Articles providing critical insights and analysis on monetary policy issues impacting the U.S. economy and its deep financial and economic relationship with Mexico.
Mexico nearshoring yet to yield big investment despite global trade tensions
The resulting reality surrounding nearshoring’s impact on Mexico’s economy is nuanced. While Mexico has made gains, many of them stem from trade diversion rather than large-scale foreign capital relocation.
December 05, 2024
Research Department Working Papers
Real Exchange Rates and the Global Financial Cycle
This paper looks at the effect of fluctuations in the global financial cycle on real exchange rates.
November 26, 2024
Research Department Working Papers
The Problem of Quality Change in Historical Price Statistics: An Illustrative Example Using Baedeker Travel Guides
This paper uses a novel dataset on the prices of the travel guidebooks published by the German publishing house Baedeker between 1832 and 1944 to construct a hedonic price index for guidebooks. Comparing these indexes to the list prices of these guidebooks, the paper shows that the failure to adjust for improvements in the quality of the guidebooks over time imparts a substantial upward bias to measured inflation.
November 26, 2024
More household savings offset increased government borrowing since 2008
Large government budget deficits over the past 15 years have led to a large increase in the stock of government debt. But these government deficits have been matched by an increase in U.S. household savings.
November 26, 2024
Blame higher U.S. equity prices for recent moves in U.S. external liabilities
The U.S. net foreign asset position—the value of foreign assets held by U.S. residents minus the value of U.S. assets held by foreign residents—has fallen sharply since the 2008 Global Financial Crisis.
November 12, 2024
Research Department Working Papers
What Imports to Import Prices?
This study offers new insights into exchange rate pass-through (ERPT) using U.S. import price indexes by country-of-origin, covering two decades of monthly data.
October 25, 2024
Mexico Economic Update
Mexico’s economy shows mixed signals
Mexico’s economy continued growing steadily through August, according to the monthly GDP proxy. However, a weakening labor market and stalled consumption are signs of deceleration going into the fourth quarter.
October 25, 2024
Research Department Working Papers
The Postpandemic U.S. Immigration Surge: New Facts and Inflationary Implications
This paper combines administrative data on border encounters and immigration court records with household survey data to document two new facts about these immigrants: They tend to be hand-to-mouth consumers and low-skilled workers that complement the existing workforce. The authors build these features into a model with capital, household heterogeneity and population growth to study the inflationary effects of this episode.
October 01, 2024
Globalization Institute Working Paper
The Contribution of Foreign Holdings of U.S. Treasury Securities to the U.S. Long-Term Interest Rate: An Empirical Investigation of the Impact of the Zero Lower Bound
This paper finds empirical evidence of a possible structural break in the relationship between the foreign holdings of U.S. Treasury securities and the U.S. long-term interest rate occurring at the time when U.S. monetary policy became constrained at the zero-lower bound (ZLB).
September 25, 2024
Globalization Institute Working Paper
Exchange Rate Determination Under Limits to CIP Arbitrage
Recent theories of exchange rate determination have emphasized limited UIP arbitrage by international financial institutions. New regulations since 2008 have also led to imperfect CIP arbitrage. This paper shows that under limited CIP arbitrage the exchange rate and CIP deviation are jointly determined by equilibrium in the FX spot and swap markets.
September 23, 2024