Brookings Papers on Economic Activity最新文献

We introduce a simple long-run aggregate demand and supply framework for evaluating long-run inflation. The framework illustrates how exogenous economic and political economy factors generate pressures that, in the presence of central bank discretion, can have an impact on long-run inflation as well as transitions between steady states. We use the analysis to provide a fresh perspective on the forces that drove global inflation downward over the past four decades. We argue that for inflation to remain low and stable in the future, political economy factors, such as strengthened central bank independence or more credible public debt policy, would need to offset the global economic pressures now pushing average long-run inflation upward.

Reducing high public debt is key for countries seeking to restore fiscal capacity and resilience in the wake of recent crises. But large debt reductions are rare. Jamaica stands out for reducing its debt from 144 percent of GDP to 72 percent over the last decade, a record achieved by running large, persistent primary budget surpluses. Well-designed fiscal rules combined with social partnership agreements making for fiscal ownership are at the root of its achievement.

As revealed by the failures of three regional banks in the spring of 2023, bank runs are not a thing of the past. To inform the ongoing discussion of the appropriate regulatory response, we examine trends in the banking industry over the last twenty-five years. On the liability side of bank balance sheets, deposits—and especially uninsured deposits—have grown rapidly. On the asset side, there has been a notable shift away from the information-intensive lending traditionally associated with banks and toward longer-term securities such as mortgage-backed securities and long-term Treasuries. These trends appear to be related, in the sense that banks with the most rapid growth in deposits have seen the biggest declines in loans as a share of assets. Thus, while the banks that failed in early 2023 were arguably extreme cases, they reflect broader trends, especially among larger banks. We construct a simple model to help assess the main regulatory options to reduce the risk of destabilizing bank runs—expanding deposit insurance and strengthening liquidity regulation—and argue that the industry trends we document favor the latter option. Using the model, we offer some design considerations for modifying the liquidity coverage ratio so as to require banks to pre-position sufficient collateral—largely in the form of short-term government securities—at the Federal Reserve's discount window to ensure they have enough liquidity to withstand a run on their uninsured deposits. We also comment briefly on some other regulatory implications of our findings, including for interest rate risk regulation and merger policy.

We estimate that the combination of changes in behavior to slow the spread of COVID-19 and the delivery of vaccines to a substantial majority of the American population by mid-2021 saved close to 800,000 American lives relative to what would have occurred had vaccines not been developed. We argue that the duration and magnitude of this behavioral response—and thus its overall success in delaying infections—came as a surprise, relative to both our historical experience with pandemic influenza and to model-based projections based on that experience. Thus, we take from our experience with COVID-19 over the past four years the important public health lesson that behavior change can be a powerful force for slowing the spread of a dangerous infectious respiratory disease for a long time. At the same time, these behavioral changes to slow the spread of COVID-19 came at a tremendous economic, social, and human cost. To avoid similar pain from mitigation in the next pandemic, we argue that we need to make investments now not only in vaccine development, but also in data infrastructure so that we can precisely target behavior-oriented mitigation efforts to minimize their economic and social impacts in the next pandemic.

Using newly digitized unemployment insurance claims data, we construct historical monthly unemployment series for US states going back to January 1947. We validate our series, showing that they are highly correlated with the Bureau of Labor Statistics' state-level unemployment data, which are only available since January 1976, and capture consistent business cycle dynamics. We use our claims-based unemployment rates to study the postwar evolution of labor market adjustments to local demand shocks and state unemployment fluctuations around national recessions. We document: (1) a trend decrease in the dispersion of relative employment growth and unemployment across states; (2) an attenuation of relative employment, unemployment, and population responses to state-specific demand shocks in recent decades; and (3) a convergence across states in both the speed and degree to which unemployment recovers after recessions. These trends show the emergence of a national business cycle experienced more uniformly across US states, particularly since the 1960s. We present evidence suggesting that a convergence in states' industrial composition helps explain why a more uniform business cycle emerged when it did. And states' increasingly similar experience in recessions may help explain why interstate migration became a weaker adjustment mechanism in recent decades.

This paper provides new evidence on a long-standing question asked by Shiller (1997): why do we dislike inflation? I conducted two surveys on representative samples of the US population to elicit people's perceptions about the impacts of inflation and their reactions to it. The predominant reason for people's aversion to inflation is the widespread belief that it diminishes their buying power, as neither personal nor general wage increases seem to match the pace of rising prices. As a result, respondents report having to make costly adjustments in their budgets and behaviors, especially among lower income groups. Inflation also provokes stress, emotional responses, and a sense of inequity, as the wages of high-income individuals are perceived to grow more rapidly amid inflation. Many respondents believe that firms have considerable discretion in setting wages, opting not to raise them in order to boost profits, rather than being compelled by market dynamics. The potential positive associations of inflation, such as with reduced unemployment or enhanced economic activity, are typically not recognized by respondents. Inflation ranks high in priority among various economic and social issues, with respondents blaming the government and businesses for it. I also highlight a substantial polarization in attitudes toward inflation along partisan lines, as well as across income groups.

Contrary to historical episodes, the 2022–2023 tightening of US monetary policy has not yet triggered financial crisis in emerging markets. Why is this time different? To answer this question, we analyze the current situation through the lens of historical evidence. In emerging markets, the financial channel–based transmission of US policy historically led to more adverse outcomes compared to advanced economies, where the trade channel fails to smooth out these negative effects. When the Federal Reserve increases interest rates, global investors tend to shed risky assets in response to the tightening global financial conditions, affecting emerging markets more severely due to their lower credit ratings and higher risk profiles. This time around, the escape from emerging market assets and the increase in risk spreads have been limited. We document that the historical experience of higher risk spreads and capital outflows can be largely explained by the lack of credible monetary policies and dollar-denominated debt. The improvement in monetary policy frameworks combined with reduced levels of dollar-denominated debt have helped emerging markets weather the recent Federal Reserve hikes.

We examine mortality differences between American adults with and without a four-year college degree over the period 1992 to 2021. Mortality patterns, in aggregate and across groups, can provide evidence on how well society is functioning, information that goes beyond aggregate measures of material well-being. From 1992 to 2010, both educational groups saw falling mortality, but with greater improvements for the more educated; from 2010 to 2019, mortality continued to fall for those with a four-year degree while rising for those without; during the COVID-19 pandemic, mortality rose for both groups, but markedly more rapidly for the less educated. In consequence, the mortality gap between the two groups expanded in all three periods, leading to an 8.5-year difference in adult life expectancy by the end of 2021. There have been dramatic changes in patterns of mortality since 1992, but gaps rose consistently in each of thirteen broad classifications of cause of death. We document rising gaps in other measures relevant to well-being—background factors to the rising gap in mortality—including morbidity, social isolation, marriage, family income, and wealth.

Applications for new businesses surprisingly surged during the COVID-19 pandemic, rising the most in industries rooted in pandemic-era changes to work, lifestyle, and business. The unexpected surge in applications raised questions about whether a surge in actual new employer businesses would follow. Evidence now shows increased employer business entry with notable associated job creation; and industries and locations with the largest increase in applications have had accompanying large increases in employer business entry. We also observe a tight connection between the surge in applications and quits—or close proxies for quits—both at the national and the local level. Within major cities, applications, net establishment entry, and our quits proxy each exhibit a "donut pattern," with less growth in city centers than in the surrounding areas, and these patterns are closely related to patterns of work-from-home activity. Reallocation of jobs across firm age, firm size, industry, and geography groupings increased significantly. Relatedly, there is evidence of a pause of the pre-pandemic trend toward greater economic activity being concentrated at large and mature firms, but this development is quite modest in magnitude.

We interpret recent inflation experience through the lens of a New Keynesian model with price and wage rigidities and nonlabor inputs in inelastic supply. The model provides a natural interpretation of some features of the recent episode: an initial surge of noncore inflation, followed by a lagged response of core inflation and a further lagged, persistent response of wage inflation. The model also provides a natural way of discussing the role and the strength of wage-price spiral dynamics in price-setting models. The model interprets recent developments as symptoms of underlying supply constraints, which can be triggered by both demand and supply shocks. The immediate manifestation of these constraints is in the relative price of scarce, inelastic nonlabor inputs (including energy). The secondary effects arise because they produce a gap between lowered real wage aspirations of firms—that try to make up for higher nonlabor costs—and increased real wage aspirations of workers—caused by increased labor demand. The gap produces a wage-price spiral, which continues as long as the initial relative scarcity of nonlabor inputs persists, even though input prices are falling. In this view, the fact that nominal wage growth is currently exceeding price inflation can be given a benign interpretation, as a sign of real wages going back to trend and not necessarily as a concern of an ongoing spiral.