Articles providing critical insights and analysis on monetary policy issues impacting the U.S. economy and its deep financial and economic relationship with Mexico.
Dallas Fed Economics
Advances in AI will boost productivity, living standards over time
Artificial intelligence offers the potential to improve people’s living standards. Such advances can be approximated by changes in GDP per capita over time. Using that common measure, AI could enhance longstanding productivity gains or, alternatively, drastically alter the economy in relatively short order.
June 24, 2025
Mexico Economic Update
Mexico’s economy shows mixed signals
The latest data available indicated a mixed economic outlook as employment and remittances fell, while output primarily driven by agriculture, industrial production, exports and retail sales grew.
June 20, 2025
Working Papers
Analysis of Multiple Long-Run Relations in Panel Data Models
This paper proposes a novel methodology that filters out the short-run dynamics using sub-sample time averages as deviations from their full-sample counterpart, and estimates the number of long-run relations and their coefficients using eigenvalues and eigenvectors of the pooled covariance matrix of these sub-sample deviations.
June 05, 2025
Dallas Fed Economics
Will AI replace your job? Perhaps not in the next decade
Recent rapid improvements in the capabilities of artificial intelligence have raised concerns about these technologies' impact on employment. The ultimate effects of AI on the workforce will depend on the extent to which AI augments (or complements) rather than automates (or substitutes for) workers' tasks. Will this new technology aid workers or replace them?
June 03, 2025
Working Papers
Bubbling Up? What Consumer Expectations Reveal About U.S. Housing Market Exuberance
This paper investigates the presence of speculative bubbles in the U.S. housing market after the global financial crisis. Unlike standard approaches that rely on observed economic fundamentals, the method used in this paper leverages subjective price expectations from the University of Michigan Survey of Consumers to test for exuberance without imposing a specific model of intrinsic housing values.
May 21, 2025
Dallas Fed Economics
U.S. tariff outcomes dependent on trading partner responses
In Depth: U.S. tariff policy has historically shifted among competing goals: providing revenue, protecting domestic markets and opening foreign markets to domestic producers. These goals are unlikely to be achieved simultaneously.
May 13, 2025
Mexico Economic Update
Mexico’s economy continues to decelerate amid worsening economic outlook
The consensus forecast for 2025 real GDP growth (fourth quarter, year over year) compiled by Banco de México fell to 0.5 percent in March. The latest data available indicated a slowing economy.
April 23, 2025
Working Papers
Global Macro-Financial Cycles and Spillovers
This paper develops a new dynamic factor model to jointly characterize global macroeconomic and financial cycles and the spillovers between them.
April 22, 2025
Working Papers
Tempting FAIT: Flexible Average Inflation Targeting and the Post-COVID U.S. Inflation Surge
In August 2020, the Federal Reserve replaced Flexible Inflation Targeting (FIT) with Flexible Average Inflation Targeting (FAIT), introducing make-up strategies that allow inflation to temporarily exceed the 2% target. Using a synthetic control approach, this paper estimates that FAIT raised CPI inflation by about 1 percentage point and core CPI inflation by 0.5 percentage points, suggesting a moderate impact net of food and energy and a largely temporary effect. The findings are consistent with the hypothesis of a steeper-than-expected post-pandemic Phillips curve in the New Keynesian model.
April 09, 2025
Living Up to Expectations: The Effectiveness of Forward Guidance and Inflation Dynamics Post-Global Financial Crisis
This paper studies the effectiveness of forward guidance when central banks face private agents with heterogeneous expectations allowing for a degree of bounded rationality.
April 03, 2025