Category Archives: FEDS Paper

FEDS 2018-046: Self-confirming Price Dispersion in Monetary Economies

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Garth Baughman and Steven Rabinovich | In a monetary economy, we show that price dispersion arises as an equilibrium outcome without the need for costly simultaneous search or any heterogeneity in preferences, production costs, or search technologies. …

FEDS 2018-045: The Local Impact of Containerization

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Leah Brooks, Nicolas Gendron-Carrier, and Gisela Rua | We investigate how containerization impacts local economic activity. Containerization is premised on a simple insight: packaging goods for waterborne trade into a standardized container makes them …

FEDS 2018-044: A Nowcasting Model for the Growth Rate of Real GDP of Ecuador: Implementing a Time-Varying Intercept

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Manuel P. Gonzalez-Astudillo and Daniel Baquero | This paper proposes a model to nowcast the annual growth rate of real GDP for Ecuador. The specification combines monthly information of 28 macroeconomic variables with quarterly information of real GDP…

FEDS 2018-043: Financial Heterogeneity and Monetary Union

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Simon Gilchrist, Raphael Schoenle, Jae W. Sim, and Egon Zakrajsek | We analyze the economic consequences of forming a monetary union among countries with varying degrees of financial distortions, which interact with the firms’ pricing decisions because…

FEDS 2018-042: The Money View Versus the Credit View

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Sarah S. Baker, David López-Salido, and Edward Nelson | We argue that Schularick and Taylor’s (2012) comparison of credit growth and monetary growth as financial-crisis predictors does not necessarily provide a valid basis for achieving one of t…

FEDS 2018-041: Nothing is Certain Except Death and Taxes: The Lack of Policy Uncertainty from Expiring “Temporary” Taxes

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Andrew C. Chang | What is the policy uncertainty surrounding expiring taxes? How uncertain are the approvals of routine extensions of temporary tax policies? To answer these questions, I use event studies to measure cumulative abnormal returns (CARs) f…

FEDS 2018-040: An Output Gap Measure for the Euro Area: Exploiting Country-Level and Cross-Sectional Data Heterogeneity

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Manuel P. Gonzalez-Astudillo | This paper proposes a methodology to estimate the euro-area output gap by taking advantage of two types of data heterogeneity. On the one hand, the method uses information on real GDP, inflation, and the unemployment rate for each member state; on the other hand, it jointly considers this information for all the euro-area countries to extract an area-wide output gap measure. The setup is an unobserved components model that theorizes a common cycle across euro-area economies in addition to country- specific cyclical components. I estimate the model with Bayesian methods using data for the 19 countries of the euro area from 2000:Q1 through 2017:Q2 and perform model comparisons across different specifications of the output trend. The estimation of the model preferred by the data indicates that, because of negative shocks to trend output during the global financial crisis, output remained slightly above potential in that period, but an output gap of about negative 3-1⁄2 percent emerged during the European debt crisis. At the end of the sample period, output is estimated to be about 1 percent above potential.

FEDS 2018-038: What Macroeconomic Conditions Lead Financial Crises?

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Michael T. Kiley | Research has suggested that a rapid pace of nonfinancial borrowing reliably precedes financial crises, placing the pace of debt growth at the center of frameworks for the deployment of macroprudential policies. I reconsider the role …

FEDS 2018-037: Efficient Mismatch

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David M. Arseneau and Brendan Epstein | This paper presents a model in which mismatch employment arises in a constrained efficient equilibrium. In the decentralized economy, however, mismatch gives rise to a congestion externality whereby heterogeneous…

FEDS 2018-036: Density Forecasts in Panel Data Models: A Semiparametric Bayesian Perspective

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Laura Liu | This paper constructs individual-specific density forecasts for a panel of firms or households using a dynamic linear model with common and heterogeneous coefficients and cross-sectional heteroskedasticity. The panel considered in this pape…