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80 posts on "Macroecon"

November 19, 2014

The Long-Term Unemployed and the Wages of New Hires



Third in a three-part series
This is the third in a series of blog posts on the topic of measuring labor market slack. In this post, we assess the relationships between short- and long-term unemployment and wages by comparing the differences in states’ experiences over the business cycle. While all states felt the impact of the Great Recession, some fared better than others. Consequently, it is possible to use differences in the composition and shifts of short- and long-term unemployment to determine whether short-term unemployment exerts a greater influence on wage determination. The results suggest that there is little difference in how long-term and short-term unemployment affect wages, and as a consequence, the long-term unemployed shouldn’t be dismissed when evaluating labor market slack.

Continue reading "The Long-Term Unemployed and the Wages of New Hires" »

Posted by Blog Author at 7:00 AM in Labor Economics, Macroecon | Permalink | Comments (3)

November 18, 2014

How Attached to the Labor Market Are the Long-Term Unemployed?



Second in a three-part series
In this second post in our series on measuring labor market slack, we analyze the labor market outcomes of long-term unemployed workers to assess their employability and labor force attachment. If long-term unemployed workers are essentially nonparticipants, their job-finding prospects and attachment to the labor force should resemble those of nonparticipants who are not looking for a job and should differ considerably from those of short-term unemployed workers. Using data that allow us to follow workers over longer time periods, we find that differences in labor market outcomes between short- and long-term unemployed workers exist, but these differences narrow at longer horizons. In contrast, labor market outcomes for the long-term unemployed are substantially different from those of nonparticipants who do not want a job.

Continue reading "How Attached to the Labor Market Are the Long-Term Unemployed?" »

Posted by Blog Author at 7:00 AM in Labor Economics, Macroecon | Permalink | Comments (1)

November 17, 2014

Measuring Labor Market Slack: Are the Long-Term Unemployed Different?



Istock-longterm-unemployed-450_caption
First in a three-part series
There has been some debate in the Liberty Street Economics blog and in other outlets, such as Krueger, Cramer, and Cho (2014) and Gordon (2013), about whether the short-term unemployment rate is a better measure of slack than the overall unemployment rate. As the chart below shows, the two measures are sending different signals, with the short-term unemployment rate back to its pre-recession level while the overall rate is still elevated because of a high long-term unemployment rate. One can argue that the unemployment rate is exaggerating the extent of underutilization in the labor market, based on the premise that the long-term unemployed are, in practice, out of the labor force and likely to exert little pressure on earnings. If this is indeed the case, inflationary pressures might start building up sooner than suggested by the overall unemployment rate. In a three-part series, we study the available evidence on the long-term unemployed and argue against this premise. The long-term unemployed should not be excluded from measures of labor market slack.

Continue reading "Measuring Labor Market Slack: Are the Long-Term Unemployed Different?" »

Posted by Blog Author at 7:00 AM in Labor Economics, Macroecon | Permalink | Comments (3)

November 05, 2014

Forecasting Inflation with Fundamentals . . . It’s Hard!



Controlling inflation is at the core of monetary policymaking, and central bankers would like to have access to reliable inflation forecasts to assess their progress in achieving this goal. Producing accurate inflation forecasts, however, turns out not to be a trivial exercise. This posts reviews the key challenges in inflation forecasting and discusses some recent developments that attempt to deal with these challenges.

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Posted by Blog Author at 7:00 AM in Macroecon, Monetary Policy | Permalink | Comments (4)

October 24, 2014

At the N.Y. Fed: Macroeconomic Policy Mix in the Transatlantic Economy



Img7c_transatlanticconf The reason why the macroeconomic policy mix has been different on the two sides of the Atlantic in recent years remains a hotly debated issue. Was it due to a different reading of the root causes of the global financial crisis and therefore of the type of policy response considered most appropriate? Or was it instead the result of incomplete economic and financial integration in the euro area and the absence of a solid backstop for sovereign and banking sector problems, factors that led the euro area—as put by European Central Bank (ECB) President Mario Draghi—to resort to “policy choices made under the pressure of events and that were commendable by themselves, but that were sequenced in the wrong order”? Or was it a combination of the two? Looking forward, will the policy mix continue to be different? Are the United States and the euro area at risk of secular stagnation? What are the most effective fiscal consolidation plans for advanced economies with a high government debt/GDP ratio? What are the risks related to evolving liquidity conditions? And is there room for cooperation on the two sides of the Atlantic on macroprudential issues?

Continue reading "At the N.Y. Fed: Macroeconomic Policy Mix in the Transatlantic Economy" »

Posted by Blog Author at 7:00 AM in Macroecon | Permalink | Comments (0)

October 08, 2014

Demographic Trends and Growth in Japan and the United States



IStock_000042647488Small_300 Japan’s population is shrinking and getting older, with the population falling at a 0.2 percent rate this year and the working-age population (ages 16 to 64) falling at a much faster rate of almost 1.5 percent. In contrast, the U.S. population is rising at a 0.7 percent annual rate and the working-age population is rising at a 0.2 percent rate. So far, supporting the growing share of Japan’s population that is 65 and over has been the substantial increase in the share of working-age women entering the labor force. In contrast, U.S. labor force participation rates have been falling for both men and women. Japan’s labor market adjustments help explain the steady, albeit, modest growth in output per person despite the surge in the 65 and over cohort. Indeed, Japan has been able to match U.S. per capita growth since 2000.

Continue reading "Demographic Trends and Growth in Japan and the United States" »

Posted by Blog Author at 7:00 AM in International Economics, Labor Economics, Macroecon | Permalink | Comments (1)

September 30, 2014

Do Unemployment Benefits Expirations Help Explain the Surge in Job Openings?



Job openings are arguably one of the most important indicators of recovery in the labor market, as they reflect employers’ willingness to hire. The number of job openings has recovered steadily since the recession, yet through the end of 2013, the openings rate was still substantially below its pre-recession peak (see chart below). Starting in January 2014, however, the number of job openings increased dramatically, up by 20 percent through June 2014, and job openings relative to employment jumped back to the peak of the previous expansion. In this post, we argue that the expiration of the Emergency Unemployment Compensation (EUC) program may have contributed to this rapid rise in 2014.

Continue reading "Do Unemployment Benefits Expirations Help Explain the Surge in Job Openings? " »

Posted by Blog Author at 7:00 AM in Labor Economics, Macroecon | Permalink | Comments (5)

September 26, 2014

The FRBNY DSGE Model Forecast



Fifth in a five-part series
This series examines the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (FRBNY DSGE) model—a structural model used by Bank researchers to understand the workings of the U.S. economy and provide economic forecasts. The U.S. economy has been in a gradual but slow recovery. Will the future be more of the same? This post presents the current forecasts from the Federal Reserve Bank of New York’s (FRBNY) DSGE model, described in our earlier “Bird’s Eye View” post, and discusses the driving forces behind the forecasts. Find the code used for estimating the model and producing all the charts in this blog series here. (We should reiterate that these are not the official New York Fed staff forecasts, but only an input to the overall forecasting process at the Bank.)

Continue reading "The FRBNY DSGE Model Forecast" »

Posted by Blog Author at 10:00 AM in Macroecon, Monetary Policy | Permalink | Comments (3)

September 25, 2014

Connecting “the Dots”: Disagreement in the Federal Open Market Committee



People disagree, and so do the members of the Federal Open Market Committee (FOMC). How much do they disagree? Why do they disagree? We look at the FOMC’s projections of the federal funds rate (FFR) and other variables and compare them with those in the New York Fed’s Survey of Primary Dealers (SPD). We show that the members of the FOMC tend to disagree more than the primary dealers and offer some potential explanations.


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Posted by Blog Author at 7:05 AM in Macroecon, Monetary Policy | Permalink | Comments (1)

An Assessment of the FRBNY DSGE Model's Real-Time Forecasts, 2010-13



Fourth in a five-part series
This series examines the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (FRBNY DSGE) model—a structural model used by Bank researchers to understand the workings of the U.S. economy and provide economic forecasts. The previous post in this series showed how the Federal Reserve Bank of New York’s DSGE model can be used to provide an interpretation of the Great Recession and the slow recovery. In this post, we look at the role of the model as a forecasting tool and evaluate its forecasting performance since 2010. This analysis will give context for the last post, which will present the model’s current forecast for the U.S. economy.

Continue reading "An Assessment of the FRBNY DSGE Model's Real-Time Forecasts, 2010-13" »

Posted by Blog Author at 7:00 AM in Macroecon, Monetary Policy | Permalink | Comments (0)
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