Inflation
Through the Looking-Glass: An analytical and empirical view of inflation determination (and forecasting) based on the workhorse open-economy New Keynesian model laid out in Martínez-García and Wynne (2010).
The economic relationship between domestic inflation and domestic economic activity no longer seems to work for modeling inflation or as a tool for inflation forecasting. In this area of research, my work shows in turn that the Phillips curve is alive and well, after all—so long as one considers an open-economy specification rather than the standard closed-economy one that has been prevalent in much of the literature.
The major contribution of this research is to show that incorporating the international linkages of an economy with respect to the rest of the world is important—both in theory and in practice—to explain the dynamics of inflation and for understanding the monetary policy trade-offs of an increasingly more integrated world.
Research Publications
Refereed Journals
"Forecasting Inflation in Open Economies: What Can a NOEM Model Do?" (with Roberto Duncan), Journal of Forecasting, Vol. 42 (3), pp. 481–513, March 2023. A working paper version of this article appeared as Globalization and Monetary Policy Institute Working Paper no. 235, April 2015 (Revised: December 2022)
This paper also circulated as: "Forecasting Local Inflation with Global Inflation: When Economic Theory Meets the Facts" (with Roberto Duncan), Globalization and Monetary Policy Institute Working Paper no. 235, April 2015
A background paper with supplementary materials appeared as Globalization and Monetary Policy Institute Working Paper no. 235a, December 2022
"Flexible Average Inflation Targeting: How Much Is U.S. Monetary Policy Changing?" (with Jarod Coulter and Roberto Duncan), Economía, Vol. 45 (89), pp. 102-149, August 2022. A working paper version of this article appeared as Globalization and Monetary Policy Institute Working Paper no. 417, July 2022
"Introduction to Special Issue 2022-1: Recent Developments in Inflation Dynamics" (with Roberto Duncan), Economía, Vol. 45(89), August 2022.
"Mind the Gap!—A Monetarist View of the Open-Economy Phillips Curve" (with Ayse Kabukcuoglu Dur), Journal of Economic Dynamics and Control, Vol. 117, 2020. A working paper version of this article appeared as Globalization and Monetary Policy Institute Working Paper no. 392, June 2020
A background paper with the derivations of the model and supplementary results appeared as Globalization and Monetary Policy Institute Working Paper no. 392app, June 2020
An earlier version of this paper circulated as: "What Helps Forecast U.S. Inflation? - Mind the Gap!" (with Ayse Kabukcuoglu), Koç University-TUSIAD Economic Research Forum Working Papers No. 1615, December 2016
"New Perspectives on Forecasting Inflation in Emerging Market Economies: An Empirical Assessment" (with Roberto Duncan), International Journal of Forecasting, Vol. 35(3), pp. 1008-1031, 2019. A working paper version of this article appeared as Globalization and Monetary Policy Institute Working Paper no. 388, January 2018
Video presentation of the paper 'New Perspectives on Forecasting Inflation in Emerging Market Economies: An Empirical Assessment', Federal Reserve Bank of Dallas, March 14, 2018
"As Good as a Random Walk: Inflation Forecasting in Emerging Market Economies" (with Roberto Duncan), VoxEU, June 8, 2018
"Inflation as a Global Phenomenon--Some Implications for Inflation Modelling and Forecasting" (with Ayse Kabukcuoglu), Journal of Economic Dynamics and Control, Vol. 87(2), pp. 46-73, 2018. A working paper version of this article appeared as Globalization and Monetary Policy Institute Working Paper no. 261, January 2016 (Revised: November 2017)
A background paper with the derivations of the model and supplementary results appeared as Globalization and Monetary Policy Institute Working Paper no. 261a, November 2017
Video presentation of the paper 'Inflation as a Global Phenomenon--Some Implications for Inflation Modelling and Forecasting', Federal Reserve Bank of Dallas, October 17, 2017
(For code and dataset files, contact the author.)
Book Chapters
"Exploring the Nexus between Inflation and Globalization under Inflation Targeting through the Lens of New Zealand's Experience" (with Ayse Kabukcuoglu and Mehmet Ali Soytas), in Current Approaches in Education and Economics, Part II. Current Approaches in Economic Studies, Chapter V, pp. 55-74, edited by Hasan Göksu. SRA Academic Publishing, October 2017. A working paper version of this article appeared as Globalization and Monetary Policy Institute Working Paper no. 308, March 2017
(For code and dataset files, contact the author.)
"The Global Component of Local Inflation: Revisiting the Empirical Content of the Global Slack Hypothesis with Bayesian Methods," in Monetary Policy in the Context of Financial Crisis: New Challenges and Lessons, pp. 51-112, edited by William Barnett and Fredj Jawadi. Emerald Group Publishing Limited, July 2015. A working paper version of this article appeared as Globalization and Monetary Policy Institute Working Paper no. 225, February 2015
(For code and dataset files, contact the author.)
"Global Slack as a Determinant of U.S. Inflation" (with Mark A. Wynne), in Globalisation and Inflation Dynamics in Asia and the Pacific, edited by the Bank for International Settlements, Vol. 70, pp. 93-98. Basel, Switzerland: Bank for International Settlements, 2013. A working paper version of this article appeared as Globalization and Monetary Policy Institute Working Paper no. 123, August 2012
Read coverage of this work from The Economist (September 19, 2012)
Working Papers
Business Cycle Dynamics and Monetary Policy
"Living Up to Expectations: Central Bank Credibility, the Effectiveness of Forward Guidance, and Inflation Dynamics Post-Global Financial Crisis" (with Stephen J. Cole and Eric R. Sims), Globalization and Monetary Policy Institute Working Paper no. 424, September 2023
A version of this paper appeared as NBER working paper no. 31777, October 2023
(For code and dataset files, contact the author.)
Open-Economy Macroeconomics
"Globalization and Monetary Policy: An Introduction," Globalization and Monetary Policy Institute Working Paper no. 11, April 2008
Inflation Dynamics and Globalization
"Just Do IT? An Assessment of Inflation Targeting in a Global Comparative Case Study" (with Roberto Duncan and Patricia Toledo)
(For code and dataset files, contact the author.)
Federal Reserve System Publications
"Disparate Supply-Side Forces Gave U.S. Economy an Edge" (with Braden Strackman), Dallas Fed Economics Blog, March 26, 2024
Media and online coverage: Central Banking
"Gazing at R-star: Gauging U.S. Monetary Policy Via the Natural Rate of Interest," Dallas Fed Economics Blog, July 3, 2023
"Monetary Policy at a Crossroads: Donald Kohn on Controlling Inflation, Ukraine Effects, Volcker-Era Lessons," Dallas Fed Economics Blog, July 5, 2022
"Russia’s War on Ukraine Will Leave Scars on U.S., World Economies" (with Jarod Coulter), Dallas Fed Economics Blog, May 17, 2022
"The Global Slack Hypothesis" (with Mark A. Wynne), Federal Reserve Bank of Dallas Staff Papers, No. 10, September 2010
Presentation 'Global Output Gaps: Wave of the Future?' (by James Bullard), March 28, 2012, with references to this article
Read coverage on the determinants of inflation in the Financial Times (March 30, 2015) with references to the meeting of the Federal Open Market Committee (FOMC) of December 15-16, 2009 (see FOMC documents here and here)
"A Historical Look at the Labor Market During Recessions" (with Janet Koech), Federal Reserve Bank of Dallas Economic Letter, Vol. 5, No. 1, January 2010
Other Research Publications
"Exploring the Economics of Russia's War with Ukraine in One Minute", Video Update, March 29, 2022
"Interest Rate Expectations Shape the Federal Reserve’s Path of Lift-off" (with Rachel Doehr), VoxEU, March 6, 2022
"As Good as a Random Walk: Inflation Forecasting in Emerging Market Economies" (with Roberto Duncan), VoxEU, June 8, 2018
"Lecture Notes on Globalization and Monetary Policy (Rules)," April 2008
Other Professional Experience
Guest Editor, Special Issue of the ECONOMÍA Journal: Recent Developments in Inflation Dynamics (July 2022)
Policy Presentations
FOMC
Read a discussion of the monetary policy framework of the Federal Reserve, the ECB, the Bank of England, and the Bank of Japan at "Monetary Policy and Economic Performance since the Financial Crisis" (with Dario Caldara, Etienne Gagnon, and Christopher J. Neely), Federal Reserve Bank of St. Louis Review, 103(4), Fourth Quarter 2021, pp. 425-460. A working paper version of this article appeared as Globalization and Monetary Policy Institute Working Paper no. 397, August 2020
This paper also circulated as: "Monetary Policy and Economic Performance since the Financial Crisis" (with Dario Caldara, Etienne Gagnon, and Christopher J. Neely), Finance and Economics Discussion Series 2020-065. Washington: Board of Governors of the Federal Reserve
The analysis in this paper was presented to the Federal Open Market Committee as background for its discussion of the Federal Reserve’s review of monetary policy strategy, tools, and communication practices. The Committee discussed issues related to the review at five consecutive meetings from July 2019 to January 2020. References to the FOMC’s current framework for monetary policy refer to the framework articulated in the Statement on Longer-Run Goals and Monetary Policy Strategy first issued in January 2012 and reaffirmed each January, most recently in January 2019. The conclusions and revision to the Federal Reserve's Monetary Policy Framework were announced by Chair Powell at the Jackson Hole Symposium on August 26, 2020: https://www.federalreserve.gov/newsevents/speech/powell20200827a.htm
Related blog post: "Fed’s New Inflation Targeting Policy Seeks to Maintain Well-Anchored Expectations" (with Jarod Coulter and Valerie Grossman), Dallas Fed Economics Blog, April 6, 2021
Read a discussion of the global slack hypothesis in the minutes of the meeting of the Federal Open Market Committee (FOMC) of December 15-16, 2009 (see FOMC documents here and here)