Dallas Fed Economics
What Big Macs tell us about the disconnect between prices and exchange rates
The Economist’s Big Mac Index is a measure of the real exchange rate that instead of measuring the price of a basket of goods and services, measures the price of one good, the McDonald’s Big Mac. Recent empirical work finds that financial factors, and not monetary ones, underlay a very high correlation between nominal exchange rates and the Big Mac-based real exchange rate.
October 15, 2026
Dallas Fed Economics
Tariffs increased in 2025; why did U.S. imports grow?
The U.S. average tariff rate increased from 2.9 percent in January 2025 to 14.8 percent in December, a rise of almost 12 percentage points. The surge—the largest such U.S. jump since the Smoot-Hawley tariffs at the onset of the Great Depression in 1930—led to a sharp increase in the tariff-inclusive prices that U.S. importers paid.
October 06, 2026
Working Paper
Human Capital Accumulation Across Space
This paper studies how human capital shapes the economic geography of development. The authors propose a model in which human capital acquisition costs vary across space, and regions with higher human capital invest more in human-capital-augmenting technology.
September 23, 2026
Working Paper
Globalization, Inflation Dynamics and the Slope of the Phillips Curve
This paper studies how international trade has affected U.S. inflation dynamics. The authors develop a multi-region New Keynesian model of an open monetary union in which regional Phillips curve slopes depend on exposure to imported goods.
September 22, 2026
Working Paper
Endogenous Markups and Trade Elasticities
This paper develops a search model of international trade where buyers allocate costly cognitive attention across suppliers.
September 21, 2026
Special Report
USMCA trade outlook matters for the U.S., not just for Canada and Mexico
While the overall impact on the U.S. of a redrawn regional trade agreement with Mexico and Canada appears modest in most plausible scenarios, policies promoting regionalization differ sharply in their impacts.
August 26, 2026
Dallas Fed Economics
Mitigating tariffs via USMCA may have limited 2025 price increases
Higher tariffs do not automatically show up one-for-one in consumer prices. Price effects depend on how firms respond. Foreign exporters may cut pre-tariff prices to preserve access to the U.S. market, while domestic importers or retailers may absorb part of the increase with lower margins.
August 18, 2026
Dallas Fed Economics
How USMCA compliance cushioned the 2025 tariff shock
Despite regional sourcing and compliance costs, USMCA-based firms enjoy an edge over competitors outside North America facing higher U.S. tariffs.
August 04, 2026
Working Paper
How Times Have Changed: The Impact of the 2026 Iran War on the U.S. Economy
The 2026 Iran war has raised the question of how exposed the U.S. economy is to geopolitical oil supply disruptions. This paper develops a two-country model of the global economy with large geopolitical oil supply disruptions that distinguishes between the U.S. economy and the rest of the world.
June 23, 2026
Dallas Fed Economics
Hormuz closure offsets tariff reversal; U.S. left with upside inflation risk
A pair of important and opposing trade shocks hit the U.S. economy during the first quarter of 2026. The U.S. Supreme Court struck down a portion of the tariffs imposed under the International Emergency Economic Powers Act (IEEPA). The decision on Feb. 20 lowered average U.S. import tariffs by roughly 4.8 percentage points.
June 02, 2026