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Journal Article
What Has Driven the Recent Increase in Retirements?
During the pandemic, the share of retirees in the U.S. population rose much faster than its normal pace. Typically, an increase in this share is driven by more people transitioning from employment to retirement. However, we show that the recent increase was instead driven by fewer people transitioning from retirement back into employment, likely due to pandemic-related health risks. More retirees may rejoin the workforce as these health risks fade, but the retirement share is unlikely to return to a normal level for some time.
Working Paper
Deciphering Federal Reserve Communication via Text Analysis of Alternative FOMC Statements
We apply a natural language processing algorithm to FOMC statements to construct a new measure of monetary policy stance, including the tone and novelty of a policy statement. We exploit cross-sectional variations across alternative FOMC statements to identify the tone (for example, dovish or hawkish), and contrast the current and previous FOMC statements released after Committee meetings to identify the novelty of the announcement. We then use high-frequency bond prices to compute the surprise component of the monetary policy stance. Our text-based estimates of monetary policy surprises are ...
Working Paper
Forecasting U.S. Economic Growth in Downturns Using Cross-Country Data
To examine whether including economic data on other countries could improve the forecast of U.S. GDP growth, we construct a large data set of 77 countries representing over 90 percent of global GDP. Our benchmark model is a dynamic factor model using U.S. data only, which we extend to include data from other countries. We show that using cross-country data produces more accurate forecasts during the global financial crisis period. Based on the latest vintage data on August 6, 2020, the benchmark model forecasts U.S. real GDP growth in 2020:Q3 to be −6.9 percent (year-over-year rate) or 14.9 ...
Journal Article
How You Say It Matters: Text Analysis of FOMC Statements Using Natural Language Processing
The Federal Reserve has increasingly used public statements to shape expectations about future policy actions. After the Great Recession, when the nominal short-term interest rate reached its effective lower bound, the Federal Open Market Committee turned toward explicit forward guidance about the future path of the policy rate as well as the amount and composition of large-scale asset purchases in their post-meeting statements. Although these statements sometimes included quantitative information, they also included more nuanced, qualitative descriptions of economic conditions. However, ...
Journal Article
How Did the 2018–19 U.S. Tariff Hikes Influence Household Spending?
Jun Nie, Alice von Ende-Becker, and Shu-Kuei X. Yang construct a tariff intensity measure to assess the uneven effects of the 2018–19 tariff increases across different types of households. They find that low-income households were more exposed to tariff increases than high-income households; younger households were more exposed than older households; Black households were more exposed than white or Asian households; and Hispanic households were more exposed than non-Hispanic households. In addition, they find that the tariff increases led to only a small shift in household spending from ...