Alex Domash, Lawrence H. Summers, 13 April 2022

As inflation accelerates in the US, the Federal Reserve will raise interest rates in the hope of achieving a soft landing for the economy. This column uses historical data on unemployment and inflation to evaluate the likelihood that the Fed can lower inflation without causing a recession. The authors find that low levels of unemployment and high inflation are both strong predictors of future recessions, and that overheating indicators today suggest a very high probability of recession over the next two years. The likelihood of the Fed achieving a soft landing in the economy appears low. 

Nicholas Bloom, Leonardo Iacovone, Mariana Pereira-López, John Van Reenen, 25 February 2022

The implications of poor management in developing countries are becoming well known, but what drives these differences is less clear. Based on large new surveys in Mexico and the US, this column argues that misallocation is a key driver of these differences. Frictions from low competition and weak rule of law appear to lie behind the difficulties even well-managed firms in Mexico have in growing, especially in the services sector. These results point to the importance of open and contestable markets, improving contract enforcement, and lowering crime and corruption as key mechanisms to improve firms' management and productivity.

Kristin Butcher, Kelsey Moran, Tara Watson, 22 February 2022

The caregiving workforce in the US will have to dramatically expand to meet the needs of the ageing population. This column argues that less-educated immigration could partially solve the problem. Using data from 1980 to 2017, the authors show that immigration increases the supply of home care for the elderly in the US and reduces its cost, while at the same time improving the quality of care for those who live in institutions.

Peter Andre, Ingar Haaland, Chris Roth, Johannes Wohlfart, 23 December 2021

Inflation has recently surged in both the US and the EU. This column uses responses from surveys of a representative sample of the US population as well as academic economists and US firm managers to show that households and managers are more likely than experts to think that the current surge in inflation will be persistent. Since the narratives individuals use to explain movements in inflation appear central to whether inflation expectations remain anchored, communication strategies by policymakers could put emphasis on specific narratives that highlight that inflationary pressures are unlikely to persist.

Davide Brignone, Alistair Dieppe, Martino Ricci, 01 November 2021

There are many uncertainties surrounding the inflation outlook in the US, particularly in light of the large fiscal stimulus. Using the ECB-Global model, this column estimates the impact on inflation of the fiscal stimulus to be limited. Three scenarios are undertaken to quantify the upside risks to inflation which could arise from considering a steeper Phillips curve, stronger fiscal multipliers, and rising inflation expectations. The results suggest that the impact on inflation from these sources of risk is likely to be moderate, unless all of the risks materialise simultaneously, and the Fed does not depart from the assumed monetary policy path. 

Niels-Jakob Hansen, Rui C. Mano, 02 September 2021

The emergence of new Covid-19 variants and a highly uneven vaccine rollout have put mask mandates back on the policy agenda. This column presents new evidence that state-level mask mandates reduced new weekly COVID-19 cases, hospital admissions, and deaths significantly in the US. The results imply that 87,000 lives were saved up until 19 December 2020, while an additional 58,000 lives could have been saved if all states had put in place a mandate starting in April 2020. Mask mandates had a greater effect in counties more positively inclined towards mask wearing.

,

US economists on the economic impact of the crisis and policy developments in the US and Europe.

with:
* Adam S. Posen, The Peterson Institute for International Economics
* Vivien A. Schmidt, Boston University
* Jeffry Frieden, Harvard University
* Michael Landesmann, Vienna Institute for International Economic Studies (wiiw)

The following questions will be addressed:
* How does the unfolding Covid-19 crisis compare so far between the US and Europe?
* How does the EMU/EU governance structure constrain monetary and fiscal responses compared to the US?
* Which failures in policy can be/could have been avoided?
* Which social and political outcomes do you expect on both sides of the Atlantic?
* How will the US and European responses affect global economic and political relations?

Tamim Bayoumi, Barry Eichengreen, 27 March 2017

Asymmetric aggregate supply and demand disturbances across its regions prevent the smooth functioning of a currency union. This column argues that the disturbances in peripheral regions of the US show more symmetry with those in the anchor region than is the case for the Eurozone. Moreover, disturbances to the GIPPS, which previously were in Europe’s periphery, have become more correlated with disturbances to the anchor (Germany) compared to other Eurozone countries. Hysteresis operating via the financial sector may provide an explanation for this development.

Rui Albuquerque, Zicheng Lei, Jörg Rocholl, Chendi Zhang, 09 July 2016

As US states amass control of business through public pension funds, important questions about potential agency conflicts are raised. This column uses a landmark ruling, which in effect created a new channel of corporate political activism, to investigate this agency conflict. Firms with high institutional ownership have seen lower returns following the ruling. The findings suggest that political connections are an important mechanism of political activism by corporations with state public pension fund ownership.

Robert Margo, 08 June 2016

Racial income inequality continues to be a major problem in the US. To devise a coherent policy response, this persistent inequality must be understood in its historical context. This column uses data from over 130 years to suggest a model in which income in the US is a function of racial identity and human capital. While racial identity is transmitted inter-generationally, human capital is also affected by race, for example through educational attainment. Furthermore, shifts in labour market prices inhibit the convergence of wages across race. 

Markus Poschke, Barış Kaymak, 17 April 2016

Recent decades have seen a remarkable increase in the concentration of wealth in the hands of the wealthiest in the US. This column examines which factors may have driven this increase. The evidence points to higher wage inequality, often attributed to new developments in the technology of production, as the main driving force, followed by tax cuts for top earners and more generous public transfers as secondary factors.

Charles Manski, 22 November 2011

Policymakers and the media often rely on official estimates. But with policies that are so complex and often untested, these estimates are at best rough guesses – so why not be honest about it? This column calls for confidence intervals to be used in future policy debates.

Gary Hufbauer, Jeffrey Schott, 05 February 2009

The “Buy American” provision in the US stimulus package would violate US trade obligations, damage the US' reputation, and have almost no real impact on US jobs. Moreover, the provisions will be read as an Obama trade policy that leans toward protectionism – with severe consequences abroad.

Richard Murnane, 17 March 2008

The poor state of America’s urban public school systems is one of the nation’s most pressing domestic policy problems. Two improvement approaches vie for attention in policy circles: changing central office management strategies, and improving incentives. While the two approaches compete for influence, they are in fact complementary. Alone, neither one will make much of a difference. Together they can improve urban school systems.

Events

CEPR Policy Research