Danny Walker Many people expect the rise in interest rates over the past 18 months to lead house prices to fall. Average prices have already fallen by 1–2% in the UK and by more in the US. In this post I show that historically there have been large differences in how an interest rate shock … Continue reading How house prices respond to interest rates depends on where they are in the country
Monetary Policy
Vania Esady, Bradley Speigner and Boromeus Wanengkirtyo The headline unemployment rate is one of the most widely used indicators of economic slack to measure the state of the business cycle. A large empirical literature on Phillips curve estimation has explored whether more general definitions of labour utilisation are more informative than this simple measure. In … Continue reading Does long-term unemployment affect inflation dynamics?
Sangyup Choi, Tim Willems and Seung Yong Yoo How does monetary policy really affect the real economy? What kinds of firms or industries are more sensitive to changes in the stance of monetary policy, and through which exact channels? Despite advances in our understanding of the monetary transmission mechanism, existing studies have not reached a … Continue reading What can we learn about monetary policy transmission using international industry-panel data?
Ambrogio Cesa-Bianchi, Federico Di Pace, Aydan Dogan and Alex Haberis The recent steep rise in energy prices led to a rise in the price of energy-intensive tradable goods, with inflationary pressures subsequently broadening into services in many economies. Because services are less traded and have little energy input some have suggested this broadening might indicate … Continue reading Tradable cost shocks and non-tradable inflation: real wages and spillovers
Natalie Burr The challenge of measuring financial conditions Imagine you were tasked with thinking about how financial conditions have changed over a policy tightening cycle. Different economists would come to very different conclusions, and none would necessarily be wrong. Why? Because measuring financial conditions is challenging – for a variety of reasons. A financial conditions … Continue reading The challenges of measuring financial conditions
by Brian Czech
Banks are macroeconomic mirrors. They reflect the activity of the real economy. If the economy is growing, so are the banks, starting with the Federal Reserve and its regional banks, all the way out to tiny First Michigan Bank, Oakwood Bank (the smallest bank in bank-laden Texas), and the patriotically named Citizens Bank of Americus (Georgia).
Not only do the banks,
The post Lesson from a Failed Bank: Only One Real Start-Up appeared first on Center for the Advancement of the Steady State Economy.
Vania Esady In macroeconomic models, economic agents are often assumed to perfectly observe the current state, but in reality they have to infer current conditions (nowcast). Because of information costs, this is not always easy. Information costs are not observable in the data but they can be proxied. A good proxy is disagreement on a … Continue reading Time-varying disagreement and monetary transmission
Kristina Bluwstein, Sudipto Karmakar and David Aikman Introduction Inflation reached almost 9% in July 2022, its highest reading since the early 1990s. A large proportion of the working age population will never have experienced such price increases, or the prospect of higher interest rates to bring inflation back under control. In recent years, many commentators … Continue reading What does the rise in the inflation mean for financial stability?
Modern Monetary Theory or MMT has crept in from the academic margins to become an influential doctrine in progressive policy circles in the United States. Both Elizabeth Warren and Bernie Sanders drew on the ideas of MMT to shape their ambitious public spending platforms. MMT has been cited as one way to fund a Green New Deal, in combination with [...]
Lekha Chakraborty (Professor, NIPFP, and Member of Governing Board, International Institute of Public Finance, Munich) Climate change is about risks and uncertainty. How well the monetary policy stance can incorporate such risks and uncertainties is questioned by many economists. There is a broad consensus among economists that fiscal policy is capable of dealing with the […]