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This paper presents and discusses the estimates of the present value of corporate profits in the United States from 1984 to 2018. To value the expected income stream, it uses the long-range forecasts of professional forecasters for pre-tax corporate earnings and long-term Treasury note yields, sourced from the Blue Chip Economic Indicators survey. The appraised value of corporate earnings can point in real time at periods where market prices are deviating from valuations implied by expected earnings and interest rates. Market participants' forecasts seem to interpret most of the earnings fluctuations as permanent, underestimating the cyclical fluctuations The over-reaction to transitory shocks and changes in long-term outlook leads to swings in the valuation, in line with swings in the observed market prices.

Corporations --- Valuation. --- Stocks --- Valuation --- Finance --- Banks and Banking --- Investments: General --- Investments: Stocks --- Labor --- Macroeconomics --- Prices, Business Fluctuations, and Cycles: Forecasting and Simulation --- Wages, Compensation, and Labor Costs: General --- Investment --- Capital --- Intangible Capital --- Capacity --- Price Level --- Inflation --- Deflation --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Interest Rates: Determination, Term Structure, and Effects --- Labour --- income economics --- Investment & securities --- Wages --- Return on investment --- Asset prices --- Long term interest rates --- National accounts --- Prices --- Financial institutions --- Financial services --- Saving and investment --- Interest rates --- United States

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We develop a semi-structural new-Keynesian open-economy model, with separate food and non-food inflation dynamics, for forecasting and monetary policy analysis in low-income countries and apply it to Kenya. We use the model to run several policy-relevant exercises. First, we filter international and Kenyan data (on output, inflation and its components, exchange rates and interest rates) to recover a model-based decomposition of most variables into trends (or potential values) and temporary movements (or gaps)—including for the international and domestic relative price of food. Second, we use the filtration exercise to recover the sequence of domestic and foreign macroeconomic shocks that account for business cycle dynamics in Kenya over the last few years, with a special emphasis on the various factors (international food prices, monetary policy) driving inflation. Third, we perform an out-of-sample forecast to identify where the economy—and therefore policy—was likely headed given the inflationary pressures at the end of our sample (2011Q2). We find that while imported food price shocks have been an important source of inflation, both in 2008 and more recently, accommodating monetary policy has also played a role, most notably through its effect on the nominal exchange rate. The model correctly predicted that a policy tightening was required, although the actual interest rate increase was larger. We discuss implications for the use of model-based policy analysis in low income countries.

Food prices --- Inflation (Finance) --- Finance --- Natural rate of unemployment --- Food --- Agricultural prices --- Food industry and trade --- Econometric models. --- Prices --- Banks and Banking --- Foreign Exchange --- Inflation --- Macroeconomics --- Production and Operations Management --- Monetary Policy --- Central Banks and Their Policies --- Macroeconomic Aspects of International Trade and Finance: Forecasting and Simulation --- Fiscal and Monetary Policy in Development --- Price Level --- Deflation --- Agriculture: Aggregate Supply and Demand Analysis --- Macroeconomics: Production --- Interest Rates: Determination, Term Structure, and Effects --- Currency --- Foreign exchange --- Real exchange rates --- Output gap --- Real interest rates --- Production --- Financial services --- Economic theory --- Interest rates --- Kenya

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Assessing House Prices with Prudential and Valuation Measures.

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In this paper we provide tools for assessing the house prices and housing valuation. We develop two approaches: (i) borrowing capacity approach, and (ii) intrinsic value approach. The borrowing capacity of households, together with their down payment, implies how much housing they can attain. In the intrinsic value approach, property value is viewed as a discounted present value of adjusted net rental income. Our approach does not involve a complex econometric model and only widely available data are used. The proposed indicators can guide households, financial markets and macroprudential authorities in their understanding of house prices development. To illustrate the concepts, we analyze the housing prices in the Czech Republic and assess the degree of market over-and undervaluation.

Real property --- Land valuation --- Real estate appraisal --- Valuation of land --- Valuation. --- Infrastructure --- Macroeconomics --- Real Estate --- Industries: Financial Services --- Financial Risk Management --- Prices, Business Fluctuations, and Cycles: Forecasting and Simulation --- Housing Supply and Markets --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Personal Income, Wealth, and Their Distributions --- Economic Development: Urban, Rural, Regional, and Transportation Analysis --- Housing --- International Financial Markets --- Property & real estate --- Finance --- Housing prices --- Personal income --- Loans --- Prices --- Financial institutions --- National accounts --- Asset valuation --- Asset and liability management --- Income --- Saving and investment --- Asset-liability management --- Czech Republic

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This paper outlines an approach to assess uncertainty around a forecast baseline as well as the impact of alternative policy rules on macro variability. The approach allows for non-Gaussian shock distributions and non-linear underlying macroeconomic models. Consequently, the resulting distributions for macroeconomic variables can exhibit skewness and fat tails. Several applications are presented that illustrate the practical implementation of the technique including confidence bands around a baseline forecast, the probabilities of global growth falling below a specified threshold, and the impact of alternative fiscal policy reactions functions on macro variability.

Banks and Banking --- Macroeconomics --- Money and Monetary Policy --- Public Finance --- Monetary Policy --- Fiscal Policy --- Interest Rates: Determination, Term Structure, and Effects --- Macroeconomics: Production --- Monetary economics --- Finance --- Interest rate floor --- Production growth --- Zero lower bound --- Fiscal policy --- Monetary policy --- Production --- Financial services --- Interest rates --- Economic theory --- United States