Research Department Working Papers
Tempting FAIT: Flexible Average Inflation Targeting and the Post-COVID U.S. Inflation Surge
In August 2020, the Federal Reserve replaced Flexible Inflation Targeting (FIT) with Flexible Average Inflation Targeting (FAIT), introducing make-up strategies that allow inflation to temporarily exceed the 2% target. Using a synthetic control approach, this paper estimates that FAIT raised CPI inflation by about 1 percentage point and core CPI inflation by 0.5 percentage points, suggesting a moderate impact net of food and energy and a largely temporary effect. The findings are consistent with the hypothesis of a steeper-than-expected post-pandemic Phillips curve in the New Keynesian model.
April 09, 2025
Globalization Institute Working Paper
Living Up to Expectations: The Effectiveness of Forward Guidance and Inflation Dynamics Post-Global Financial Crisis
This paper studies the effectiveness of forward guidance when central banks face private agents with heterogeneous expectations allowing for a degree of bounded rationality.
April 03, 2025
Texas Employment Forecast
The Texas Employment Forecast indicates jobs will increase 1.9 percent in 2025, with an 80 percent confidence band of 1.2 to 2.6 percent.
March 28, 2025
Texas Employment Forecast
The Texas Employment Forecast indicates jobs will increase 1.9 percent in 2025, with an 80 percent confidence band of 1.2 to 2.6 percent.
March 17, 2025
Evidence suggests U.S. house price/rent ratio, real home prices to decline
The ratio of house prices to rents in the U.S. has risen 20 percent since first quarter 2020, coinciding with the beginning of the pandemic. The ratio is near its previous high in 2006. The future course of inflation may well be influenced by how this now-lofty ratio reverts to a more usual level.
February 25, 2025
Is inflation still slowing? Early 2025 data pivotal to outlook
January inflation data were stronger in 2023 and 2024 than forecasters expected, even after more encouraging results had been reported for the ends of 2022 and 2023. Rather than reflecting seasonal adjustment difficulties, this pattern may be caused by a large share of firms changing prices at the start of a new year.
February 11, 2025
Texas Employment Forecast
The Texas Employment Forecast indicates jobs will increase 1.6 percent in 2025, with an 80 percent confidence band of 0.8 to 2.4 percent.
February 07, 2025
Texas Employment Forecast
The Texas Employment Forecast estimates jobs will increase 1.6 percent in 2024, with an 80 percent confidence band of 1.5 to 1.7 percent.
December 20, 2024
Rising unemployment doesn’t counter signs of strong GDP growth
Real (inflation-adjusted) GDP grew strongly during the second and third quarters of 2024, increasing at an annualized pace of 2.9 percent. Yet, the unemployment rate also rose 0.4 percentage points, an unusually large amount except during recessions.
December 03, 2024
Texas Employment Forecast
The Texas Employment Forecast estimates jobs will increase 2.2 percent in 2024, with an 80 percent confidence band of 2.0 to 2.4 percent.
November 15, 2024