Research
Working Papers
A New Measure of Central Bank Transparency and Implications for the Effectiveness of Monetary Policy.
Previously circulated as FOMC Responses to Calls for Transparency. 2015. Finance and Economics Discussion Series.
This earlier version provides more details on latent semantic analysis.
Abstract
Transparency has been posited as a channel through which monetary policy is made more effective. However, empirical studies of this question and other questions concerning the role of transparency have lacked access to a time-varying high-frequency measure of transparency. This paper presents a new measure of the transparency of Federal Reserve deliberations, derived from the documents that the Fed uses to record and summarize each of its meetings. The measure---the similarity of the minutes and transcripts of each Federal Open Market Committee (FOMC) meeting---is largely, though not entirely, shaped by FOMC leadership. Monetary policy shocks have about a 40 percent larger effect on nominal and real interest rates when the prevailing level of transparency is high, suggesting an important role for transparency in determining the efficacy of monetary policy. These effects are primarily driven by transparency about monetary policy strategies conditional on the state of the economy. A simple model of FOMC announcements consistent with these results highlights that high transparency enhances monetary policy's effectiveness by increasing the FOMC's signaling ability, but diminishes the ability for policymakers to generate market surprises.
The Regressive Nature of the U.S. Tariff Code: Origins and Implications. With Lydia Cox.
Abstract
The U.S. tariff code has a surprising, and little-known feature: tariffs are systematically higher on lower-end versions of goods relative to their more expensive counterparts. For example, a handbag made of reptile leather has a tariff rate of 5.3 percent, while a plastic-sided handbag has a tariff rate of 16 percent. This paper is the first to systematically document the presence of this pattern. Historical evidence suggests that the origins of the pattern are twofold: tariffs were lowered for important trading partners that produced higher-end goods, and raised to protect domestic producers of lower-end goods. Eliminating the pattern would results in savings of ten billion dollars annually for U.S. consumers, with estimates from a trade model with a non-homothetic demand system suggesting that welfare gains would fall heavily upon the lower end of the income distribution. This pattern not only has important economic implications for understanding the distribution of gains from trade, but it may also have indirect impacts on inequality both among exporting countries and among U.S. consumers.
WORKS IN PROGRESS
Rationally Confused: On the Aggregate Implications of Information Provision Policies. With Hassan Afrouzi.
Estimating the Effects of Monetary Policy via High Frequency Factors. With Joe Saia.
Updated monetary policy shocks of Nakamura and Steinsson (2018). [Excel]
The Macro‐Effects of Unemployment Insurance: A Simulation‐Based Discontinuity Design Approach. With Andreas Mueller, Emi Nakamura, and Jón Steinsson.
Other Publications
Hanging on every word: Semantic analysis of the FOMC's postmeeting statement. 2015. With Ellen Meade. FEDS Notes.
Using Occupation to Measure Intergenerational Mobility. With Bhashkar Mazumder. The ANNALS of the American Academy of Political and Social Science.
Abstract
Scholarly investigations of intergenerational mobility typically focus on either the occupations of fathers and sons or their incomes. Using an identical sample of fathers and sons, we examine how estimates of intergenerational mobility in income and occupational prestige are affected by (1) measurement that uses long time averages and (2) varying the point in the life cycle when outcomes are measured. We find that intergenerational occupational mobility is overstated when using a single year of fathers’ occupation compared to a 10-year average centered on mid-career. We also find that for both income and occupation, mobility estimates are largest when sons are in their mid-career, suggesting that this may be the ideal period in which to measure their status. Finally, we see differences in the pattern of estimates across the two types of measures: for income, estimates of intergenerational persistence are highest when fathers are in their mid-career; for occupation, estimates are much larger when fathers’ occupations are accounted for late in their careers.