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Speech
The Benefits and Casualties of Trade
It?s time for fiscal and other policies to take the lead in growing the American economy, Federal Reserve Bank of Philadelphia President Patrick T. Harker said in a speech today at the Global Interdependence Center?s Central Banking Series in Dublin, Ireland. President Harker?s comments focused on the benefits and casualties of international trade
Working Paper
Fiscal Policies for Job Creation and Innovation: The Experiences of US States
This paper reviews selected fiscal policy initiatives undertaken by US states to encourage job creation and innovation. We begin with a discussion of some general considerations about the design of tax policies summarized in a tax policy design table. Four policies are reviewed: job creation tax credits, research and development tax credits, a set of tax policies targeted to the biotechnology industry, and a broad set of tax policies that attract star scientists. The experiences at the state level are used to evaluate the effectiveness of these employment and knowledge-capital tax incentives ...
Working Paper
Credit Guarantee and Fiscal Costs
This paper studies the effectiveness of government-backed credit guarantees to the infrastructure sector, a policy tool adopted by a range of countries during recessions. We proposea two-sector model with financial intermediary frictions so that infrastructure producers relyon bank loans to finance their risky production. Governments can intervene in the credit market by providing a partial guarantee on those bank loans. We find that a credit guaranteeincreases infrastructure production, leading to a high fiscal multiplier in the longer run. In thenear term, however, higher wages in the ...
Working Paper
Consumption, Wealth, and Income Inequality: A Tale of Tails
We provide evidence that the distributions of consumption, labor income, wealth, and capital income exhibit asymptotic power-law behavior with a strict ranking of upper tail inequality, in that order, from the least to the most unequal. We show analytically and quantitatively that the canonical heterogeneous-agent model cannot replicate the proper ranking and magnitudes of these four tails simultaneously. Mechanisms addressing the wealth concentration puzzle in these models through return heterogeneity lead to a mirror consumption concentration puzzle. We match the cross-sectional data on ...
Journal Article
Fiscal Multiplier
Jargon Alert on the Fiscal Multiplier
Journal Article
The Rise and Fall of Pandemic Excess Savings
U.S. households built up savings at unprecedented rates following the strong fiscal response and lower consumer spending related to the pandemic. Despite recent rapid drawdowns of those funds, estimates suggest a substantial stock of excess savings remains in the aggregate economy. Since 2020, households across all income levels have held a historically large share of savings in cash or other easily accessible forms. Estimates suggest that those funds could be available to support personal spending at least into the fourth quarter of 2023.
Working Paper
Inflationary Effects of Fiscal Support to Households and Firms
Fiscal support measures in response to the COVID-19 pandemic varied in their targeted beneficiaries. Relying on variability across 10 large economies, we study differences in the inflationary effects of fiscal support measures targeting consumers or businesses. Because conventional measures of real activity were distorted, we control for the underlying state of real economy using households sentiment data. We find that fiscal support measures to consumers, but not firms, had inflationary effects that manifested 5 weeks following the announcement and peaked at 12 weeks. The magnitude of the ...