We study how households choose between three mortgage contracts with different payment structures: fixed-rate fixed-payment, variable-rate variable-payment, and a hybrid variable-rate fixed-payment mortgage where interest rate changes affect principal repayment rather than payment size. This...

The current monetary policy framework of the Fed intends to be more 'inclusive' by running the economy hot for longer during expansions. The logic of this strategy rests on Okun's (1973) hypothesis that sustaining a 'high-pressure economy' persistently improves labor market outcomes of low-wage...

Conventional wisdom suggests that information transparency about prices lowers prices and markups by intensifying seller competition. However, in markets with costly buyer entry, price transparency also draws in more buyers, increasing demand-side competition and putting upward pressure on...

Cross-country evidence finds that there are low levels of financial literacy. Financial literacy is often measured using the "Big Three" questions about interest rates, inflation, and risk. These questions are usually part of a longer survey. Respondents in long surveys may suffer survey fatigue...

We present the R package MSTest, which implements hypothesis testing procedures to determine the number of regimes in Markov switching models. These models have wide ranging applications in economics, finance, and many other fields. MSTest provides several testing frameworks, including Monte...

Statistical inference-both estimation and testing-for stochastic volatility (SV) models is known to be challenging and computationally demanding. We propose simple and efficient estimators for SV models with conditionally heavy-tailed error distributions, particularly the Student's t and...

This paper examines the interaction between quantitative easing (QE) and the securities lending facility (SLF) using a detailed dataset on Riksbank QE purchases, Swedish DMO SLF transactions and OTC repo deals. A theoretical model further shows how excess demand for assets and search frictions...

We study competition between a welfare-maximizing public platform and a profit-maximizing private platform in a two-sided payment market. We characterize the public platform's optimal pricing and show that it balances the benefits of increased competition against the welfare costs of network...

Professional inflation forecasts contain valuable information but exhibit information frictions. We extract improved forecasts by explicitly modeling these frictions using the US Survey of Professional Forecasters data, and find that forecast rigidity increases systematically with horizon,...

We develop a Trend-Cycle Bayesian VAR that jointly estimates the real neutral rate of interest, r∗t , and identifies monetary policy shocks. A key innovation is that cyclical shocks, notably monetary policy shocks, can affect the trend of macroeconomic variables, providing a way to assess...