Economic Letter
Brief summaries of SF Fed economic research that explain in reader-friendly terms what our work means for the people we serve.
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What Do Wages Tell Us About Future Inflation?
The rate of wage growth has moderated recently, leading some observers to predict that inflation will continue to remain subdued in the near future. In this Letter we discuss what economic theory tells us about the relationship between changes in wages and changes in prices and also look at some of the empirical evidence on this issue, in order to determine whether the recent slowdown in wage growth does, in fact, tell us something about future inflation that we might otherwise miss.
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Innovations and Recent Developments in Mortgage-Backed Securities
The securitization of mortgages has fundamentally changed home mortgage financing. In the past, the vast majority of home mortgages were originated and funded by depository institutions. Today about half of total home mortgage debt outstanding is held by a wide variety of financial institutions and investors in the form of mortgage-backed securities.