This post considers spillovers to the U.S. from a downside scenario, one in which China’s ongoing property sector slump takes another leg down and precipitates an economic hard landing and financial crisis…
What if China Manufactures a Sugar High?
In a series of posts, we consider the implications of two alternative Chinese policy scenarios for the risks to the U.S. outlook for real activity and inflation over the next two years. Here, we consider the impact of a scenario in which a credit-fueled boom in manufacturing activity produces higher-than-expected economic growth in China…
Great Expectations: the economic power of news about the future →
Can shifts in beliefs about the future alter the macroeconomic present? In a recent working paper we have studied how consumers, firms, financial markets and central banks adjust their expectations and modify their choices when given news of future technological progress. We were able to isolate these news from the signal in patents applications…
What’s in the News? Text-Based Confidence Indices and Growth Forecasts →
As the American playwright Arthur Miller wrote, “A good newspaper, I suppose, is a nation talking to itself.” Using text analysis and machine learning, we decided to put this to test – to find out whether newspaper copy could tell us about the national economy, and in particular, whether it can help us predict GDP growth…
The surprise in monetary surprises: a tale of two shocks →
One popular way to identify the effects of monetary policy is to use surprises in financial markets to proxy for the shock. In a recent paper, I argue that markets are not able to distinguish the shocks from the systematic component of policy if their forecasts do not align with those of the central bank. I develop a new measure of monetary shocks, based on market surprises but free of anticipatory effects and unpredictable by past information…