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Insights / Research BriefSep 20, 2023

Households’ Response to the Wealth Effects of Inflation

Philip Schnorpfeil, Michael Weber, Andreas Hackethal
While many households know about inflation and its erosive effect on nominal assets, most are unaware of inflation’s erosive impacts on nominal debt. Once they receive information about debt erosion, households update their beliefs about their own real net wealth and even change their consumption choices.
Topics:  Monetary Policy
Insights / Research BriefAug 15, 2023

The Long-term Effects of Inflation on Inflation Expectations

Fabio Braggion, Felix von Meyerinck, Nic Schaub, Michael Weber
German households living in areas with higher local inflation during the hyperinflation of the 1920s expect higher inflation today, suggesting that inflationary shocks have a long-lasting impact on attitudes toward inflation.
Topics:  Monetary Policy
Insights / Research BriefAug 01, 2023

Tell Me Something I Don’t Already Know: Learning in Low and High-Inflation Settings

Michael Weber, Bernardo Candia, Tiziano Ropele, Rodrigo Lluberas, Serafin Frache, Brent H. Meyer, Saten Kumar, Yuriy Gorodnichenko, Dimitris Georgarakos, Olivier Coibion, Geoff Kenny, Jorge Ponce
As inflation has recently risen in advanced economies, both households and firms have become more attentive and informed about inflation, leading them to respond less to information about inflation and monetary policy.
Topics:  Monetary Policy
Insights / Research BriefJul 20, 2023

Price Level and Inflation Dynamics in Heterogeneous Agent Economies

Greg Kaplan, Georgios Nikolakoudis, Giovanni L. Violante
This work offers new insights into the effects of persistent fiscal deficits on US inflation, revealing that targeted income redistribution during COVID increased short-term inflation significantly. The largest sustainable primary deficit is 4.6% of GDP, or 40% higher than current levels, dependent on how deficit spending is distributed.
Topics:  Financial Markets, Monetary Policy
Insights / Research BriefJun 30, 2023

Monetary Policy Transmission Through Online Banks

Samuel Earnest, Isil Erel, Jack Liebersohn, Constantine Yannelis
Monetary transmission is significantly larger for online banks; compared to brick-and-mortar banks, a 100-basis point increase in the federal funds rate leads to an approximately-30-basis-point larger increase in deposit rates offered by online banks.
Topics:  Financial Markets, Monetary Policy
Insights / Research BriefJun 29, 2023

The Value of Student Debt Relief and the Role of Administrative Barriers: Evidence from the Teacher Loan Forgiveness Program

Damon Jones, Brian Jacob, Benjamin J. Keys
Neither eligibility for nor information about the Teacher Loan Forgiveness (TLF) program affect teachers’ employment decisions. Information increases application and TLF receipt rates for teachers who have already accrued the five years required to be eligible. In general, teachers appear to value the prospect of debt relief, and TLF take-up may be constrained by program complexity and administrative barriers.
Topics:  Fiscal Studies, Higher Education & Workforce Training
Insights / Research BriefMay 22, 2023

Judging Nudging: Understanding the Welfare Effects of Nudges Versus Taxes

John A. List, Matthias Rodemeier, Sutanuka Roy, Gregory K. Sun
A combination of nudges and taxes always outperforms each policy in isolation; however, there is large variation in how much these combinations add to social welfare, reinforcing the importance of empirically quantifying welfare effects.
Topics:  Fiscal Studies
Insights / Research BriefMay 19, 2023

Debt Moratoria: Evidence from Student Loan Forbearance

Ching-Tse Chen, Michael Dinerstein, Constantine Yannelis
Relative to borrowers who had to continue paying their loans, borrowers allowed to pause their payments sharply increased mortgage, auto, and credit card borrowing, with little effect on loan delinquencies.
Topics:  Fiscal Studies, Higher Education & Workforce Training