Forecasting inflation using dynamic model averaging

We forecast quarterly US inflation based on the generalized Phillips curve using econometric methods which incorporate dynamic model averaging. These methods not only allow for coefficients to change over time, but also allow for the entire forecasting model to change over time. We find that dynamic model averaging leads to substantial forecasting improvements over simple benchmark regressions and more sophisticated approaches such as those using time varying coefficient models. We also provide evidence on which sets of predictors are relevant for forecasting in each period

Deflation and depression: Is there an empirical link?

Are deflation and depression empirically linked? No, concludes a broad historical study of inflation and real output growth rates. Deflation and depression do seem to have been linked during the 1930s. But in the rest of the data for 17 countries and more than 100 years, there is virtually no evidence of such a link

Modeling the transition to a new economy: Lessons from two technological revolutions

Many view the period after the Second Industrial Revolution as a paradigm of a transition to a new economy following a technological revolution, including the Information Technology Revolution. We build a quantitative model of diffusion and growth during transitions to evaluate that view. With a learning process quantified by data on the life cycle of US manufacturing plants, the model accounts for the key features of the transition after the Second Industrial Revolution. But we find that features like those will occur in other transitions only if a large amount of knowledge about old technologies exists before the transition begins

Modeling and measuring organization capital

Manufacturing plants have a clear life cycle: they are born small, grow substantially with age, and eventually die. Economists have long thought that this life cycle is driven by organization capital, the accumulation of plant‐specific knowledge. The location of plants in the life cycle determines the size of the payments, or organization rents, plant owners receive from organization capital. These payments are compensation for the interest cost to plant owners of waiting for their plants to grow. We use a quantitative growth model of the life cycle of plants, along with U.S. data, to infer the overall size of these payments

Using humanoid robots to study human behavior

Our understanding of human behavior advances as our humanoid robotics work progresses-and vice versa. This team's work focuses on trajectory formation and planning, learning from demonstration, oculomotor control and interactive behaviors. They are programming robotic behavior based on how we humans “program” behavior in-or train-each other

The optimal degree of discretion in monetary policy

How much discretion should the monetary authority have in setting its policy? This question is analyzed in an economy with an agreed-upon social welfare function that depends on the economy’s randomly fluctuating state. The monetary authority has private information about that state. Well designed rules trade off society’s desire to give the monetary authority discretion to react to its private information against society’s need to prevent that authority from giving in to the temptation to stimulate the economy with unexpected inflation, the time inconsistency problem. Although this dynamic mechanism design problem seems complex, its solution is simple: legislate an inflation cap. The optimal degree of monetary policy discretion turns out to shrink as the severity of the time inconsistency problem increases relative to the importance of private information. In an economy with a severe time inconsistency problem and unimportant private information, the optimal degree of discretion is none

New Barriers to Participation: Application of New Mexico's Voter Identification Law

In democratic societies there is a tension between maximizing ballot access and minimizing voter fraud. Since the 2000 presidential election, this tension has been central to discussions about election reform, at the national and local level. We examine this tension by focusing on the implementation of voter identification laws in one state that has experienced significant issues in recent elections, and that is now implementing significant attempts at election reform: New Mexico. We hypothesized that Hispanic voters were more likely to show some form of identification than other types of voters. Using a voter data set from New Mexico’s First Congressional District in the 2006 election, we find that Hispanic, male and Election Day voters were more likely to show some form of identification than non-Hispanic, female and early voters. In addition, using an overlapping study of Bernalillo County 2006 poll workers, we find no evidence that certain groups of poll workers were more likely to ask for voter identification. Our findings suggest that broad voter identification laws, which may be applied unequally, may be perceived as discriminatory