Recent Analysis and Research

Posted September 22, 2014
Jeffrey Clemens, Joshua D. Gottlieb, and Adam Hale Shapiro

Economic Letter a Publication of Economic Research

Because the health sector makes up a large share of the U.S. economy, widespread price changes for medical services can impact overall inflation significantly. Cuts to public health-care spending spill over directly and indirectly to private spending. A recent estimate suggests the full effect of the Medicare payment cuts from the 2011 Budget Control Act resulted in a decline of 0.24 percentage point in the overall personal consumption expenditures price index. This is over twice the expected drop if private-sector spillovers are not included.

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Posted September 16, 2014
Kevin J. Lansing and Jun Ma

Working Papers a Publication of Economic Research

We introduce a form of boundedly rational expectations into a standard asset-pricing model of the exchange rate, where cross-country interest rate differentials are governed by Taylor-type rules. We postulate that agents augment a lagged-information random walk forecast with a term that relates to news about Taylor-rule fundamentals. Our model generates volatility and persistence remarkably similar to monthly bilateral exchange rate data (relative to the U.S.) for Canada, Japan, and the U.K. over the period 1974 to 2012. Moreover, regressions performed on model-generated data can deliver the well-documented forward premium anomaly.

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The New Geography of Jobs (EiP)

Posted April 30, 2014

The New Geography of Jobs

In the 1950s, the best indicator of a community's economic success was its level of physical capital. In today's world, the best indicator of a community's economic success is human capital. Professor Enrico Moretti discusses the factors shaping community development and the pivotal role of college-educated workers.

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