Papers by David Beckworth
Applied Econometrics and International Development, 2015
Remittances have become an important and reliable source of funds for many developing countries, ... more Remittances have become an important and reliable source of funds for many developing countries, particularly Latin American countries. The inflow of remittances has been shown to improve consumption levels, health care access, educational attainment, and the implementation of entrepreneurial initiatives, affecting the economic prospects of the receiving countries. However, economic conditions in the host-countries have proven to be influential in immigrants’ earnings and their ability to send money to their families back home. This article measures the impact that economic fluctuations in the U.S. and Spain have in the amount of remittances received by 5 Latin American countries, showing that migrant workers tend to send more funds home when the state of the economy in which they reside improves. Our results also show that shocks to specific sectors of the host country produce a differential effect on the remittances flowing to different countries, both in terms of magnitude and sometimes direction.
Social Science Research Network, 2021
Social Science Research Network, 2020
The nominal GDP (NGDP) gap, a measure of unexpected changes in the dollar size of the US economy,... more The nominal GDP (NGDP) gap, a measure of unexpected changes in the dollar size of the US economy, is calculated as the percentage difference between the actual and the neutral levels of NGDP. The neutral level of NGDP, in turn, is a sum of all dollar incomes expected by households and businesses coming into a specific time period and is created using data from consensus forecasts. In the third quarter of 2021, the median NGDP gap rose to 0.70 percent, up from the previous quarter's value of −0.02 percent. The 0.70 percent NGDP gap means that the dollar size of the economy, $23.17 trillion, was close to the expected $23.01 trillion. Moreover, the 10th and 90th percentiles of the NGDP gap show that
Social Science Research Network, 2020
The nominal GDP (NGDP) gap, a measure of the stance of US monetary policy, is the percent differe... more The nominal GDP (NGDP) gap, a measure of the stance of US monetary policy, is the percent difference between the actual level and the neutral level of NGDP. The neutral level of NGDP is the dollar size of the economy when monetary policy has been neither expansionary nor contractionary. In the first quarter of 2020, the NGDP gap experienced its sharpest decline since 2008, falling to −2.03 percent (see figures above). The sudden decline in the NGDP gap indicates that the COVID-19 crisis has morphed from a supply shock-a sudden decline in the productive capacity of the US economy-into an even larger spending shock. To be clear, the sharp drop in the NGDP gap does not mean that the Federal Reserve
Social Science Research Network, 2009
Is the United States best served by a single currency? This question is explored in this paper by... more Is the United States best served by a single currency? This question is explored in this paper by looking at the regional effects of U.S. monetary policy shocks through the perspective of the Optimal Currency Area framework. Using monthly state-level data for the period 1983:1 to 2008:3, this paper finds that some regions of the United States during this time may have benefited from having their own currency.
Journal of Policy Modeling, Mar 1, 2015
It is widely believed that, in the wake of the dot.com crash, the Fed kept the federal funds targ... more It is widely believed that, in the wake of the dot.com crash, the Fed kept the federal funds target rate too low for too long, inadvertently contributing to the subprime boom. We attribute this and other Fed departures from a "neutral" policy stance to the Fed's failure to respond appropriately to exceptional rates of total factor productivity growth. We then show how the Fed, by adhering to a nominal GDP growth rate target, might have succeeded in maintaining such a neutral stance.
Social Science Research Network, 2016
The eurozone crisis represents one of the greatest economic tragedies of the past century. It has... more The eurozone crisis represents one of the greatest economic tragedies of the past century. It has caused immense human suffering, which continues to this day. The standard view attributes the economic crisis to an earlier buildup of public and private debt that was augmented by the imposition of austerity during the crisis. Although evidence exists of a relationship between the debt buildup, austerity measures, and economic growth Notes: Gray bars = GDP recession; core countries = Austria,
SSRN Electronic Journal, 2020
The nominal GDP (NGDP) gap, a measure of the stance of US monetary policy, is the percent differe... more The nominal GDP (NGDP) gap, a measure of the stance of US monetary policy, is the percent difference between the actual level and the neutral level of NGDP. The neutral level of NGDP is the dollar size of the economy when monetary policy has been neither expansionary nor contractionary. In the first quarter of 2020, the NGDP gap experienced its sharpest decline since 2008, falling to −2.03 percent (see figures above). The sudden decline in the NGDP gap indicates that the COVID-19 crisis has morphed from a supply shock-a sudden decline in the productive capacity of the US economy-into an even larger spending shock. To be clear, the sharp drop in the NGDP gap does not mean that the Federal Reserve
SSRN Electronic Journal, 2020
The nominal GDP (NGDP) gap, a measure of unexpected changes in the dollar size of the US economy,... more The nominal GDP (NGDP) gap, a measure of unexpected changes in the dollar size of the US economy, is calculated as the percentage difference between the actual and the neutral levels of NGDP. The neutral level of NGDP, in turn, is a sum of all dollar incomes expected by households and businesses coming into a specific time period and is created using data from consensus forecasts. In the third quarter of 2021, the median NGDP gap rose to 0.70 percent, up from the previous quarter's value of −0.02 percent. The 0.70 percent NGDP gap means that the dollar size of the economy, $23.17 trillion, was close to the expected $23.01 trillion. Moreover, the 10th and 90th percentiles of the NGDP gap show that
Social Science Research Network, May 22, 2019
SSRN Electronic Journal, 2018
THE ECONOMIC BOOM of the early-to-mid 2000s was not just a U.S. phenomenon. It was a global one. ... more THE ECONOMIC BOOM of the early-to-mid 2000s was not just a U.S. phenomenon. It was a global one. Beginning in the early 2000s, the world economy began an expansion that had the fastest sustained economic growth in thirty years. At its peak during this boom, the global economy was grow-
Over the last few years, the Federal Reserve has conducted a series of large scale asset purchase... more Over the last few years, the Federal Reserve has conducted a series of large scale asset purchases. Given the Federal Reserve’s dual mandate, the objective of this policy has been to generate an increase in real economic activity while maintaining a low, stable rate of inflation. In addition, some such as Sumner (2011, 2012) and Woodford (2012) have advocated making such large scale asset purchases conditional upon a particular target for nominal income. Whether this type of policy can be successful is dependent upon the monetary transmission mechanism. This paper proposes a mechanism in which monetary policy works through current and expected growth in the supply of transaction assets and nominal income expectations. Empirical results focusing on the role of nominal income expectations provide support for the theoretical framework.
Essays in Economic and Business History, 2015
A number of studies over the past decade find that US monetary policy generates asymmetric effect... more A number of studies over the past decade find that US monetary policy generates asymmetric effects on regional economies. These studies further find that the variation in industry composition across US regions is a key reason for these regional effects of monetary policy. One implication from these findings is that should a US region undergo a major restructuring of its economy that region would likely find its response to monetary policy shocks to change as well. This possibility is explored in this article by examining the regional effect of monetary policy shocks during and after the dramatic economic transformations of the American South in the twentieth century.
Over the last few years, the Federal Reserve has increased the monetary base fourfold. Given the ... more Over the last few years, the Federal Reserve has increased the monetary base fourfold. Given the Federal Reserve’s dual mandate, the objective of this policy has been to generate an increase in real economic activity while maintaining a low, stable rate of inflation. Some, such as Sumner (2011, 2012) and Woodford (2012) have advocated making the expansion of the monetary base conditional upon a particular target for nominal income. This paper develops a model to examine the effects of exogenous changes in the monetary base and changes to the monetary base that result from exogenous changes to the central bank’s nominal target. The model is estimated using Bayesian estimation. The posterior distribution of impulse response functions suggests that changes in the monetary base that result from changes in the nominal target are larger and more persistent that exogenous changes in the monetary base itself.
ERN: Monetary Policy Objectives; Policy Designs; Policy Coordination (Topic), 2020
This policy brief reports on the NGDP gap, a measure of unexpected changes in the dollar size of ... more This policy brief reports on the NGDP gap, a measure of unexpected changes in the dollar size of the US economy, is the percent difference between the actual and the neutral level of NGDP. The neutral level of NGDP, in turn, is a sum of all dollar incomes expected by households and businesses coming into a specific time period. In the second quarter of 2020, the NGDP gap reached a new low, hitting −12.12 percent.<br><br>(For more information on how the NGDP gap is constructed and how it may be used to understand policy, please see “The Stance of Monetary Policy: The NGDP Gap,” a policy brief by David Beckworth. Also, see the NGDP gap web page hosted by the Mercatus Center that provides access to current and vintage data on the NGDP gap.)
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Papers by David Beckworth