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Making Sense of Recession Probabilities
While recession probabilities can provide a snapshot of current economic conditions, relying on them to judge whether a recession is underway can be risky.
Working Paper
Does Uncertainty Really Predict Recessions?
We evaluate the ability of economic uncertainty measures to forecast recessions in real time. We find that including uncertainty increases the predictive power of both in sample and out-of-sample forecast models relative to a baseline set of financial variables. A nonlinear maximum transformation of uncertainty, which captures whether a measure exceeds its maximum over the past year, improves forecast performance for some measures. Adding a contemporaneous indicator like GDP growth alongside uncertainty yields additional predictive gains. Lastly, ex post Bayesian model averaging outperforms ...
Pension or 401(k)? Retirement Plan Trends in the U.S. Workplace
An analysis describes the declining prevalence of defined-benefit pensions in favor of defined-contribution retirement plans in the U.S. workplace over time.
Do Government Shutdowns Affect Subsequent Data Revisions?
This analysis looks at GDP revisions around U.S. government shutdowns to gauge whether these funding lapses seem to affect the quality of economic data.
When Oil Prices Drop, Why Do Gasoline Prices Stay Elevated?
Why do gasoline prices rise quickly but fall slowly when oil prices drop? Learn the economics behind the "rockets and feathers" effect on pump prices.
Journal Article
Understanding the Distribution of Inflation Expectations
Inflation expectations are central to monetary policy but are often summarized by a single statistic such as the mean or median forecast. This article argues for a distributional view in which the full cross-sectional distribution of beliefs is the relevant object. We first organize the literature around the main distributional features of inflation expectations: the level of expected inflation, disagreement across agents, subjective uncertainty within agents, skewness, and tail behavior. The literature consistently documents large and time-varying disagreement, systematic demographic ...