This paper provides new evidence on a long-standing question asked by Shiller (1997): why do we dislike inflation? I conducted two surveys on representative samples of the US population to elicit people's perceptions about the impacts of inflation and their reactions to it. The predominant reason for people's aversion to inflation is the widespread belief that it diminishes their buying power, as neither

We estimate that the combination of changes in behavior to slow the spread of COVID-19 and the delivery of vaccines to a substantial majority of the American population by mid-2021 saved close to 800,000 American lives relative to what would have occurred had vaccines not been developed. We argue that the duration and magnitude of this behavioral response—and thus its overall success in delaying infections—came

Reducing high public debt is key for countries seeking to restore fiscal capacity and resilience in the wake of recent crises. But large debt reductions are rare. Jamaica stands out for reducing its debt from 144 percent of GDP to 72 percent over the last decade, a record achieved by running large, persistent primary budget surpluses. Well-designed fiscal rules combined with social partnership agreements

We introduce a simple long-run aggregate demand and supply framework for evaluating long-run inflation. The framework illustrates how exogenous economic and political economy factors generate pressures that, in the presence of central bank discretion, can have an impact on long-run inflation as well as transitions between steady states. We use the analysis to provide a fresh perspective on the forces

Using newly digitized unemployment insurance claims data, we construct historical monthly unemployment series for US states going back to January 1947. We validate our series, showing that they are highly correlated with the Bureau of Labor Statistics' state-level unemployment data, which are only available since January 1976, and capture consistent business cycle dynamics. We use our claims-based

As revealed by the failures of three regional banks in the spring of 2023, bank runs are not a thing of the past. To inform the ongoing discussion of the appropriate regulatory response, we examine trends in the banking industry over the last twenty-five years. On the liability side of bank balance sheets, deposits—and especially uninsured deposits—have grown rapidly. On the asset side, there has been

We examine mortality differences between American adults with and without a four-year college degree over the period 1992 to 2021. Mortality patterns, in aggregate and across groups, can provide evidence on how well society is functioning, information that goes beyond aggregate measures of material well-being. From 1992 to 2010, both educational groups saw falling mortality, but with greater improvements

Contrary to historical episodes, the 2022–2023 tightening of US monetary policy has not yet triggered financial crisis in emerging markets. Why is this time different? To answer this question, we analyze the current situation through the lens of historical evidence. In emerging markets, the financial channel–based transmission of US policy historically led to more adverse outcomes compared to advanced

Applications for new businesses surprisingly surged during the COVID-19 pandemic, rising the most in industries rooted in pandemic-era changes to work, lifestyle, and business. The unexpected surge in applications raised questions about whether a surge in actual new employer businesses would follow. Evidence now shows increased employer business entry with notable associated job creation; and industries

We interpret recent inflation experience through the lens of a New Keynesian model with price and wage rigidities and nonlabor inputs in inelastic supply. The model provides a natural interpretation of some features of the recent episode: an initial surge of noncore inflation, followed by a lagged response of core inflation and a further lagged, persistent response of wage inflation. The model also

The Russian attack on Ukraine in February 2022 laid bare Germany's dependence on Russian energy imports and ignited a heated debate on the costs of a cutoff from Russian gas. While one side predicted economic collapse, the other side (ours) predicted "substantial but manageable" economic costs due to households and firms adapting to the shock. Using the empirical evidence now at hand, this paper studies

Labor force participation and average hours of work both fell sharply at the beginning of the COVID-19 pandemic. Neither had fully recovered by the end of 2022. The drop in participation between December 2019 and December 2022 implies a loss of 3 million people from the labor force; the decline in average hours over the same period translates to the equivalent of 2.6 million fewer workers. Demographic

The Inflation Reduction Act (IRA) represents the largest US federal response to climate change to date. We highlight the key climate provisions and assess the act's potential economic impacts. Substantially higher investments in clean energy and electric vehicles imply that fiscal costs may be larger than projected. However, even at the high end, IRA provisions remain cost-effective. The IRA has large

I present a perspective on where the Indian economy stands right now. I acknowledge the contradictions that have arisen given the divergent growth path of urban, formal or (stock-market) listed India relative to rural, informal or unlisted India. I also focus on the country's immense opportunities in expanding the digital footprint of finance to last-mile borrowers. I present novel facts on the rising

Governments deployed credit policies on a historically unprecedented scale in response to the COVID-19 pandemic. We estimate the effective size of credit policies for seven large advanced economies in terms of the incremental resources provided to firms and households—a measure that allows aggregation across credit support, forbearance, and traditional fiscal policies but that does not appear in traditional

Over half of the US population receives health insurance through an employer with premium contributions creating a flat "head tax" per worker, independent of their earnings. This paper develops and calibrates a stylized model of the labor market to explore how this uniquely American approach to financing health insurance contributes to labor market inequality. We consider a partial-equilibrium counterfactual

This paper analyzes the dramatic rise in US inflation since 2020, which we decompose into a rise in core inflation as measured by the weighted median inflation rate and deviations of headline inflation from core. We explain the rise in core inflation with two factors: the tightening of the labor market as captured by the ratio of job vacancies to unemployment, and the pass-through into core inflation

Households spent only a small fraction of their 2020 Economic Impact Payments (EIPs) within a month or two of arrival, consistent with pandemic constraints on spending, other pandemic programs and social insurance, and the broader disbursement of the EIPs compared to the economic losses during the early stages of the pandemic. While these EIPs did not fill an urgent economic need for most households

We use discounted cash flow analysis to measure the projected fiscal capacity of the US federal government. We apply our valuation method to the Congressional Budget Office (CBO) projections for the US federal government's primary deficits between 2022 and 2052 and projected debt outstanding in 2052. The discount rate for projected cash flows and future debt must include a GDP or market risk premium

In lieu of an abstract, here is a brief excerpt of the content: Panel on Shrinking the Federal Reserve Balance Sheet Arvind Krishnamurthy, Sydney C. Ludvigson, and Jonathan H. Wright Lessons for Policy from Research Arvind Krishnamurthy ABSTRACT I review lessons from the research on central bank actions over the last decade and draw out implications for expanding the Federal Reserve balance sheet (quantitative

The pandemic triggered a large, lasting shift to work from home (WFH). To study this shift, we survey full-time workers who finished primary school in twenty-seven countries as of mid-2021 and early 2022. Our cross-country comparisons control for age, gender, education, and industry and treat the United States mean as the baseline. We find, first, that WFH averages 1.5 days per week in our sample,

The US dollar's nominal effective exchange rate closely tracks global financial conditions, which themselves show a cyclical pattern. Over that cycle, world asset prices, leverage, and capital flows move in concert with global growth, especially influencing the fortunes of emerging markets and developing economies (EMDEs). This paper documents that dollar appreciation shocks predict economic downturns

This paper aims at an improved understanding of the relationship between monetary policy and racial inequality. We investigate the distributional effects of monetary policy in a unified framework, linking monetary policy shocks both to earnings and wealth differentials between Black and white households. Specifically, we show that, although an accommodative monetary policy shock increases employment

This paper aims at an improved understanding of the relationship between monetary policy and racial inequality. We investigate the distributional effects of monetary policy in a unified framework, linking monetary policy shocks both to earnings and wealth differentials between Black and white households. Specifically, we show that, although an accommodative monetary policy shock increases employment

Compared with previous recessions, the recession induced by COVID-19 had a greater impact on women's employment and labor force participation relative to men. But the big divide was less between men and women than it was between the more and the less educated. Contrary to many accounts, women did not exit the labor force in large numbers, and they did not greatly decrease their hours of work. The aggregate

Compared with previous recessions, the recession induced by COVID-19 had a greater impact on women's employment and labor force participation relative to men. But the big divide was less between men and women than it was between the more and the less educated. Contrary to many accounts, women did not exit the labor force in large numbers, and they did not greatly decrease their hours of work. The aggregate

The paper provides an overview of cryptocurrencies and decentralized finance (DeFi). The discussion lays out potential benefits and challenges of the new system and presents a comparison to the traditional system of financial intermediation. Our analysis highlights that while the DeFi architecture might have the potential to reduce transaction costs, similar to the traditional financial system, there

The paper provides an overview of cryptocurrencies and decentralized finance (DeFi). The discussion lays out potential benefits and challenges of the new system and presents a comparison to the traditional system of financial intermediation. Our analysis highlights that while the DeFi architecture might have the potential to reduce transaction costs, similar to the traditional financial system, there

In lieu of an abstract, here is a brief excerpt of the content: Panel on Fiscal Policy and Budget Deficits Following The Pandemic Editors' Note: This panel, presented at the Spring 2022 BPEA conference, discussed the rise in sovereign budget deficits in the United States and around the world and their potential implications for policymaking. N. Gregory Mankiw, of Harvard University, Phillip L. Swagel

This essay discusses the reasons for and implications of the decline in real interest rates around the world over the past several decades. It suggests that the decline in interest rates is largely explicable from trends in saving, growth, and markups. In this environment, greater government debt is likely not problematic from a budgetary standpoint. But a Ponzi-like scheme of perpetual debt rollover

This paper illustrates how the Congressional Budget Office's (CBO's) July 2021 baseline budget projections would have differed if the agency had used two alternative economic scenarios. The high-sixth scenario is based on the average values of projections for several variables—including inflation and the growth of gross domestic product after removing the effects of inflation (real GDP)—from the six

This paper illustrates how the Congressional Budget Office's (CBO's) July 2021 baseline budget projections would have differed if the agency had used two alternative economic scenarios. The high-sixth scenario is based on the average values of projections for several variables—including inflation and the growth of gross domestic product after removing the effects of inflation (real GDP)—from the six

We propose a new measure of the rate of poverty we call the supplemental expenditure poverty measure (SEPM), based on expenditure in the Consumer Expenditure Survey. It treats household expenditure as a measure of resources available to purchase the minimum bundle necessary to meet basic needs. Our measure differs from conventional income and consumption poverty in both concept and measurement, and

We propose a new measure of the rate of poverty we call the supplemental expenditure poverty measure (SEPM), based on expenditure in the Consumer Expenditure Survey. It treats household expenditure as a measure of resources available to purchase the minimum bundle necessary to meet basic needs. Our measure differs from conventional income and consumption poverty in both concept and measurement, and

This is an update of a paper that we published with Karl E. Case in Brookings Papers on Economic Activity in 2012. The paper analyzes data from our annual questionnaire survey of US home buyers to understand their expectations for future home price changes. We again see a period of rapid price increase as we did in our surveys a decade ago. We find that home buyers were generally well informed, and

This is an update of a paper that we published with Karl E. Case in Brookings Papers on Economic Activity in 2012. The paper analyzes data from our annual questionnaire survey of US home buyers to understand their expectations for future home price changes. We again see a period of rapid price increase as we did in our surveys a decade ago. We find that home buyers were generally well informed, and

Investments in the green economy are used for both environmental goals and fiscal stimulus. The success of these investments depends, at least in part, on whether they create new jobs and whether such jobs are available to workers hurt by a green transition. We evaluate the employment effect of green investments from the American Recovery and Reinvestment Act (ARRA). Most job creation from green ARRA

Investments in the green economy are used for both environmental goals and fiscal stimulus. The success of these investments depends, at least in part, on whether they create new jobs and whether such jobs are available to workers hurt by a green transition. We evaluate the employment effect of green investments from the American Recovery and Reinvestment Act (ARRA). Most job creation from green ARRA

How much larger would the US economic pie be if labor market outcomes were more equitably distributed by race and ethnicity? Using data from the Current Population Survey (1990–2019), we estimate the improvements in labor contribution to aggregate output associated with making the outcomes for Black, Hispanic, and other minority groups at least as favorable as those for non-Hispanic white individuals

How much larger would the US economic pie be if labor market outcomes were more equitably distributed by race and ethnicity? Using data from the Current Population Survey (1990–2019), we estimate the improvements in labor contribution to aggregate output associated with making the outcomes for Black, Hispanic, and other minority groups at least as favorable as those for non-Hispanic white individuals

We study the suspension of household debt payments (debt forbearance) during the COVID-19 pandemic. Between March 2020 and May 2021, more than 70 million consumers with loans worth $2.3 trillion entered forbearance, missing $86 billion of their payments. This debt relief can help explain the absence of consumer defaults relative to the evolution of economic fundamentals. Borrowers' self-selection is

We study the suspension of household debt payments (debt forbearance) during the COVID-19 pandemic. Between March 2020 and May 2021, more than 70 million consumers with loans worth $2.3 trillion entered forbearance, missing $86 billion of their payments. This debt relief can help explain the absence of consumer defaults relative to the evolution of economic fundamentals. Borrowers' self-selection is

The social cost of carbon (SCC) is a crucial metric for informing climate policy, most notably for guiding climate regulations issued by the US government. Characterization of uncertainty and transparency of assumptions are critical for supporting such an influential metric. Challenges inherent to SCC estimation push the boundaries of typical analytical techniques and require augmented approaches to

The social cost of carbon (SCC) is a crucial metric for informing climate policy, most notably for guiding climate regulations issued by the US government. Characterization of uncertainty and transparency of assumptions are critical for supporting such an influential metric. Challenges inherent to SCC estimation push the boundaries of typical analytical techniques and require augmented approaches to

Inflation has an anchor in people's expectations of what its longrun value will be. If expectations persistently change, then the anchor is adrift; if they differ from the central bank's target, the anchor is lost. This paper uses data on expectations from market prices, from professional surveys, and from the cross-sectional distribution of household surveys to measure shifts in this anchor. The paper's

Inflation has an anchor in people's expectations of what its longrun value will be. If expectations persistently change, then the anchor is adrift; if they differ from the central bank's target, the anchor is lost. This paper uses data on expectations from market prices, from professional surveys, and from the cross-sectional distribution of household surveys to measure shifts in this anchor. The paper's

In this paper we explore the fiscal sustainability of US state and local government pension plans. Specifically, we examine whether, under current benefit and funding policies, state and local pension plans will ever become insolvent and if so, when. We then examine the fiscal cost of stabilizing pension debt as a share of the economy and examine the cost associated with delaying such stabilization

In this paper we explore the fiscal sustainability of US state and local government pension plans. Specifically, we examine whether, under current benefit and funding policies, state and local pension plans will ever become insolvent and if so, when. We then examine the fiscal cost of stabilizing pension debt as a share of the economy and examine the cost associated with delaying such stabilization

In this paper we explore the fiscal sustainability of US state and local government pension plans. Specifically, we examine whether, under current benefit and funding policies, state and local pension plans will ever become insolvent and if so, when. We then examine the fiscal cost of stabilizing pension debt as a share of the economy and examine the cost associated with delaying such stabilization

In this paper we explore the fiscal sustainability of US state and local government pension plans. Specifically, we examine whether, under current benefit and funding policies, state and local pension plans will ever become insolvent and if so, when. We then examine the fiscal cost of stabilizing pension debt as a share of the economy and examine the cost associated with delaying such stabilization

A model of private and public behavior to mitigate disease transmission during the COVID-19 pandemic over the past year in the United States addresses two questions: What dynamics of infections and deaths should we expect to see from a pandemic? What are our options for mitigating the impact of a pandemic on public health? I find that behavior turns what would be a short and extremely sharp epidemic

This paper provides estimates of the size and determinants of the fiscal policy response to the COVID-19 pandemic across thirty advanced economies. In contrast to the fiscal response to financial crises, I find no evidence that fiscal space was an important determinant of the aggressiveness of pandemic fiscal packages. Focusing in on the US fiscal policy response, I discuss the policy implications

We review several spending programs designed to support Americans through the COVID-19 pandemic in 2020. We group these into programs designed to stabilize the labor market and facilitate its recovery and those that provided financial relief to households independent of their employment history. We review the extent to which these programs reached intended beneficiaries along with early evidence of

We review several spending programs designed to support Americans through the COVID-19 pandemic in 2020. We group these into programs designed to stabilize the labor market and facilitate its recovery and those that provided financial relief to households independent of their employment history. We review the extent to which these programs reached intended beneficiaries along with early evidence of

After the global financial crisis, bank regulation became more stringent, and as a result the traditional banking system was well capitalized leading into the COVID-19 pandemic. But these same regulatory changes also incentivized a continuing migration of traditional banking activities to nonbank financial institutions (NBFIs), where looser regulation allowed for dangerous buildups of systemic risk

After the global financial crisis, bank regulation became more stringent, and as a result the traditional banking system was well capitalized leading into the COVID-19 pandemic. But these same regulatory changes also incentivized a continuing migration of traditional banking activities to nonbank financial institutions (NBFIs), where looser regulation allowed for dangerous buildups of systemic risk

After the global financial crisis, bank regulation became more stringent, and as a result the traditional banking system was well capitalized leading into the COVID-19 pandemic. But these same regulatory changes also incentivized a continuing migration of traditional banking activities to nonbank financial institutions (NBFIs), where looser regulation allowed for dangerous buildups of systemic risk

After the global financial crisis, bank regulation became more stringent, and as a result the traditional banking system was well capitalized leading into the COVID-19 pandemic. But these same regulatory changes also incentivized a continuing migration of traditional banking activities to nonbank financial institutions (NBFIs), where looser regulation allowed for dangerous buildups of systemic risk

On the occasion of the fiftieth anniversary of the Brookings Panel on Economic Activity, I review the extensive body of research that has appeared in the Brookings Papers on Economic Activity (BPEA) on the labor market. Much of the research deals with unemployment, a topic of great interest in macroeconomic analysis and policy. I trace the evolution of modern economic analysis of unemployment and the

Over the past fifty years BPEA authors have written extensively about both domestic US productivity growth and international sources of growth differences in rich and poor countries. This paper summarizes and evaluates five BPEA papers on US productivity growth that focus primarily on the sources of the post-1965 growth slowdown and post-1995 growth revival. Then three papers are reviewed on international