Federal Reserve Bank of Dallas

About: Federal Reserve Bank of Dallas is a other organization based out in Dallas, Texas, United States. It is known for research contribution in the topics: Monetary policy & Inflation. The organization has 196 authors who have published 994 publications receiving 35508 citations.

Covid-19 Fiscal Support and its Effectiveness

Abstract: This paper uses a threshold-augmented Global VAR model to quantify the macroeconomic effects of countries’ discretionary fiscal actions in response to the Covid-19 pandemic and its fallout. Our results are threefold: (1) fiscal policy is playing a key role in mitigating the effects of the pandemic; (2) all else equal, countries that implemented larger fiscal support are expected to experience less output contractions; (3) emerging markets are also benefiting from the synchronized fiscal actions globally through the spillover channel and reduced financial market volatility.

Is Rotemberg Pricing Justified by Macro Data

Abstract: Structural models used to study monetary policy often include sticky prices. Calvo pricing is more common but Rotemberg pricing has become popular due to its computational advantage. To determine whether the data supports that change, we estimate a nonlinear New Keynesian model with a zero lower bound (ZLB) constraint and each type of sticky prices. The models produce similar parameter estimates and the filtered shocks are nearly identical when the Fed was not constrained, but the Rotemberg model has a higher marginal data density and it endogenously generates more volatility at the ZLB, which helps explain data from 2008-2011.

John Muellbauer (1944

Abstract: John Muellbauer has made notable contributions to applied microeconomics and macroeconomics. His earlier work on indirect utility functions and aggregation and his collaboration with Angus Deaton—especially their Almost Ideal Demand System (AIDS) and classic graduate text, Economics and Consumer Behaviour—notably advanced the practice of applied microeconomics. Building on his work on aggregation, Muellbauer’s mid-career research focused on incorporating balance sheets, credit constraints and expectations into macroeconomic analysis. His seminal papers with Anthony Murphy on housing booms and busts and their impact on UK consumption predated by nearly two decades the acclaimed papers by Mian and Sufi on US housing and consumption during the Great Recession. Muellbauer’s more recent work (in part with Janine Aron, John Duca and Anthony Murphy) has extended his consumption and housing analysis to other countries, re-examined how to model inflation, and integrated financial stability into macroeconomic analysis relevant to policy.

Regulation and the Neo‐Wicksellian Approach to Monetary Policy

Abstract: Laubach and Williams (2003) employ a Kalman filter approach to jointly estimate the neutral real federal funds rate and trend output growth using an IS relationship and an output-gap-based inflation equation. They find a positive link between these two variables, but also much error surrounding neutral real rate estimates. We modify their approach by including variables for regulations on deposit interest rates and on wages and prices. These variables are statistically significant and notably affect estimates of two policy-relevant coefficients: the sensitivity of output to the real interest rate and that of inflation to the output gap.

Dealing with Time-Inconsistency: Inflation Targeting vs. Exchange Rate Targeting

Abstract: Abandoning an objective function with multiple targets and adopting a single mandate can be an effective way for a central bank to overcome the classic time-inconsistency problem. We show that the choice of a particular single mandate depends on an economy’s level of trade openness and the credibility of the central bank. We begin with reduced form empirical results which show that as central banks become less credible they are more likely to adopt a pegged exchange rate, and crucially, the tendency to peg depends on trade openness. Then in a model where the central bank displays “loose commitment” we show that as central bank credibility falls, they are more likely to adopt either an inflation target or a pegged exchange rate. A relatively closed economy would adopt an inflation target to overcome the time-inconsistency problem, but a highly open economy would prefer an exchange rate peg.