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2026-09-17

• Using options prices to measure financial risk : The Kansas City Fed Policy Rate Skew
  by ? in FRED blog, 2026-09-17 13:00:00 UTC

  The takeaway The Kansas City Fed uses options prices to measure how financial markets perceive the balance of risks for future short-term interest rates: a.k.a., the KC Policy Rate Skew. The data Options are publicly traded financial instruments that reflect expectations about future economic conditions. The Kansas City Fed uses options prices to create their daily index of how financial markets perceive the balance of risks, or “skew,” to short-term U.S. interest rates one year in the future. Our FRED graph above shows the value of this “KC PRS” index over the past five years, although daily [...]

2026-09-10

• Economics Has No Lean
  by Carlos Chavez in Carlos Chavez, 2026-09-10 20:13:47 UTC

  On Tuesday I read Tristan Buckmaster’s statement before I read the OpenAI announcement it was responding to. It is four pages long and I read it twice. The second time I was no longer reading it as news about mathematics. I was reading it as a preview of something that will happen to my own field, and the question was only which part. Buckmaster is a mathematician at NYU. For close to a year he and Levent Alpöge, who works at Anthropic, had been using AI models to chase proofs that solutions to the Euler and Navier-Stokes equations can blow up in finite time. The Navier-Stokes version is one o [...]

2026-09-04

• Regulating the regulators: Assessing regulation-making frameworks in India's financial sector
  by Anurodh in Ajay Shah's blog, 2026-09-04 11:48:32 UTC

  by Natasha Aggarwal and Renuka Sane . Indian regulators, like the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI), routinely wield quasi-legislative powers. For example, Section 30 of the Securities and Exchange Board of India Act, 1992 empowers the SEBI Board to make regulations. According to its 2024-25 annual report, SEBI issued 104 consultation papers, 61 amendments to its regulations, one new set of regulations, 14 master circulars, and 154 "policy measures." Such regulatory interventions can significantly influence markets and affect economic outcomes. [...]

2026-09-02

• The curious case of definition and adjudication of front running in India
  by Anurodh in Ajay Shah's blog, 2026-09-02 08:09:11 UTC

  by Natasha Aggarwal , Amol Kulkarni and Bhavin Patel . One of the core legislative mandates of the Securities and Exchange Board of India (SEBI) is to prohibit fraudulent and unfair trade practices (FUTP) relating to securities markets. A practice commonly classified as FUTP is front running. It is generally understood as a set of two trades or positions: first, a trade or position taken in advance of a large order, and second, a squaring off of the initial trade or position after the large order, to benefit from the price movement it causes. SEBI issued the SEBI (Prohibition of Fraudulent a [...]

2026-08-27

• Has UK food inflation been under the weather?
  by BankUnderground in Bank Underground, 2026-08-27 13:00:00 UTC

  India Rimmer , Hannah Copeland and Boromeus Wanengkirtyo Global extreme weather events may feel far away, but they leave behind a trail of higher prices in our shopping baskets. As outlined in past Monetary Policy Reports, droughts, flooding and heatwaves occurring overseas often impact UK food inflation, which averaged 4.2% in 2025. But how much of the rise in food inflation last year can we blame on the weather? By constructing a new proxy for global weather shocks, we find that they increase UK food prices with a peak impact after one year. In the latest period, our model suggests t [...]

• Should Central Banks Be Independent?
  by Josh Hendrickson in Economic Forces, 2026-08-27 10:02:53 UTC

  One of the strengths of price theory is that it teaches you to think about problems in terms of constrained maximization, no matter the context. Yes, price theory often involves markets, but it can also be used to think about institutions, or the “rule of the game” in society. Price theory is fundamentally about costs and choices. Non-market activity isn’t immune from that. Neither is the design of institutions. With that in mind, I would like to address a topic that has received a lot of attention recently. That topic is central bank independence. We try not to write much about politics here, [...]

2026-08-24

• Forget the Population Bomb. The New Fear Is a Population Implosion.
  by Ronald Bailey in Hit & Run blog, 2026-08-24 16:05:02 UTC

  Nearly six decades ago the world was allegedly in the midst of an apocalyptic "population explosion." Today the fear among some economists is the opposite: that the world in this century is on track to experience a steep global population implosion. When the Stanford biologist Paul Ehrlich wrote The Population Bomb in 1968, world population stood at just over 3.5 billion and the global total fertility rate was just under 5 children per woman . As a dire consequence of these trends, he declared, "The battle to feed all of humanity is over. [...]

2026-08-20

• Is AI reducing employment for software coders?
  by ? in FRED blog, 2026-08-20 13:00:00 UTC

  The takeaway Employment of software coders has decelerated sharply since 2022. Recent research suggests this job-specific shock isn’t caused by a slowing industry but likely from the emergence of AI tools. What employment data show Our FRED graph above shows annual employment data for 1991-2025 reported by the US Bureau of Labor Statistics: The solid blue line shows the year-over-year percent change in total employment. The dashed green line shows the same measure but specifically for computer systems design and related services. Annual employment growth in the computer systems design industr [...]

• Foreign equity investment in India: A stall, not a reversal
  by Anurodh in Ajay Shah's blog, 2026-08-20 08:04:21 UTC

  by Sanjuktha Athreya. In 2026, many have expressed concern about the flight of foreign portfolio investors from India. Examples of this alarm are found here , here , here , here , here and here . Capital flow reversals are an important concern in the literature on international capital markets. However, to understand whether recent outflows represent a meaningful change in foreign investor participation, we need to look at both flows and stocks. The flow is the net investment by foreign investors in a given time period, and the stock is the size of their position in India on a certain dat [...]

2026-08-19

• Economists should be worried about birth rates
  by Noah Smith in Noahpinion, 2026-08-19 23:27:31 UTC

  Photo by Age Cymru on Unsplash The Economist has an interesting article this week, in which it goes after Daron Acemoglu . Acemoglu is probably the top economist in the world at this point, having just earned a Nobel prize, and sitting right at the top of the list of most cited economists. So it’s kind of funny that when it talks about people who doubt Acemoglu’s research, the one person it mentions is…me! 1 Give an economist a few drinks, however, and some of them will venture their true opinions about this giant. “Much of his theoretical work is useful, but he uses his models to inform popul [...]

2026-08-13

• What is the Texas ratio?
  by ? in FRED blog, 2026-08-13 13:00:00 UTC

  The name In the 1980s, Texas had a banking crisis whose causes included shocks in oil prices and real estate investments. In response, Gerard Cassidy of the Royal Bank of Canada developed the Texas ratio metric to assess a bank’s credit risk in that state. The definition The Texas ratio measures a bank’s nonperforming loans divided by the sum of tangible equity capital and allowance for losses on loans and leases. Nonperforming loans consist of the following: Nonaccrual loans, where a lender stops adding expected interest to their reported income. Loans with payments 90 or more days past due [...]

2026-08-12

• Stagnation: the norm
  by Chris Dillow in Chris Dillow, 2026-08-12 09:04:58 UTC

  “To understand the man you have to know what was happening in the world when he was twenty” said Napoleon. He was right - a fact which suggests many economists might be overconfident about how quickly the economy might grow even with the very best policies. Most of us over the age of 40 were educated to take economic growth for granted. Of course, we knew recessions were inevitable from time to time, but these were dips in a rising trend of prosperity. Between 1945 and 2005 real GDP per person grew on average by 2.3% a year, which meant that a young adult earlier this century was three times b [...]

2026-08-06

• What securities do FDIC-insured banks hold?
  by ? in FRED blog, 2026-08-06 13:00:00 UTC

  The quarterly banking profile of FDIC-insured institutions provides an overview of their aggregate financial condition, including data on bank earnings, loan and deposit activity, and asset quality. According to theses profiles, mortgage-backed securities make up more than half of the total assets held on their balance sheets. Our FRED graph above shows the makeup of these institutions’ balance sheets between the first quarter of 1984 and the first quarter of 2026. The asset classes are as follows, in descending order of relative shares: Mortgage-backed securities (blue area): bonds backed b [...]

2026-08-04

• Mamdani’s not the first to try to bring cheap groceries to N.Y.C.
  by Matthew Yglesias in Slow Boring, 2026-08-04 10:02:35 UTC

  A Walmart in Maryland. Walmart spent years trying to enter New York City but was unsuccessful. (Photo by Alexander Farnsworth via Getty Images) As Zohran Mamdani inches forward with his plan to introduce low-cost government-run grocery stores in New York City , I think it’s worth noting that he’s far from the first person to have noticed that the city’s supermarkets are unusually expensive or to have thought it might be a good idea to try to bring in some lower-cost options. The most prominent attempt to do this was not by a democratic socialist or even a mayor, but rather a businessman workin [...]

2026-08-03

• How does seasonal weather affect construction employment?
  by ? in FRED blog, 2026-08-03 13:00:00 UTC

  The FRED Blog has discussed why employment in retail and postal services peak around the Christmas holidays. Today we tap into a 2018 research piece from the Federal Reserve Bank of Chicago to discuss why construction employment may follow different patterns across states. Our FRED graph above shows monthly employment data reported by the US Bureau of Labor Statistics. The solid lines are the numbers (in thousands) of employed workers in construction between May 2016 and June 2026 in two states: Kentucky in purple and Minnesota in blue. The dashed lines are the same employment figures adjuste [...]

2026-07-17

• Book Review: "Power and Progress"
  by Noah Smith in Noahpinion, 2026-07-17 03:52:55 UTC

  My elderly rabbit Giggles has unfortunately been quite sick the past two days (he’s recovering now), so I haven’t had as much time to write. Instead I thought I would repost a book review I did two years ago . I’ll be back with more original content tomorrow! In my post yesterday about the “We Must Act Now” statement, I noted that Daron Acemoglu successfully got the writers to alter some key language in exchange for his signature — most likely, adding the “steering” idea that I took issue with. Technological “steering” is the central policy recommendation of Acemoglu’s 2023 book Power and Prog [...]

2026-07-13

• The American suburbs are better than you think
  by Noah Smith in Noahpinion, 2026-07-13 12:38:16 UTC

  “Buy a big house and live in the suburbs” — Tracy Chapman “Outside suburbia’s sprawling everywhere/ I don’t want to go, baby” — Kim Wilde I grew up in the suburbs, and when I got the chance, I moved to a big city and never looked back. 1 I love living in dense, built-up urban areas, with great train systems and tons of restaurants and shops. Japanese cities are the best in the world, and I’ve written plenty of posts about what makes them so great . But you don’t have to be Japan in order to create amazing metropolises — New York City, Paris, Istanbul, Seoul, London, etc. are all excellent plac [...]

2026-07-06

• What US assets are held overseas?
  by ? in FRED blog, 2026-07-06 13:00:00 UTC

  The FRED Blog recently discussed who holds Treasury securities in the US and abroad. Today, we answer a related question: How do Treasury securities fit into the overall portfolio of US financial assets held overseas? Our FRED graph above uses data from the Treasury International Capital (TIC) system to show the class shares of US financial assets held overseas. In April 2026, those asset classes were (in descending order) Equities (blue area). Common stock, preferred stock, and fund shares of US corporations made up 59.4% of the overall portfolio of US financial assets held overseas Long-te [...]

• Is the dollar in danger of losing its supremacy?
  by Dalton,A in LSE Review of Books, 2026-07-06 11:14:28 UTC

  Kenneth Rogoff’ s Our Dollar, Your Problem explores how the US dollar has maintained its position as the world’s dominant currency. Combining economic history, geopolitics and monetary economics, Rogoff explains dollar dominance with institutional credibility, financial depth and America’s power. The book offers an eagle-eyed ,critical view of the evolving global financial landscape, writes Srishti Gupta . Our Dollar, Your Problem: An Insider’s View of Seven Turbulent Decades of Global Finance, and the Road Ahead. Kenneth Rogoff. Yale University Press. 2025 (hardback); 2026 (paperback). [...]

2026-06-29

• AI investment and semiconductor prices
  by ? in FRED blog, 2026-06-29 13:00:00 UTC

  The takeaway Although data center construction and semiconductor purchases are both related to the AI boom, changes in their prices may be occurring at different stages of the investment process.   Producer price index Our FRED graph above shows the producer price index for semiconductor and other electronic component manufacturing. This index measures prices received by domestic producers in that industry. For much of the recent past, the index had changed slowly, even during periods when semiconductor shortages received wide attention. But that pattern has changed: The index rose from 61.6 [...]

• Migrants vs natives vs machines
  by Johan Fourie in Our Long Walk, 2026-06-29 06:02:27 UTC

  In the autumn of 1965, something was missing from the tomato fields of California. For two decades, close to half a million Mexican men had crossed the border each year to pick the crops that Americans ate. They were called braceros – hired hands, brought in under a government programme that had started during the war. Then, on the last day of 1964, Washington closed the programme down. The braceros went home. Politicians had promised this would be good news for American workers. Take away the foreigners, the argument ran, and farmers would have no choice but to offer better wages to the local [...]

2026-06-23

• Lessons of Brexit
  by Chris Dillow in Chris Dillow, 2026-06-23 07:51:51 UTC

  Today is the tenth anniversary of the vote to leave the EU - one of the worst political decisions in living memory. It’s not just those experts of whom people have had enough who believe this. So too do the voters. According to Yougov , 57% think we were wrong to vote to leave the EU, including 23% of Leave voters. And only 12% think Brexit has been a success. Our biggest political decision in years, taken after months of extensive public debate, was therefore mistaken. Unlike other bad decisions, such as the Truss/Kwarteng Budget or the election of a succession of inadequate prime ministers, [...]

2026-06-22

• Urbanisation, megaprojects and dispossession in Asia
  by Dalton,A in LSE Review of Books, 2026-06-22 11:22:34 UTC

  The Political Economy of Megaprojects in Asia edited by Hyun Bang Shin and Dong-Wan Gimm critiques the megaproject as the dominant model of urban development across Asia. Through interdisciplinary case studies in South Korea, China, Taiwan, India, Turkey, and Malaysia, this compelling, nuanced volume reveals how states, private capital and various actors reshape urban landscapes through large-scale infrastructural and real-estate projects, writes Sara Bardhan . The Political Economy of Megaprojects in Asia: State Power, Land Control, Financial Flows, and Dispossession. Hyun Bang Shin and Do [...]

2026-06-19

• Colorado’s Funeral Mistake
  by ? in Marginal Revolution, 2026-06-19 11:20:08 UTC

  Today about a quarter of the US workforce are required to have a license to work in their chosen profession, up from just 5 percent in 1950. Almost always the trend has been to add occupational licensing over time, but in 1983 Colorado did something unusu… [...]

2026-06-18

• AI versus the China Shock
  by Adam Ozimek in Agglomerations, 2026-06-18 10:31:34 UTC

  To hear an extended conversation about the themes in this post, please subscribe and listen to our podcast, The New Bazaar . The China Shock refers to the widespread job loss that certain workers and communities suffered because of the rapid rise of trade with China in the 2000s. The AI Shock refers to the same thing happening to white collar workers from the rise of Artificial Intelligence. For now, the AI Shock is merely a potential shock. But a number of economists , journalists , and other experts have drawn worrying parallels between these two shocks. We understand why. Across a large bod [...]

2026-06-17

• What Set-Asides Cost: A Lesson from Timber Auctions.
  by noreply@blogger.com (Luke Froeb) in Managerial Econ, 2026-06-17 17:44:21 UTC

  California's Public Utilities Commission is pressuring utilities to steer about 1.5% of procurement toward state-certified "LGBT-owned" firms.  Setting aside the certification debate, what will this cost the state?  In every auction, the winner has to outbid the second-best bidder, so the second-best bidder sets the price. Weaken the field and you weaken that price-setter. But which way the price moves depends on whether the government is buying or selling. When the government buys, it runs a procurement auction: bidders compete to sell to the government, and the lowest-cost bidder wins, whi [...]