Global Institute working papers

 

• Working Paper

  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 Paper

  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

• Working Paper

  Trade Costs and Inflation Dynamics

  Using bilateral trade flows from detailed global input-output data and a gravity framework, this paper estimates trade cost shocks and their effects on CPI inflation.

  March 04, 2025

• Working Paper

  An Anatomy of U.S. Establishments’ Trade Linkages in Global Value Chains

  Global value chains (GVC) are a pervasive feature of modern production, but they are hard to measure. Using U.S. Census microdata, this paper develops novel measures of the linkages between U.S. manufacturing establishments’ imports and exports. The paper documents three new GVC patterns.

  December 27, 2024

• Working Paper

  Structural Change in Sub-Saharan Africa: An Open Economy Perspective

  This paper studies the evolution of manufacturing value-added shares in 11 sub-Saharan African (SSA) countries through the lens of an open economy model of structural change.

  December 24, 2024

• Working Paper

  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

• Working Paper

  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

• Working Paper

  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

• Working Paper

  The Postpandemic U.S. Immigration Surge: New Facts and Inflationary Implications

  To determine the impact of the postpandemic U.S. immigration surge, the authors first document the salient features of these new immigrants: they are primarily low-skilled relative to the existing workforce and more likely to be hand-to-mouth consumers. They then incorporate these features into a heterogeneous agent model with capital-skill complementarity.

  October 01, 2024

• 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