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Working Paper
The Chicago Fed DSGE Model: Version 2
The Chicago Fed dynamic stochastic general equilibrium (DSGE) model is used for policy analysis and forecasting at the Federal Reserve Bank of Chicago. This guide describes its specification, estimation, dynamic characteristics, and how it is used to forecast the U.S. economy. In many respects the model resembles other medium-scale New Keynesian frameworks, but there are several features which distinguish it: the monetary policy rule includes anticipated future deviations, productivity is driven by both neutral and investment specific technical change, multiple price and wage indices identify ...
Report
Assessing the Relative Progressivity of the Biden Administration’s Federal Student Loan Forgiveness Proposal
We quantify the total stock of balances eligible for the Biden Administration’s student loan forgiveness policy announced and examine which groups benefit most. Up to $442 billion in loans are eligible. Those benefiting most are younger, have lower credit scores, and live in lower- and middle-income neighborhoods. We also find that Black and Hispanic borrowers disproportionately benefit from the proposal. We then compare the distribution of beneficiaries for the announced policy to several alternative hypothetical forgiveness proposals and three existing tax credits. The additional ...
Working Paper
Some Implications of Uncertainty and Misperception for Monetary Policy
When choosing a strategy for monetary policy, policymakers must grapple with mismeasurement of labor market slack, and of the responsiveness of price inflation to that slack. Using stochastic simulations of a small-scale version of the Federal Reserve Board?s principal New Keynesian macroeconomic model, we evaluate representative rule-based policy strategies, paying particular attention to how those strategies interact with initial conditions in the U.S. as they are seen today and with the current outlook. To do this, we construct a current relevant baseline forecast, one that is loosely ...