to average family income over a 10-year period. The data show that most of those in the poorest one-fifth of the long-term income distribution during the 1996?2006 period spent all or nearly all of the period?s years in the poorest fifth of the single-year income distribution, and those who escaped did not move far. Moreover, this situation has worsened over time, with the long-term poor more ?stuck? at the bottom in the 1996-2006 period than they were ...
Measurement of unemployment
Measures of unemployment tally people without a job who are looking for one. For measurement purposes, the critical question is what constitutes ?looking.? This article summarizes how unemployment is measured in the United States and Europe, and describes recent research investigating the permeability of the dividing line between the unemployed and ?marginally attached? subgroups of those out of the labor market. A continuum between unemployed and entirely inactive individuals indicates that measures beyond unemployment may be useful in judging the state of the labor market.
U.S. household deleveraging: what do the aggregate and household-level data tell us?
Deleveraging is the process by which households decide that their level of debt is inconsistent with their revised economic outlook and adjust their leverage accordingly, primarily by substituting debt repayment for consumption. Household deleveraging is a commonly cited reason for the sluggish consumption growth experienced during the current economic recovery from the Great Recession. This policy brief analyzes the impact of household debt repayment on consumer spending during and after the Great Recession by using aggregate and household-level data. Overall, the data show little evidence ...
The role of expectations and output in the inflation process: an empirical assessment
This brief examines two issues of current interest concerning inflation: (1) whether "well-anchored" expectations will help to restrain inflation's decline and whether an "un-anchoring" of expectations could lead to undesirably high inflation and (2) to what extent output (or utilization) gaps are useful components of empirical models of inflation and, if they are useful, to what extent current gaps might counterbalance the effect of expectations on inflation. The goals of conducting this examination are to articulate a reasonably coherent framework for the discussion, highlight the ...
Do commodity price spikes cause long-term inflation?
This public policy brief examines the relationship between trend inflation and commodity price increases and finds that evidence from recent decades supports the notion that commodity price changes do not affect the long-run inflation rate. Evidence from earlier decades suggests that effects on inflation expectations and wages played a key role in whether commodity price movements altered trend inflation. This brief is based on a memo to the president of the Federal Reserve Bank of Boston as background to a meeting of the Federal Open Market Committee.