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.

The Impact of the Maquiladora Industry on U.S. Border Cities

Abstract: For decades, the maquiladora industry has been a major economic engine along the U.S.–Mexico border. Since the 1970s, researchers have analyzed how the maquiladora industry affects cities along both sides of the border. Hanson produced the first comprehensive study on the impact of the maquiladoras on U.S. border cities, considering the effects of in-bond plants on both employment and wages. His estimates became useful rules of thumb for the entire U.S.–Mexico border; however, they have become dated. Using Hanson's framework, we estimate the maquiladora industry impact on U.S. border cities from 1990 to 2006. We find that a 10 percent increase in maquiladora production leads to a 0.5 to 0.9 percent increase in employment. We also find large differences among individual border cities. Furthermore, we estimate the cross-border maquiladora impacts before and after 2001 when border security begins to rise, and the global low-wage competition intensified after China joined the World Trade Organization. Empirical results indicate that U.S. border cities are less responsive to growth in maquiladora production from 2001 to 2006 than in the earlier period; however, when looking into specific sectors, we find that U.S. border city employment in service sectors is more responsive post-2001.

A Closer Look at the Behavior of Uncertainty and Disagreement: Micro Evidence from the Euro Area

Abstract: This paper examines point and density forecasts of real GDP growth, inflation and unemployment from the European Central Bank’s Survey of Professional Forecasters. We present individual uncertainty measures and introduce individual point- and density-based measures of disagreement. The data indicate substantial heterogeneity and persistence in respondents’ uncertainty and disagreement, with uncertainty associated with prominent respondent effects and disagreement associated with prominent time effects. We also examine the co-movement between uncertainty and disagreement and find an economically insignificant relationship that is robust to changes in the volatility of the forecasting environment. This provides further evidence that disagreement is not a reliable proxy for uncertainty.

Optimal contracts in a dynamic costly state verification model

Abstract: This paper describes optimal contracts in a dynamic costly state verification model with stochastic monitoring An agent operates a risky project on behalf of a principal who can observe the project’s revenues at a cost We show that an optimal contract exists such that, at any history, either the principal claims the project’s entire revenues or promises to claim nothing in the future In particular, the agent’s expected income rises with time Moreover, except in at most one period, the principal claims all revenues when audit occurs We provide conditions under which all optimal contracts satisfy these properties

Do Actions Speak Louder than Words? Household Expectations of Inflation Based on Micro Consumption Data

Abstract: Survey data on household expectations of inflation are routinely used in economic analysis, yet it is not clear to what extent households are able to articulate their expectations in survey interviews. We propose an alternative approach to recovering households' implicit expectations of inflation from their consumption expenditures. We show that these implicit expectations have predictive power for CPI inflation. They are better predictors of CPI inflation than survey responses, except for highly educated consumers. Moreover, households' implicit inflation expectations respond to inflation news, consistent with recent work on the transmission of information across consumers. The response of consumers' expectations to inflation news tends to increase with their level of education. Our evidence strengthens the case for macroeconomic models with sticky information.

Default and the Maturity Structure in Sovereign Bonds

Abstract: This paper studies the maturity composition and the term structure of interest rate spreads of government debt in emerging markets. In the data, when interest rate spreads rise, debt maturity shortens and the spread on short-term bonds is higher than on long-term bonds. To account for this pattern, we build a dynamic model of international borrowing with endogenous default and multiple maturities of debt. Short-term debt can deliver higher immediate consumption than long-term debt; large long-term loans are not available because the borrower cannot commit to save in the near future towards repayment in the far future. However, issuing long-term debt can insure against the need to roll-over short-term debt at high interest rate spreads. The trade-off between these two benefits is quantitatively important for understanding the maturity composition in emerging markets. When calibrated to data from Brazil, the model matches the dynamics in the maturity of debt issuances and its co-movement with the level of spreads across maturities.