Associate Prof of Civic Leadership and Economics at UT Austin. Author of Shock Values: Prices and Inflation in American Democracy. Catholic wife and mom of 5.
Today at the local park with my 5 kids, I was told I needed a permit to be there with a group of more than 5 people. I said that they were my own kids and he said I still needed a permit!
@JosephPolitano
Not a cop, just a local official of some sort. I go there every week and this was the first time this happened. He didn't kick me out but said to get a permit next time (I will not!)
I have devoted most of my career to studying inflation expectations. And my own thinking has shifted pretty dramatically in the past year or two. Good time for a thread?
1/n
I generally agree with Rudd that there is too much emphasis on expectations as something the Fed can/should directly control or fine-tune. Focusing on price stability and full employment should keep expectations anchored enough.
Why do consumers sometimes overestimate inflation? This is down to their uncertainty: those who aren’t certain tend to round up, and their expectations tend to be higher than actual inflation. This is made worse during crisis periods.
#EconomicBulletin
"Coronavirus Fears and Macroeconomic Expectations" This is the fastest I've ever written a paper: conceived of on March 5, online survey March 5 and 6, data analyzed March 7, written up March 8. (thread)
Two big announcements that I'm thrilled to share:
I signed a contract with
@UChicagoPress
to publish my book on the history of price stabilization in the US. Forthcoming in Spring 2024!
And Binder baby
#5
is forthcoming this July! It's a girl!
... Most people don't want to pay attention to central bank communication, no matter how accessible, entertaining, or targeted. Central banks could respect this preference by doing their best to make sure people don't need to pay them much attention. But the more they try...
5/n
... the more the whole purpose of their communication strategy is muddled. When Fed officials do manage to get the attention of the general public, the reaction is usually highly politicized. "No news is good news" should be the central bank motto. Newsworthy = politicized.
6/n
I'm very pleased to now be a Research Associate at the
@nberpubs
Monetary Economics group. Thanks to whoever nominated and supported me! Proud to increase liberal arts college representation at NBER too!
@haverfordedu
But to use inflation expectations "as a policy tool," that is, for stabilization and fine tuning, being newsworthy is a must. This is a big problem. It is not feasible, and if it were feasible, it wouldn't necessarily be desirable.
7/n
I am writing a survey article about central bank expectations, forecasts, and projections. Please send me your work if you think it should be included. I am especially looking for more work on forecasts from central banks other than the Fed, ECB, BoE, and BoJ.
#econtwitter
After well over a thousand consecutive meals with children, I'm off to an in-person conference. Forgive me, fellow grownups, if I start cutting up your food and scolding you to eat vegetables, etc.
Moreover, there is relatively little evidence that manipulating inflation expectations can effectively shift consumption intertemporally. What about anchoring inflation expectations? Super important, but there are so many different definitions of "anchored" out there.
8/n
I started researching consumer inflation expectations in grad school in the 2010s because I felt like it would be really useful for monetary policymakers to better understand how the public forms expectations and how to use expectations as a policy tool (esp. at the ZLB).
2/n
About to give a conference presentation and my husband unexpectedly had to go to work leaving me alone with my 4 kids. Mean age=median age= mode age=3, wish me luck!
When there are big, dramatic episodes like the Great Depression and recovery, the world wars, the Volcker disinflation, then inflation expectations (by any measure) and inflation strongly co-move and each affects the other. Over shorter periods, relationship is much weaker.
9/n
I love my job at an undergrad-only college, but also think it would be an interesting/rewarding experience to serve on a PhD dissertation committee. So if you're in a small program and could use an external committee member and think we're a good research fit, get in touch!
And over shorter periods, it matters much more which measure of expectations you use-consumer surveys, professional forecasters, TIPS, etc. All of these measures have flaws, but they all rose in the 70s and fell with the Volcker disinflation.
10/n
I wrote "Fed Speak on Main Street" and a series of other papers about how the Fed struggles to communicate with households and to shape their expectations. The goal was to understand how they could better communicate and better shape expectations.
3/n
And in the course of a few years, the Fed and other CBs really ramped up their communication games-- Twitter, press conferences, cute videos, and the like. I was excited, if not fully optimistic. But now I am less so. The big takeaway of tons of research is that...
4/n
Hi,
#econtwitter
. If you're located reasonably close to Philly and have a working paper that would be interesting and (somewhat) accessible to undergrads, send me an email and I can see about getting you on the
@haverfordedu
economics seminar series.
Felicity Bernadette Binder has arrived! 8lb 10oz and doing very well. Named for St. Felicity, mother of the seven martyrs whose feast day is today, and St. Bernadette who saw the Marian apparition of Our Lady of Lourdes, for which our parish is named.
On the Fed's average inflation targeting announcement: Can we all agree to pronounce AIT like a'ight (all right)? Thanks in advance for your cooperation.
Happy to announce that
@cconces
is joining the monetary policy team at
@mercatus
this summer as a visiting scholar. She brings expertise on π expectations, central bank communications, and more! Her work is incredibly relevant in this season of high inflation. Welcome
@cconces
!
I updated my consumer inflation uncertainty index (Journal of Monetary Economics 2017). In May, U.S. households grew much more uncertain about how prices will change in the next 12 months (evidenced by more rounding on Michigan Survey). Updated data here:
On March 28, I will be discussing the paper "Why do we dislike inflation?" by
@S_Stantcheva
at the
@BrookingsInst
BPEA Spring 2024 conference. You can watch online at . Just for fun: do YOU dislike inflation? Why or why not?
We rented a garden plot on campus for just $15 and turns out it's 10ft by 60ft. If my economics output declines that's because I guess I'm a farmer now.
Thanks to
@CRPakaluk
for lending her daughter to babysit my daughter so I could bring her to my conference at
@BrookingsInst
#BPEA
! Academic moms helping academic moms.
My paper on inequality and inflation was just accepted in Journal of Macroeconomics. Inequality and inflation used to be positively correlated, now they're negatively correlated.
This Monday, I'll be on a panel at
@haverfordedu
with Larry Ball and
@davidmwessel
on "The State of the Macro Economy." Haverford alumni and friends, please come join us!
"In my experience, many policymakers produced their economic forecasts by working backwards from their preferred stance. This is an inversion of the way inflation targeting was meant to operate." One of many gems in this amazing Andy Haldane piece
@ft
I have updated my consumer inflation uncertainty indices through February 2022. These are constructed based on respondents' rounding behavior on the Michigan Survey, using the methodology in my 2017 JME. Download updated data:
Thinking of running your own survey, maybe using MTurk? Did you know your results might depend on the day of the week? You may want to oversample on Saturdays. See tips in my new publication:
Unemployment is low & wage growth is stable.
=> Whatever you thought the lowest sustainable unemployment rate was, it's time to revise that number down. Either revise down your estimate of the NAIRU, or revise your sense of whether it's a useful concept at all.
My consumer inflation uncertainty data is updated & posted:
Uncertainty about long-run inflation is up. And inflation expectations even of the "less uncertain" consumers are rising. Hard to say whether this is "good or bad" yet--some of both, probably.
I just posted a new working paper on
@SSRN
. "Communication without Consensus: Forward Guidance, Central Bank Projections, and Private Sector Expectations." Feedback always appreciated.
@UpdatedPriors
Yep. After about 6 years of getting all of my papers and panels rejected, I gave up on applying or attending. And these papers ended up publishing well.
No need for commercials when there is a government monopoly. Easy to imagine commercials for money under free banking or with private mints competing for customers.
@lawrencehwhite1
@GeorgeSelgin
After several days of exclaiming "Mommy ate a hamster!", my kids showed me the picture they found of me... at NBER Summer Institute... eating a lobster.
I feel...proud of their lack of exposure to luxuries and house pets? And an intense longing for conference food?
When inflation was low, it was possible for the Federal Reserve to run the economy hot to bring disadvantaged workers into the labour force. But now inflation is rising
This is such a cool paper and part of a really important research agenda. How should central banks respond to core vs. headline inflation is a crucial question these days.
I wonder if
@haverfordedu
is there in almost microscopic font. I admit, I am very proud to be an associate editor at two great journals while at a small liberal arts college.
More concern about coronavirus associated with more pessimistic unemployment expectations and HIGHER inflation expectations. Consistent with recent research showing that many consumers have a "bad times=high inflation" model of the economy.
My latest for
@BrookingsInst
on political party affiliation and inflation expectations shows that
#TeamTransitory
and
#TeamPermanent
were very much split on party lines. Rise in expectations came almost entirely from Republicans.
I found my elementary school science fair project, Shopping for Snacks. I had forgotten all about it, but now understand how I ended up researching the CPI for a living. Behold my personal consumption baskets in the late 1990s. Data and graphs to follow...
I am writing a book called "Purchasing Power: Prices and Legitimacy in American Democracy." Many of our big policy debates reflect different visions of the legitimate role of the state in managing/influencing prices. I'll provide historical context for proposals like this one.
Giant corporations are using inflation as a cover story to jack up prices and pad profits. Let’s pass my bill to crack down on corporate price gouging. And let’s pass our Windfall Profits Tax on Big Oil, which includes rebate checks for Americans struggling with gas prices.
I just posted a new working paper on
@SSRN
. "Communication without Consensus: Forward Guidance, Central Bank Projections, and Private Sector Expectations." Feedback always appreciated.
Just updated my data on political pressure on central banks through 2019Q1 and it has really risen: 14% of 118 central banks reportedly face political pressure or government interference. For more info come to my talk Thursday evening at
#NBERSI2019
or see
The
@bankofengland
book "Can't we just print more money?" says free banking was "inefficient. People didn't trust banknotes further away than their very local area."
This is taken as failure of private money rather than of branching restrictions.
@GeorgeSelgin
@lawrencehwhite1
A week from today, we are hosting a monetary policy conference in DC with a lineup of great panelists, a live Macro Musings podcast recording, and a keynote address by Governor Chris Waller. Hope to see you there!
Cool graph of the day shows the percent of Michigan Survey respondents who report they heard favorable or unfavorable news about employment. Look at the recent crossing: "favorable" has finally regained the lead!
We appreciate the discussion and the many great comments from the audience. Some days I can hardly believe what a fun job I have! The paper is here for anyone interested:
Today, I discussed a beautiful paper by
@cconces
and
@gillian_brunet
using survey data from the time of the Korean War to helps us better understand inflation expectations and their relation to consumption decisions. At the
@nberpubs
ME spring meeting. Overall great meeting.
Excited to share my new paper, "Presidential Antagonism and Central Bank Credibility." Only appropriate that I share it first on Twitter.
In an online experiment, I showed some respondents a
@realDonaldTrump
tweet about the Fed. (1/n)