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US Federal Reserve - Research Papers

International Finance Discussion Papers

IFDP Paper: Imperfect Information and Slow Recoveries in the Labor Market

9/25/2025

<a href="https://www.federalreserve.gov/econres/anushka-mitra.htm">Anushka Mitra</a> The unemployment rate remains elevated long after recessions, a persistence that standard search-and-matching models cannot explain. I show that noise shocks—expectational errors due to the noise in received signals about aggregate shocks—account for much of this sluggishness. Using a structural VAR, I find that ab...

IFDP Paper: Clean Money, High Costs?

9/25/2025

<a href="https://www.federalreserve.gov/econres/viktors-stebunovs.htm">Viktors Stebunovs</a> A cornerstone of the law-and-finance literature is that stronger institutions reduce financial intermediation costs. Using global data on cross-border payment costs, I show this relationship can reverse in heavily regulated sectors. Anti-money laundering risks have larger cost effects in advanced economies with strong ...

IFDP Paper: Core Inflation in the Advanced Economies: A Regional Perspective

9/19/2025

<a href="https://www.federalreserve.gov/econres/daniel-o-beltran.htm">Daniel O. Beltran</a> and <a href="https://www.federalreserve.gov/econres/julio-l-ortiz.htm">Julio L. Ortiz</a> We explore differences in the dynamics of core inflation between Europe and North America using a Bayesian time series filter that decomposes the level of core inflation in the major advanced economies into regional, global, and co...

IFDP Paper: De-Dollarization? Diversification? Exploring Central Bank Gold Purchases and the Dollar’s Role in International Reserves

9/5/2025

<a href="https://www.federalreserve.gov/econres/colin-r-weiss.htm">Colin Weiss</a> I examine how governments have managed their holdings of gold and dollar reserves in recent decades, a period when gold’s share of aggregate international reserves rose and the dollar’s share fell. Using data on central banks’ reserve currency composition and official sector purchases of U.S. assets, I argue th...

IFDP Paper: Real Exchange Rate and Net Trade Dynamics: Financial and Trade Shocks

8/27/2025

<a href="https://www.federalreserve.gov/econres/marcos-mac-mullen.htm">Marcos Mac Mullen</a> and Soo Kyung Woo This paper studies the drivers of the US real exchange rate (RER), with a particular focus on its comovement with net trade (NT) flows. We consider the entire spectrum of frequencies, as the low-frequency variation accounts for 62 and 64 percent of the unconditional variance of the RER and NT, respect...

IFDP Paper: Geopolitical Risk and Global Banking

8/27/2025

<a href="https://www.federalreserve.gov/econres/friederike-niepmann.htm">Friederike Niepmann</a> and Leslie Sheng Shen How do banks respond to geopolitical risk, and is this response distinct from other macroeconomic risks? Using U.S. supervisory data and new geopolitical risk indices, we show that banks reduce cross-border lending to countries with elevated geopolitical risk but continue lending to those mark...

IFDP Paper: Why are Manufacturing Plants Smaller in Developing Countries? Theory and Evidence from India

8/25/2025

<a href="https://www.federalreserve.gov/econres/anil-k-jain.htm">Anil K. Jain</a> and Siddharth Kothari Poorer countries (and poorer states within India) have a larger share of manufacturing employment in small plants. This paper presents empirical evidence and a theoretical model to show that this relationship is driven by greater demand for lower quality goods in poorer regions, which can be produced efficie...

IFDP Paper: Explaining World Savings

8/22/2025

<a href="https://www.federalreserve.gov/econres/colin-c-caines.htm">Colin Caines</a> and Amartya Lahiri Saving rates are significantly different across countries and remain different for long periods of time. This paper provides an explanation for this phenomenon. We formalize a model of a world economy comprised of open economies inhabited by heterogeneous agents endowed with recursive preferences. Our assume...

IFDP Paper: Expanding the Labor Market Lens: Two New Eurozone Labor Indicators

8/13/2025

Ece Fisgin, <a href="https://www.federalreserve.gov/econres/joaquin-garcia-cabo.htm">Joaquin Garcia-Cabo</a>, Alex Haag, and Mitch Lott We present a principal component analysis of euro area labor market conditions by combining information from 22 labor market indicators into two comprehensive series. These two novel indicators provide a systematic view of the current state and forward-looking direction of the...

IFDP Paper: Food, Fuel, and Facts: Distributional Effects of Global Price Shocks

8/1/2025

Saroj Bhattarai, <a href="https://www.federalreserve.gov/econres/arpita-chatterjee.htm">Arpita Chatterjee</a>, and Gautham Udupa We estimate distributional implications of global food and oil price shocks by utilizing monthly panel data on consumption and income from India, and an IV strategy that removes variation coming from global demand shocks. While both shocks lead to stagflationary aggregate dynamics, t...

IFDP Paper: Breaking Up: Fragmentation in Foreign Direct Investment

7/16/2025

<a href="https://www.federalreserve.gov/econres/cody-f-kallen.htm">Cody Kallen</a> Rising geopolitical tensions and supply chain vulnerabilities have driven recent fragmentation of foreign direct investment (FDI). This paper provides systematic evidence of FDI fragmentation along ideological and geographic lines across five dimensions: shifting away from ideologically distant countries (ideological sorting), p...

IFDP Paper: What Determines Household Expectations?

7/10/2025

<a href="https://www.federalreserve.gov/econres/anushka-mitra.htm">Anushka Mitra</a> and Aditi Singh This paper examines which macroeconomic signals shape household expectations and finds that unemployment shocks play a more influential role than inflation shocks. Using daily data, we identify which announcements prompt households to revise their expectations. We construct two shock series—assuming house...

IFDP Paper: Trade Costs and Inflation Dynamics

7/2/2025

<a href="https://www.federalreserve.gov/econres/pablo-a-cuba-borda.htm">Pablo Cuba-Borda</a>, <a href="https://www.federalreserve.gov/econres/albert-queralto.htm">Albert Queralto</a>, Ricardo Reyes-Heroles, and Mikaël Scaramucci We study how trade cost shocks influence inflation. Using bilateral trade flows from detailed global input-output data and a gravity framework, we estimate trade cost shocks and t...

IFDP Paper: Transformative and Subsistence Entrepreneurs: Origins and Impacts on Economic Growth

6/26/2025

Ufuk Akcigit, <a href="https://www.federalreserve.gov/econres/harun-alp.htm">Harun Alp</a>, Jeremy Pearce, and Marta Prato This paper explores the symbiotic relationship between transformative entrepreneurs and inventors, which is crucial for economic growth. We utilize microdata from Denmark to demonstrate that while the relationship between IQ and general entrepreneurship tends to be negative, it is strongly...

IFDP Paper: Corporate Debt Maturity and Business Cycle Fluctuations

5/27/2025

<a href="https://www.federalreserve.gov/econres/francesco-ferrante.htm">Francesco Ferrante</a>, <a href="https://www.federalreserve.gov/econres/andrea-prestipino.htm">Andrea Prestipino</a>, <a href="https://www.federalreserve.gov/econres/immo-schott.htm">Immo Schott</a> Long-term debt is the main source of firm-financing in the U.S. We show that accounting for debt maturity is crucial for understanding busines...