John Fernald, senior research advisor at the Federal Reserve Bank of San Francisco, states his views on the current economy and the outlook.
Federal fiscal policy during the recession was abnormally expansionary by historical standards. However, over the past 2½ years it has become unusually contractionary as a result of several deficit reduction measures passed by Congress. During the next three years, we estimate that federal budgetary policy could restrain economic growth by as much as 1 percentage point annually beyond the normal fiscal drag that occurs during recoveries.
A large body of past research, looking across countries, states, and metropolitan areas, has found positive and statistically significant associations between income inequality and mortality. By contrast, in recent years more robust statistical methods using larger and richer data sources have generally pointed to little or no relationship between inequality and mortality. This paper aims both to document how methodological shortcomings tend to positively bias this statistical association and to advance this literature by estimating the inequality-mortality relationship. We use a comprehensive and rich new data set that combines U.S. county-level data for 1990 and 2000 on age-race-gender-specific mortality rates, a rich set of observable covariates, and previously unused Census data on local income inequality (Gini index and three income percentile ratios). Using panel data estimation techniques, we find evidence of a statistically significant negative relationship between mortality and inequality. This finding that increased inequality is associated with declines in mortality at the county level suggests a change in course for the literature. In particular, the emphasis to date on the potential psychosocial and resource allocation costs associated with higher inequality is likely missing important offsetting positives that may dominate.
Òscar Jordà discusses the genesis of financial crises and their aftermath using the last 140 years of data on 17 industrialized economies. Recoveries after financial crises tend to be slow. Deleveraging and household finances require time to take hold.
Economic Profile of the 12th District (pdf, 65 kb)
The Center for Pacific Studies strives to promote cooperation among Pacific Basin central banks and enhance public understanding of major monetary and economic policy issues in the region.
Economic Profile of the 12th District (pdf, 65 kb)
A program to promote cooperation among central banks in the region and enhance public understanding of major Pacific Basin monetary and economic policy issues.