The Federal Reserve has increased the size of its balance sheet by a third of a trillion dollars over the last 15 weeks, returning to tools that a short while ago we thought it had abandoned. But the Fed’s current goal in these operations is quite different from what we had seen earlier.
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Category Archives: financial markets
An Event Study: Trade Truce-Part 1, or Not?
See if you can find when Trump makes his statement about trade negotiations with China. Winning!
Guest Contribution: “Yet Another Look at the Recent Inversion of the Yield Curve”
Today we are fortunate to have a guest contribution written by Kim Kowalewski, formerly Senior Adviser in the Macroeconomic Analysis Division of the Congressional Budget Office.
“The Economic Consequences of Trump’s War on Multilateralism”
That’s the title of my October 18th Global Hot Spots talk, sponsored by the Wisconsin Foundation and Alumni Association (Fluno Center, 1:30-2:30).
Guest Contribution: “A disaster under-(re)insurance puzzle: Home bias in disaster risk-bearing”
Today, we are pleased to present a guest contribution written Hiro Ito (Portland State University) and Robert N. McCauley (formerly Bank for International Settlements). The views presented represent those of the authors, and not necessarily those of the institutions the authors are affilliated with.
“Predicting the Next Recession” with James Hamilton
I’ll be at this UW Dept of Economics event, in order to learn what awaits us all…
(Actually, it’s required attendance for my Financial System course.)
Registration information here.
Estimated Probability of Recession in August 2020 = 49% 51%
…using plain vanilla 10yr-3mo probit regression, over 1986M01-2019M08 period, using data shown below in Figure 1 [corrections to data, update results 9/5]
Guest Contribution: “Oil Prices and the U.S. Economy: Evidence from the Stock Market”
Today, we’re fortunate to have Willem Thorbecke, Senior Fellow at Japan’s Research Institute of Economy, Trade and Industry (RIETI) as a guest contributor. The views expressed represent those of the author himself, and do not necessarily represent those of RIETI, or any other institutions the author is affiliated with.
An Ad Hoc Term Premium Adjusted Term Spread Recession Model
One criticism of the use of the term spread model to forecast recession in current times is that this time is different. [1] [2] [3] In particular, due to quantitative easing, the term premium is lower than in past episodes. Hence, in this interpretation, an inverted yield curve no longer signals as much future depressed interest rates as in the past.