Research
The Slope of the Phillips Curve: Evidence from U.S. States
Jonathon Hazell, Juan Herreno, Emi Nakamura, and Jón Steinsson
Quarterly Journal of Economics, 137(3), 1299-1344, August 2022.
Evidence from new state-level CPI data suggests the slope of the Phillips curve is small and was small during the 1980s. Volcker disinflation was mostly due to rapid downward shift in inflationary expectations.
Appendix — State Level CPI Data (BETA) -- ReadMe for State Level CPIs
A Plucking Model of Business Cycles
Stéphane Dupraz, Emi Nakamura, and Jón Steinsson
US unemployment strongly displays the asymmetry that increases in unemployment are followed by decreases of similar amplitude, while the amplitude of the increase is not related to the amplitude of the previous decrease. This fact favors the plucking view that recessions are shortfalls below a maximum level rather than fluctuations around a natural rate:
Women, Wealth Effects, and Slow Recoveries
Masao Fukui, Emi Nakamura, and Jón Steinsson
American Economic Journal: Macroeconomics, 15(1), 269-313, January 2023.
As female employment has converged towards male employment, the growth rate of female employment has slowed. This has led business cycle recoveries to become slower.
The Gift of Moving: Intergenerational Consequences of a Mobility Shock
Emi Nakamura, Jósef Sigurdsson, and Jón Steinsson
Review of Economic Studies, 89(3), 1557-1592, May 2022.
An volcanic eruption caused a third of the houses in a town to be covered by lava. People living in these houses were much more likely to move away permanently. For the children living in these houses, we estimate that being induced to move by this “lava shock” dramatically raised lifetime earnings and education.
What Do We Learn From Cross-Regional Empirical Estimates in Macroeconomics
Adam Guren, Alisdair McKay, Emi Nakamura, and Jón Steinsson
NBER Macroeconomics Annual 2020, 175-223.
Cross-Regional estimates contain both partial equilibrium effects and local general equilibrium effects. Estimates of local fiscal multipliers can be used to isolate the partial equilibrium effects. Also, since housing supply elasticities are more dispersed in the long-run than short-run, cities with low long-run housing supply elasticities can have larger construction booms in the short run.
Housing Wealth Effects: The Long View
Adam Guren, Alisdair McKay, Emi Nakamura, and Jón Steinsson
Review of Economic Studies, 88(2), 669-707, March 2021.
The housing wealth elasticity was no higher in the 2000s than before. The important role of housing in the 2000s boom-bust was due to the large movements in house prices as opposed to an unusually large housing wealth elasticity. We find no boom-bust asymmetry in the housing wealth elasticity.
Local House Price Sensitivity Estimates -- Online Appendix -- Replication Files
The Elusive Costs of Inflation: Price Dispersion during the U.S. Great Inflation
Emi Nakamura, Patrick Sun, Jón Steinsson, and Daniel Villar
Quarterly Journal of Economics, 133(4), 1933-1980, November 2018.
Evidence on the size of price changes indicates that price dispersion was no higher during the Great Inflation than in recent years. This suggests that the standard New Keynesian analysis of the welfare costs of inflation is wrong and its implications for the optimal inflation rate need to be reassessed.
Appendix -- Slides -- ELI Concordance -- Replication Material
High Frequency Identification of Monetary Non-Neutrality: The Information Effect
Emi Nakamura and Jón Steinsson
Quarterly Journal of Economics, 133(3), 1283-1330, August 2018.
Nominal and real rates respond one-for-one to FOMC announcements, while expected inflation responds very little. Expectations of growth rise after surprise monetary tightenings suggesting information effects are important.
Appendix -- Slides -- Replication Files -- Policy News Shocks (original sample period)
Policy News Shocks constructed by Acosta and Saia for an updated sample period may be found here.
Identification in Macroeconomics
Emi Nakamura and Jón Steinsson
Journal of Economic Perspectives, 32(3), 59-86, Summer 2018.
Often the causal effects we can estimate don’t answer the question we are interested in. But causal effects estimates can also be used to distinguish between competing structural models and in that way indirectly shed light on questions of interest.
The Discounted Euler Equation: A Note
Alisdair McKay, Emi Nakamura, and Jón Steinsson
Economica, 84, 820-831, October 2017.
The discounted Euler equation mutes the extent to which far future changes in interest rates affect current output and inflation. At the ZLB, the discounted Euler equation makes ‘deflationary death spirals’ less likely.
Informational Rigidities and the Stickiness of Temporary Sales
Eric Anderson, Benjamin Malin, Emi Nakamura, Duncan Simester, and Jón Steinsson
Journal of Monetary Economics, 90, 64-83, October 2017.
While most price changes are temporary sales, retail prices respond to a wholesale cost increase entirely through the regular price. Temporary sales are governed by complex contingent contracts between manufacturers and retailers, determined substantially in advance.
Growth-Rate and Uncertainty Shocks in Consumption: Cross-Country Evidence
Emi Nakamura, Dmitriy Sergeyev, and Jón Steinsson
American Economic Journal: Macroeconomics, 9(1), 1-39, January 2017.
Major economies experienced large growth-rate and uncertainty shocks during the 20th century. These shocks can help explain the high return on stocks relative to bonds.
The Power of Forward Guidance Revisited
Alisdair McKay, Emi Nakamura, and Jón Steinsson
American Economic Review, 106(10), 3133-3158, October 2016.
Standard models imply that far future interest rate changes have implausibly large effects on output and inflation. Allowing for precautionary savings and borrowing constraints can mute these effects, yielding a more plausible model of the monetary transmission mechanism
Are Chinese Growth and Inflation Too Smooth? Evidence from Engel Curves
Emi Nakamura, Jón Steinsson, and Miao Liu
American Economic Journal: Macroeconomics, 8(3), 113-144, July 2016.
Chinese growth was higher than official estimates suggest in the 1990s, but lower in the 2000s. These conclusions are based on shifting expenditure patterns of Chinese consumers.
Fiscal Stimulus in a Monetary Union: Evidence from U.S. Regions
Emi Nakamura and Jón Steinsson
American Economic Review, 104(3), 753-792, March 2014.
The response of output to state-level variation in prime military contract spending results in a local fiscal multiplier estimate of 1.5. This estimate suggests that the aggregate fiscal multiplier is large when monetary policy is unresponsive (e.g., at the zero lower bound).
Vox Article: Does Fiscal Stimulus Work in a Montary Union?
Data and Programs -- Technical Appendix -- Erratum -- How to Get Military Prime Contract Data
Crises and Recoveries in an Empirical Model of Consumption Disasters
Emi Nakamura, Jón Steinsson, Robert Barro, and José Ursúa
American Economic Journal: Macroeconomics, 5(3), 35-74, July 2013.
Many consumption disasters partially reverse in the longer run as the crisis that brings them on subsides. Yet, the long term effect of consumption disasters on the level of consumption is often substantial. Empirically realistic consumption disasters can explain a substantial fraction of the equity premium.
Web Appendix -- Data and Programs
Vox Article: Disasters, Recoveries, and the Equity Premium
Price Rigidity: Microeconomic Evidence and Macroeconomic Implications
Emi Nakamura and Jón Steinsson
Annual Review of Economics, 5, 133-163, 2013.
Sluggish price adjustment is a leading explanation for the large effects of demand shocks on output and, in particular, the effects of monetary policy on output. But simple statistics such as the frequency of price change can be a misleading guide to the sluggishness of the aggregate price level.
Lost in Transit: Product Replacement Bias and Pricing to Market
Emi Nakamura and Jón Steinsson
American Economic Review, 102(7), 3277-3316, December 2012.
40% of products in U.S. micro price data are replaced before they have a single price change. Price indexes based on price changes for identical items will thus suffer from “product replacement bias.” Correcting for this bias substantially increases exchange rate pass-through.
Price Setting in Forward-Looking Customer Markets
Emi Nakamura and Jón Steinsson
Journal of Monetary Economics, 58(3), 220-233, April 2011.
If households form habits in individual goods, firms want to commit to low prices in the future but gouge consumers in the present. In this setting, firms benefit from “committing to a sticky price.”
Monetary Non-Neutrality in a Multi-Sector Menu Cost Model
Emi Nakamura and Jón Steinsson
Quarterly Journal of Economics, 125(3), 961-1013, August 2010.
Incorporating heterogeneity in the price rigidity increases the degree of monetary non-neutrality in a menu cost model by a factor of three. Incorporating intermediate inputs adds another factor of three. With these additions, the menu cost model can generate substantial monetary non-neutrality