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Working Paper
Flexible Average Inflation Targeting: How Much Is U.S. Monetary Policy Changing?
One major outcome of the Federal Reserve’s 2019–20 framework review was the adoption of a Flexible Average Inflation Targeting (FAIT) strategy in August 2020. Using synthetic control methods, we document that U.S. inflation rose post-FAIT considerably more than predicted had the strategy not changed (an average of 1.18 percentage points during 2020:M8-2022:M2). To explore the extent to which targeting average inflation delayed the Fed’s response and contributed to post-FAIT inflation, we adopt a version of the open-economy New Keynesian model in Martínez-García (2021) and document the ...
COVID-19 Risks Expose Vulnerabilities, Downside Risks to U.S. Outlook
The COVID-19 crisis has adversely affected the U.S. economy, helping account for a projected 3.4 percent contraction in 2020. The Congressional Budget Office (CBO) anticipates a strong 4.6 percent rebound in 2021, making up for those losses.
Se Habla Español: U.S. Yet to Realize Many Benefits of a Growing Bilingual Population
The Spanish-only-speaking population in the U.S. faces many challenges that include overcoming often lesser income prospects compared with monolingual English speakers.
Taking the Global Housing Market’s Temperature: Is It Running a Fever (Again)?
The current trajectory prompts the question: Do markets face the prospect of a housing bubble once again? Alternatively, are price increases in step with housing market fundamentals?
Fed’s New Inflation Targeting Policy Seeks to Maintain Well-Anchored Expectations
The Fed’s evolving understanding of the economy and its reassessment of the natural rate of interest have led to arguably the most significant policy change since 2012.
Spanish-Speaking Growth in Texas Reinforces Need to Close Education Gaps
The Eleventh Federal Reserve District has the second-largest native Spanish-language population in the Federal Reserve System. That population will grow further as the number of Hispanics exceeds 20 million in Texas alone by 2050.
Systemic Risks, Interdependencies Weigh on 2021 Global Outlook
The path of economic recovery from the COVID-19 recession remains far from clear. A fitful rollout of vaccines and governmental responses to new variants of the virus loom over a global growth rebound that private forecasters estimate at 5.7 percent for 2021.
Russia’s War on Ukraine Will Leave Scars on U.S., World Economies
The conflict may alter the global economic and geopolitical order, leading to a new era of deglobalization.
Policymakers’ Response to COVID-19 Can Draw on Great Recession Lessons
Central banks’ experience before and during the 2007–09 Great Recession suggests that they have ample tools to support the economy.
Real-Time Market Monitoring Finds Signs of Brewing U.S. Housing Bubble
There is growing cause for concern that U.S. house prices are again becoming unhinged from fundamentals.