Authoritative takes on the most current and pressing issues in macroeconomics today.

The NBER Macroeconomics Annual provides a forum for leading economists to participate in important debates in macroeconomics and to report on major developments in macroeconomic analysis and policy.

The NBER Macroeconomics Annual brings together leading scholars to discuss five research papers on central issues in contemporary macroeconomics. First, Andrea Eisfeldt, Antonio Falato, and Mindy Xiaolan document the rise of a new class of worker that receives part of its labor income as equity-based compensation, its role in the recent decline in the labor share of income, and implications for the returns to skilled labor and the implied capital-skill complementarity. Next, Michael Bauer and Eric Swanson focus on monetary policy shocks and argue the correlation between estimated monetary surprises and previously available information can be explained by uncertainty about the parameters of the monetary policy rule. Using new data and methods they find effects of monetary policy on macroeconomic variables that are much larger than previously estimated. Job Boerma and Loukas Karabarbounis provide a framework for quantitatively exploring the gap in wealth between White and Black Americans over the past 150 years and examine the effectiveness of reparations as a tool for closing this gap. Guido Menzio considers workers who do not have rational expectations, and whose “stubborn” beliefs change the response of wages to technology shocks, resulting in sticky wages. He finds that the larger the fraction of workers with stubborn beliefs, the more volatile unemployment is. Finally, Rishabh Aggarwal, Adrien Auclert, Matthew Rognlie, and Ludwig Straub investigate the growth—particularly in the United States—of private savings, current account deficits, and fiscal deficits after 2020. They argue that fiscal deficits lead to large and persistent increases in private savings and current account deficits.
 

Provides a forum for leading economists to participate in important debates in macroeconomics and to report on major developments in macroeconomic analysis and policy.

The NBER Macroeconomics Annual presents research on central issues in contemporary macroeconomics. Martin Kornejew, Chen Lian, Yueran Ma, Pablo Ottonello, and Diego Perez investigate the role of bankruptcy institutions in mitigating the economic fallout of credit crunches following booms and find that efficient institutions reduce the adverse effect of credit tightening on GDP. Santiago Camara, Lawrence Christiano, and Hüsnü Dalgic analyze the global effects of US monetary policy shocks, with particular attention to trade channels and financial frictions, and find that tighter US monetary policy leads to more pronounced contractions in emerging markets than in advanced economies. David Altig, Alan Auerbach, Erin Eidschun, Laurence Kotlikoff, and Victor Yifan Ye assess the welfare costs of inflation through interactions with tax and benefit programs and show that imperfect indexation leads to welfare losses for some households and gains for others. Paul Beaudry, Chenyu Hou, and Franck Portier examine inflation dynamics and find that supply shocks and inflation expectations are pivotal for explaining them. Finally, Davide Debortoli and Jordi Galí develop a simplified two-agent new Keynesian (TANK) model to emulate more complex heterogeneous agent new Keynesian (HANK) models, and use it to examine the many channels through which heterogeneity influences aggregate fluctuations.

Provides a forum for leading economists to participate in important debates in macroeconomics and to report on major developments in macroeconomic analysis and policy.

This fortieth volume of the NBER Macroeconomics Annual includes four new papers on contemporary macroeconomic challenges and methodologies. Christopher Clayton, Matteo Maggiori, and Jesse Schreger examine how hegemonic powers use economic policies as tools of influence on target countries and show how the effectiveness of these policies depends on the target’s available alternatives and whether it can take advantage of those alternatives. José Luis Montiel Olea, Mikkel Plagborg-Møller, Eric Qian, and Christian Wolf provide essential guidance for practitioners choosing between vector autoregressions and local projections for estimating impulse response functions. Kristin Forbes, Jongrim Ha, and M. Ayhan Kose analyze inflation-output tradeoffs across rate cycles from the 1970s to the post-pandemic period using a new cross-country database that reveals how delayed but aggressive monetary responses can generate low-cost disinflation. Satyajit Chatterjee, Dean Corbae, Kyle Dempsey, and José-Victor Ríos-Rull explore the bidirectional relationship between credit scores and inequality over the life cycle, demonstrating through a dynamic general equilibrium model how full information credit scoring systems can improve welfare outcomes. In a keynote address commemorating the conference anniversary, Olivier Blanchard assesses the evolution of macroeconomic research over four decades, and finds substantial methodological convergence.