Foundational considerations in a changing economy
President Lorie K. Logan offers her views on the evolving economy and how she is continuing to apply foundational considerations to thinking about monetary policy in this new environment.
October 09, 2024
Dallas Fed Economics
Rising unemployment does not mean recession is inevitable
The sort of increase seen in the U.S. unemployment rate over the past year is an oft-noted predictor of recession. Yet, forecasters currently expect only a modest increase in unemployment with no recession. Is this a reasonable expectation, and if so, how is this unemployment episode different from others?
October 08, 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
Dallas Fed Economics
Impact of inflation shocks on foreign exchange rates reflects central bank stature
The purchasing power parity theory of exchange rates is easily understood: A basket of goods should have the same price in different markets when that price is expressed in a common currency. However, the relationship between market-determined exchange rates and inflation shocks is not always straightforward. In the short run, central bank transparency can become an important determinant.
September 03, 2024
Dallas Fed Economics
How the U.S. might outgrow pandemic-era housing (un)affordability problems
A review of market-based and private forecasters’ expectations suggests that U.S. housing may be at an inflection point. U.S. income growth and, more broadly, the robust U.S. labor market will likely help wring out pandemic-era excesses that led to rapidly deteriorating affordability.
August 13, 2024
Dallas Fed Economics
Running the economy hotter for longer could steepen Phillips curve
In the short run, running the economy hot—with output growth above potential—comes with the cost of additional inflation. But policymakers cannot exploit this relationship forever because inflation expectations won’t remain anchored, as the public comes to expect a higher level of inflation for any given level of output.
July 16, 2024
Dallas Fed Economics
Not all price increases are equal; pandemic-era outliers drove inflation spike
Many individual price changes make up widely used gauges of inflation. Their relative importance changes over time and may affect how consumers perceive inflation. Such perceptions can prompt households to update their inflation expectations, decreasing optimism about real economic activity.
June 18, 2024
Dallas Fed Economics
Persistence of house-price growth highlights geographic, credit factors
Growth in house prices is highly persistent and therefore more predictable than that of other assets, such as stocks.
May 28, 2024
Dallas Fed Economics
Swap lines curbed global dollar shortages, appreciation during COVID-19 crisis
During the initial weeks of the COVID-19 crisis, imbalances in the offshore dollar funding market led to safe-haven appreciation of the dollar. Fed swap lines between the U.S. central bank and counterparts abroad addressed these imbalances, subsequently helping reduce the cost of offshore dollar borrowing, reversing dollar appreciation and providing liquidity.
May 21, 2024