Research

Papers

Population Growth and Inflation (Moody’s Analytics paper)

This analysis investigates the relationship between population growth and inflation. Panel models demonstrate a strong association between population growth and inflation in both cross-country data and across a sample of U.S. metro areas. The metro area results are highly robust, including an instrumental variable approach and long-run models using decadal changes over 90 years of data. The metro area analysis suggests that the housing market is the main mechanism through which population growth affects inflation, likely because of regulatory and physical constraints that keep land and housing relatively inelastic in many places. There is suggestive evidence that the relationship between population growth and inflation is nonlinear, with population declines having a stronger effect than population growth. This is consistent with relatively permanent housing stock that declines only slowly in response to declining population. Overall, these results suggest that slowing population growth can be a headwind for inflation and help explain why inflation has remained stubbornly weak in some places.

Sticky Rents and the CPI for Owner Occupied Housing (Working Paper

This paper examines the implications of sticky rents on the measurement of owner-occupied housing in the Consumer Price Index (CPI). I argue that market and not average rents are the most theoretically justified measurement of owners’ equivalent rent (OER), and that the current measurement of rental inflation using average rents is methodologically incorrect. A new data source is used to construct a market rent measure to compare to the existing CPI measure of owner-occupied housing inflation for the Baltimore/Washington D.C. CMSA. The results show that market rents reflect housing market turning points sooner, and show a larger post-housing bubble decline in rents. In addition, market rents are shown to forecast overall inflation better than average rents. The results suggest that switching to market rents may allow the Federal Reserve to be more responsive to housing bubbles.

Sticky Rents and the CPI for Owner Occupied Housing (Dissertation version

A longer version of the working paper.

The Regulation and Value of Prediction Markets (Mercatus Center working paper

Prediction markets are important information-aggregation tools for researchers, businesses, individuals, and governments. This paper provides an overview of why prediction markets matter, how they are regulated, and how the regulation can be improved. The value of prediction markets is illustrated with discussions of their forecasting ability and the characteristics these markets possess which give them advantages over other means of forecasting and information aggregation. The past, current, and future regulatory environment is surveyed.

The Macroeconomic Consequences of Mr. Trump’s Economic Policies (Moody’s Analytics with Mark Zandi, Dan White, and Chris Lafakis) 

This paper assesses the macroeconomic consequences of presidential candidate Donald Trump’s proposed economic policies. These include his policies on taxes and government spending, immigration, and international trade. A similar analysis of candidate Hillary Clinton’s proposed economic policies will be forthcoming

The Macroeconomic Consequences of Secretary Clinton’s Economic Policies (Moody’s Analytics with Mark Zandi and Chris Lafakis) 

This paper assesses the macroeconomic consequences of presidential candidate Hillary Clinton’s proposed economic policies. These include her policies on taxes and government spending, foreign immigration, and the federal minimum wage. Our analysis of candidate Donald Trump’s proposed economic policies was published several weeks ago.

Healthy People, Healthy Economies (Moody’s Analytics with Dan White) 

This study investigates the relationship between the health of a population and the health of an economy using a new health metric, the Blue Cross Blue Shield (BCBS) Health Index. The Health Index captures the relative health of nearly every county in the U.S. using rigorous statistical analysis and health insurance data from millions of members.Overall, the BCBS data clearly indicate that healthy populations are related to strong local economies. Where populations are healthier, we observe lower unemployment, higher income, and higher pay. Moving from a county of average health to the 99th percentile is associated with an increase in average annual pay of $5,302 and a 0.6-percentage point decline in the unemployment rate.

U.S. Employment Outlook: Solving the Wage Puzzle (Moody’s Analytics with Ryan Sweet)

The U.S. labor market has tightened, but wage growth remains mediocre at best. One hypothesis which has gained some traction blames pent-up wage deflation—the hypothesis that firms could not cut nominal wages by as much as they wanted during the recession, and are thus reluctant to raise wages now. This 2014 analysis suggests pent-up wage deflation is unlikely.

Consumer Response to Service Interruption on the Washington Metro (Transportation Research Board with Pete Angelides and Richard Voith)

The Current Condition and Future Viability of Casino Gaming in Pennsylvania (Econsult Solutions research)