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Working Paper
Climate Shocks in the Anthropocene Era: Should Net Domestic Product Be Affected by Climate Disasters
The monetary costs of weather and climate disasters in the U.S. have grown rapidly from 1980 to 2022, rising more than 5 percent in real terms annually. Much of this real growth in costs is likely due to climate change. Regardless of its cause, these costs imply a faster depreciation of real assets. We argue that the expected depreciation from these events could be included in the consumption of fixed capital, leading to lower levels, and slightly lower growth rates, for net domestic product (NDP). We use Poisson pseudo-maximum-likelihood regressions to estimate this expectation and to ...
Discussion Paper
Low Productivity Growth: The Capital Formation Link
A major economic concern is the ongoing sluggishness in the growth of output per worker hour, generally called labor productivity. In an arithmetic sense, the growth of the economy can be accounted for by the increase in hours worked plus that of labor productivity. With the unemployment rate now at a level widely regarded as near ?full employment,? growth in hours worked is likely to be limited by demographic forces, most importantly the very limited expansion of the working-age population. If productivity growth also remains low, the sustainable pace of increase of real GDP will be limited ...
Working Paper
Currency Crashes and Bond Yields in Industrial Countries
This paper examines episodes of sudden large exchange rate depreciations (currency crashes) in industrial countries and characterizes the behavior of government bond yields during and after these crashes. The most important determinant of changes in bond yields appears to be inflationary expectations. When inflation is high and rising at the time of a currency crash, bond yields tend to rise. Otherwise--and in every currency crash since 1985--bond yields tend to fall. Over the past 20 years, inflation rates have been remarkably stable in industrial countries after currency crashes.
Working Paper
How fast do personal computers depreciate? concepts and new estimates
This paper provides new estimates of depreciation rates for personal computers using an extensive database of prices of used PCs. Our results show that PCs lose roughly half their remaining value, on average, with each additional year of use. We decompose that decline into age-related depreciation and a revaluation effect, where the latter effect is driven by the steep ongoing drop in the constant-quality prices of newly-introduced PCs. Our results are directly applicable for measuring the depreciation of PCs in the National Income and Product Accounts (NIPAs) and were incorporated into the ...
Discussion Paper
Exchange rate policies
Modern macroeconomic theory teaches us new lessons about exchange rates: Currency depreciations or appreciations that change the relative competitiveness of producers in different countries are undesirable from a global perspective if they lead to relative prices that do not reflect the true relative costs of production. From this standpoint, "external balance" does not mean that trade balances should be zero, but rather that global resources are allocated efficiently. The implications of this insight for the role of the exchange rate in monetary policy are explored here. Some of the ...
Journal Article
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