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What is the latest thinking in fiscal and monetary policy? Hutchins Roundup keeps you informed about the latest research, charts, and speeches. Want to receive the Hutchins Roundup by email? Sign up here to receive it in your inbox every Thursday.

According to Dennis Golea of ​​the European Investment Bank, Oleksiy Krivtsov of the Bank of Canada and Marianna Kudryak of the Federal Reserve Bank of San Francisco, house prices react quickly to the Federal Reserve’s announcement. Using data from 2001 to his 2019, the author focuses on US housing. list Price rather than being researched more often sale price. Unexpected changes in short-term interest rates have little impact on home prices, while future interest rate surprises affect list prices in just a few weeks.Part of this effect may be working through the mortgage market, the authors say. They estimate that in his one month after the FOMC announcement, the financial surprise of a 1% rise in 30-year mortgage rates will see home prices fall 3%.

Immigrants play an important role in America’s entrepreneurial ecosystem. Using data on venture capital-backed startups, Natee Amonsiripanić of the Philadelphia Fed and co-authors found that: More than three-quarters of highly successful immigrant entrepreneurs first came to the United States to get a degree, not to work.Compared to other venture capital-backed entrepreneurs, immigrants went to top coastal colleges, earned STEM degrees, and found companies in states where they were educated. These findings suggest that approving policies that limit the flow of international students to the U.S. or limit the ability of international students to stay after graduation comes at a significant cost to the country. In addition, immigrant entrepreneurs often find companies near universities, so attracting international students to local universities can help the local economy boost growth. However, given the long time lag between arriving in the US and setting up a company, and the fact that most companies ever set up are in California, Massachusetts, or New York, that would require a long period of continuous Effort is required.

Elias Albagli and Emiliano Rutini of the Central Bank of Chile and Francesco Grigori of the International Monetary Fund used a proprietary dataset on Chilean retail and manufacturing industries to find: Firms form their expectations about aggregate inflation from changes in the input costs they face. Even if these changes are independent of overall inflation.The authors find that firms’ inflation expectations are an important determinant of pricing, and that rising inflation expectations are fully reflected in the prices firms charge. This channel helps explain inflation expectations and price variability, as prices along the supply chain are likely to vary from firm to firm. This also means that the expectations channel for monetary policy is weakening. The authors conclude that improved central bank communications to firms could sustain monetary policy transmission through expectations channels.

Line chart of wages and salaries for private industry workers and state and local government workers from Q2 2020 to Q2 2022.  Changes from Q2 2020.

“[W]It’s good to see inflation starting to come down, and I’d love to see a period of sustained subdued inflation. Until we can do that, I think we will have to keep moving interest rates into restrictive territory…we want inflation to hit 2% at his PCE, which is our target. I think we still have a long way to go to enter the restricted area. The economy seems to be weathering it well. While it’s clear that some sectors have been hit more than others, the economy still looks fundamentally healthy based on the jobs report and other data from the past few weeks. ” Richmond Fed President Thomas Birkin said:.

“[A] A tight labor market doesn’t have to cause inflation. The labor market has indeed tightened in 2018 and 2019 and inflation has been driven by commodity prices. It’s driven by supply chain issues, it’s driven by demand. So trying to move interest rates and hopefully normalize demand will also get help from the other two lanes and not be at all inconsistent with the labor market. “

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