Search Results
Journal Article
Labor Market Dynamics During the 2021-24 Inflation Surge
This paper revisits the common interpretation that the surge in the vacancy-tounemployment ratio during the 2021–24 inflation episode primarily reflected an overheated labor market. Instead, I argue that the increase in vacancies relative to unemployment was largely driven by falling real wages and a rise in job-to-job transitions, as workers sought to recover lost purchasing power, rather than by broad-based labor market overheating.
Journal Article
Will Tariffs Touch Off an Inflationary Impulse? Business Execs Think So.
Following the inflationary surge from 2021 to 2023, which was touched off by supply chain constraints and shipping bottlenecks, we evaluate a new panel of own-firm price and unit cost growth expectations in the Atlanta Fed's Survey of Business Uncertainty for signs that the anticipated impact from tariffs is broadening beyond directly affected firms. We find evidence for the potential of tariffs to touch off another bout of high inflation. First, firms that are directly exposed to tariffs have increased their year-ahead price growth expectations sharply (by 0.7 percentage points). Second, ...
Journal Article
How Credible Is Hong Kong's Currency Peg? Insights from Financial Market Prices
This article presents a structural asset-pricing model that quantifies financial market perceptions of the credibility of Hong Kong's Linked Exchange Rate System (LERS). Using data from the foreign exchange market, the authors estimate the probability that the Hong Kong dollar (HKD) remains pegged to the US dollar (USD) and the value the HKD would take if the peg were to break. The analysis reveals multiple episodes when market confidence in the peg declined, with particularly sharp stress in late 2022 and mid-2025. In these periods, capital flows, interest rate differentials, and liquidity ...
Journal Article
Geographic Inequality in Food Inflation
Using NielsenIQ Retail Scanner data, we study how food inflation varies across regions with different income levels and the role of retailer market structure. From 2006 to 2020, for the average consumer, food prices—as measured by the personal consumption expenditures (PCE) price index for food and beverages—rose by by about 1.8 percent per year. However, this aggregate increase masked substantial spatial heterogeneity. Poorer metropolitan statistical areas (MSAs) experienced annualized food inflation that was half a percentage point higher than that of richer ones—amounting to a ...
Journal Article
Fiat-Backed Stablecoins and Narrow Banking
Devastated by the misery of millions of people during the Great Depression caused by the collapse of the entire US financial system, a group of economists at the University of Chicago sought to reform the banking sector. The "Chicago plan" suggested a replacement of "fractional-reserve banks" with "full-reserve banks" (also called "narrow banks" and "limited-purpose banks"). Most economists dismiss this idea. However, the rising popularity of stablecoins and the 2025 GENIUS Act in the US introduce this form of banking to the general public. The goal of this note is to analyze the similarities ...
Journal Article
Downside Risk to the Stock Market and Consumption
We investigate downside risk to the stock market and, in turn, downside risk to consumption via the equity wealth effect. The AI boom has seen stock market valuations rise sharply, led by the so-called Magnificent 7, raising concerns of a stock market "bubble." We analyze potential factors contributing to downside risk to the stock market if investor sentiment turns decidedly more negative, thereby driving down equity prices. Downside risk to the stock market in turn poses downside risk to consumption spending via the equity wealth effect. We measure the equity wealth effect using data on ...
Journal Article
High and Volatile Inflation Begets a More Volatile Business Cycle
Following five years of inflation above the Federal Reserve's 2 percent target, a pressing question for policymakers is: what are the macroeconomic consequences of inflation remaining persistently elevated? Drawing on historical lessons from the 1970s and a new theoretical framework, this paper shows that elevated and persistent inflation makes the economy more vulnerable to costpush shocks. When inflation is already high, a cost-push shock generates larger and more persistent inflation and a deeper output contraction than it would in an environment of low and stable inflation. The ...
Journal Article
The Price of Delay: Supply Disruptions, Product Availability, and Strategic Pricing during the Pandemic
During 2020–23, firms did not just face higher costs but faced an unusually tight constraint on product availability. Imports often did not arrive when expected, and port congestion and vessel delays made replenishment unusually uncertain. In Baslandze and Fuchs (2026), we study how these disruptions showed up in consumer prices using newly linked micro data that match shipment-level bills of lading to high-frequency consumer transaction prices. The evidence points to sizable pass-through from delivery shortfalls to prices, above and beyond the standard pass-through of costs. Prices also ...
Journal Article
K-shaped Economy or Not? Evidence from a Payments Survey
Using transaction data from a payments survey in the United States, we analyze how consumers across income groups changed their spending between 2021 and 2025. We find that spending by consumers with high household income (fourth and fifth quintiles) grew substantially faster than spending by consumers with low household income (first to third quintiles), a pattern that holds across total spending, grocery spending, and spending on necessities. Both groups saw spending increases, but the gap in growth rates points to a widening of consumption inequality across the income distribution. Rather ...
Journal Article
Downside Risk to the Stock Market and Consumption
We investigate downside risk to the stock market and, in turn, downside risk to consumption via the equity wealth effect. The AI boom has seen stock market valuations rise sharply, led by the so-called Magnificent 7, raising concerns of a stock market “bubble.” We analyze potential factors contributing to downside risk to the stock market if investor sentiment turns decidedly more negative, thereby driving down equity prices. Downside risk to the stock market in turn poses downside risk to consumption spending via the equity wealth effect. We measure the equity wealth effect using data on ...