Publications

Publications

FRBSF Economic Letters

Economic analysis for a general audience

Reuven Glick, Sylvain Leduc, and Mollie Pepper

2022-21

Households are currently expecting inflation to run high in the short run but to remain muted over the more distant future. Given this divergence, what role do short-run and long-run household inflation expectations play in determining what workers expect for future wages? Data show that wage inflation is sensitive to movements in household short-run inflation expectations but not to those over longer horizons. This points to an upside risk for inflation, as workers negotiate higher wages that businesses could pass on to consumers by raising prices.

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FedViews

Analysis of current economic developments and the outlook

Western Economic Developments

Western Economic Developments is linked to via Fed in Print only.

Working Papers

The latest in economic research

Regis Barnichon and Geert Mesters

The evaluation of macroeconomic policy decisions has traditionally relied on the formulation of a specific economic model. In this work, we show that two statistics are sufficient to detect, often even correct, non-optimal policies, i.e., policies that do not minimize the loss function. The two sufficient statistics are (i) the effects of policy shocks on the policy objectives, and (ii) forecasts for the policy objectives conditional on the policy decision. Both statistics can be estimated without relying on a specific model. We illustrate the method by studying US monetary policy decisions.

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