Publications

Publications

FRBSF Economic Letters

Economic analysis for a general audience

Martin M. Andreasen and Jens H.E. Christensen

2016-35

The prices of special securities known as TIPS can give some insight into how investors view the outlook for future inflation. New research uses a novel term structure model of nominal and real yields to estimate how much the liquidity premium embedded in the prices of these securities have varied over time. Accounting for variation in the premiums notably increases estimates of the inflation expectations underlying market-based measures of inflation compensation, particularly during the most recent financial crisis.

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FedViews

Analysis of current economic developments and the outlook

SF Fed Forecast Preview

The SF Fed Forecast Preview is an advance release of the monthly SF Fed FedViews publication. Our forecasts of GDP, inflation, and unemployment will usually be released will usually be released on the second Tuesday of each month.

Western Economic Developments

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Working Papers

The latest in economic research

Paul R. Bergin, Reuven Glick, and Jyh-Lin Wu

While economic theory highlights the usefulness of flexible exchange rates in promoting adjustment in international relative prices, flexible exchange rates also can be a source of destabilizing shocks. We find that when countries joining the euro currency union abandoned their national exchange rates, the adjustment of real exchange rates toward their long-run equilibrium surprisingly became faster. To investigate, we distinguish between differing rates of purchasing power parity (PPP) convergence conditional on alternative shocks, which we refer to as “conditional PPP.” We find that the loss of the exchange rate as an adjustment mechanism after the introduction of the euro was more than compensated by the elimination of the exchange rate as a source of shocks, in combination with faster adjustment in national prices. These findings support claims that flexible exchange rates are not necessary to promote long-run international relative price adjustment.

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