Monetary Policy Strategies for a Low-Rate Environment

By Ben S. Bernanke, Michael T. Kiley, and John M. Roberts

AEA Papers and Proceedings, May 2019

In low-rate environments, policy strategies that involve holding rates "lower for longer" (L4L) may mitigate the effects of the effective lower bound (ELB). However, these strategies work in part by managing the public's expectations, which is not always ...

Monetary Policy Frameworks and the Effective Lower Bound on Interest Rates

By Thomas M. Mertens and John C. Williams

AEA Papers and Proceedings, May 2019

This paper applies a New Keynesian model to analyze monetary policy in the presence of a low natural rate of interest and a lower bound on interest rates. Under standard inflation-targeting, inflation expectations will be anchored at a level below the inf...

Policy Options at the Zero Lower Bound When Foresight is Limited

By Michael Woodford and Yinxi Xie

AEA Papers and Proceedings, May 2019

We reconsider several monetary and fiscal policies that have been proposed as tools of stabilization policy when conventional interest-rate policy is constrained by the zero lower bound on interest rates, assuming that households and firms are capable of ...

Minding Your Ps and Qs: Going from Micro to Macro in Measuring Prices and Quantities

By Gabriel Ehrlich, John Haltiwanger, Ron Jarmin, David Johnson, and Matthew D. Shapiro

AEA Papers and Proceedings, May 2019

Key macro indicators such as output, productivity, and inflation are based on a complex system across multiple statistical agencies using different samples and levels of aggregation. The Census Bureau collects nominal sales, the Bureau of Labor Statistics...

Measuring Productivity: Lessons from Tailored Surveys and Productivity Benchmarking

By David Atkin, Amit K. Khandelwal, and Adam Osman

AEA Papers and Proceedings, May 2019

We use tailored surveys and benchmarking in the flat-weave rug industry to better understand the shortcomings of standard productivity measures. Quantity-based productivity (TFPQ) performs poorly because of variation in product specifications across firms...

Aggregation and the Gravity Equation

By Stephen J. Redding and David E. Weinstein

AEA Papers and Proceedings, May 2019

One of the most successful empirical relationships in international trade is the gravity equation. A key decision for researchers in estimating this relationship is the level of aggregation, since the gravity equation is log linear, whereas aggregation in...

New Evidence on the Cyclicality of Employer-to-Employer Flows from Canada

By Alice Nakamura, Emi Nakamura, Kyle Phong, and Jón Steinsson

AEA Papers and Proceedings, May 2019

This paper presents new estimates of gross worker flows for Canada for the sample period 1978 to 2016. We use administrative data from the Canadian Record of Employment in combination with the Canadian Labor Force Survey to estimate employer-to-employer f...

Flow Origins of Labor Force Participation Fluctuations

By Michael Elsby, Bart Hobijn, Fatih Karahan, Gizem Koşar, and Ayşegül Şahin

AEA Papers and Proceedings, May 2019

We investigate the origins of cyclical and trend movements in the labor force participation rate (LFPR) using a three-state flow decomposition. The procyclicality of LFPR can be traced to cyclical flows between employment and unemployment. By contrast, la...

Is Inflation Just Around the Corner? The Phillips Curve and Global Inflationary Pressures

By Olivier Coibion, Yuriy Gorodnichenko, and Mauricio Ulate

AEA Papers and Proceedings, May 2019

Tightening labor markets in the United States and other advanced economies suggest inflation should be on the rise, yet it remains subdued. Is the Phillips curve broken? We bring together surveys of household or firm expectations for 18 countries to estim...

Macroprudential Policy: What We've Learned, Don't Know, and Need to Do

By Kristin J. Forbes

AEA Papers and Proceedings, May 2019

Over the last decade, macroprudential policy has made important advances and become more widely used. We have a better understanding of its goals and tools, and are accumulating evidence that it can be effective on its direct targets, albeit often with un...

China versus the United States: IMS Meets IPS

By Emmanuel Farhi and Matteo Maggiori

AEA Papers and Proceedings, May 2019

Currently both the International Monetary System (IMS) and the International Price Systems (IPS) are dominated by the United States. The emergence of China, both as reserve currency and as a currency of invoicing, is likely to disrupt this status quo. We ...

Some Principles for Regulating Cyber Risk

By Anil K. Kashyap and Anne Wetherilt

AEA Papers and Proceedings, May 2019

We explain why cyber risk differs from other operational risks in the financial sector. The form of cyber shocks differs because of their intent, probability of success, possibility of a hidden phase, and evolving form of the risks. The impact differs bec...

Profit Shifting in a Globalized World

By Dhammika Dharmapala

AEA Papers and Proceedings, May 2019

This paper briefly reviews the measurement of the magnitude of profit shifting by multinational firms. Highlighting differences between estimates using microeconomic and macroeconomic approaches, it sketches a conceptual framework that can help explain th...

How Elastic is the Demand for Tax Havens? Evidence from the US Possessions Corporations Tax Credit

By Daniel Garrett and Juan Carlos Suárez Serrato

AEA Papers and Proceedings, May 2019

Why do some firms adopt certain tax havens, and how sensitive is the demand for tax havens? We address these questions by studying how the repeal of section 936 tax credits affected firms with affiliates in Puerto Rico. We first describe the characteristi...

Challenges of Monitoring Tax Compliance by Multinational Firms: Evidence from Chile

By Sebastián Bustos, Dina Pomeranz, José Vila-Belda, and Gabriel Zucman

AEA Papers and Proceedings, May 2019

This paper reviews common challenges of taxing multinational firms, using Chile as a case study. We briefly describe key international tax avoidance methods: profit shifting to low-tax jurisdictions through transfer pricing and debt shifting. We discuss t...

The Quality of Banks at Stigmatized Lending Facilities

By Sriya Anbil and Angela Vossmeyer

AEA Papers and Proceedings, May 2019

When the names of banks that borrow from an emergency lending facility are inadvertently leaked, the facility may become stigmatized. We examine how the quality of the borrowing pool of banks changed when stigma was unexpectedly introduced at a once confi...

Does Getting Health Insurance Affect Women's Fertility? Evidence from the United Mine Workers' Health Insurance

By Erin Troland and Theodore F. Figinski

AEA Papers and Proceedings, May 2019

Does health insurance affect fertility decisions? Fertility may increase if insurance lowers the costs of having a child. Fertility may decrease if children are more likely to survive into adulthood (quality-quantity tradeoff). We study a largely permanen...

Traditional Medicine in Central Africa

By Sara Lowes and Eduardo Montero

AEA Papers and Proceedings, May 2019

In many settings, traditional medicine is a popular, accessible, and affordable alternative to modern medicine. Understanding the determinants of the use of traditional medicine is important because it is widespread and because of the growing evidence of ...

The Rise of the Dollar and Fall of the Euro as International Currencies

By Matteo Maggiori, Brent Neiman, and Jesse Schreger

AEA Papers and Proceedings, May 2019

International currencies play important roles as foreign exchange reserves but are also most frequently used to denominate corporate and government bonds, bank loans, and import and export invoices. These currencies offer unrivaled liquidity, constituting...

Dollar Invoicing and the Heterogeneity of Exchange Rate Pass-Through

By Emine Boz, Gita Gopinath, and Mikkel Plagborg-Møller

AEA Papers and Proceedings, May 2019

We show empirically that the variation across country pairs in exchange rate pass-through and trade elasticity is meaningfully explained by the dollar's dominance as invoicing currency. We use a hierarchical Bayesian approach to directly and flexibly mode...