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Newsletter
Automation and the Minimum Wage
This issue explains how a higher mandated minimum wage may lead some firms to substitute capital for labor, likely reducing job opportunities.
Working Paper
Domestic bond markets and inflation
This paper explores the relationship between inflation and the existence of a local, nominal, publicly-traded, long-maturity, domestic-currency bond market. Bond holders are exposed to capital losses through inflation and therefore represent a potential anti-inflationary force; we ask whether their influence is apparent both theoretically and empirically. We develop a simple theoretical model with heterogeneous agents where the issuance of such bonds leads to political pressure on the government to choose a lower inflation rate. We then check this prediction empirically using a panel of data, ...