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We explore the long-term impact of economic booms on labor market outcomes using a novel approach based on revisions to professional forecasts over the past 30 years for 34 advanced economies. We find that when employment rises unexpectedly, forecasters typically raise their long-term forecasts of employment by more than one-for-one and also expect a strong rise in labor force participation, suggesting more persistent effects than is traditionally assumed. Economic booms associated with changes in aggregate demand, when inflation is rising and unemployment falling unexpectedly, also come with persistent long-term effects on expected employment and labor force participation, suggesting positive hysteresis. Our forecast evaluation tests indicate that forecasters are, on average, unbiased in their assessment of these positive, persistent effects.

Monetary policy. --- Monetary management --- Economic policy --- Currency boards --- Money supply --- Labor --- Business Fluctuations --- Cycles --- Studies of Particular Policy Episodes --- General Outlook and Conditions --- Demand and Supply of Labor: General --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Unemployment: Models, Duration, Incidence, and Job Search --- Labor Force and Employment, Size, and Structure --- Labor Standards: Labor Force Composition --- Labour --- income economics --- Labor markets --- Unemployment rate --- Labor force --- Labor force participation --- Labor market --- Economic theory --- United States --- Income economics

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Hysteresis in Labor Markets? Evidence from Professional Long-Term Forecasts.

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We present new evidence on how heterogeneity in banks interacts with monetary policy changes to impact bank lending. Using an exogenous policy measure identified from narratives on FOMC intentions and real-time economic forecasts, we find much greater heterogeneity in U.S. bank lending responses than that found in previous research based on realized federal funds rate changes. Our findings suggest that studies using realized monetary policy changes confound the monetary policy’s effects with those of changes in expected macrofundamentals. We also extend Romer and Romer (2004)’s identification scheme, and expand the time and balance sheet coverage of the U.S. banking sample.

Bank loans. --- Monetary policy. --- Monetary management --- Economic policy --- Currency boards --- Money supply --- Bank credit --- Loans --- Accounting --- Banks and Banking --- Money and Monetary Policy --- Industries: Financial Services --- Inflation --- Financial Markets and the Macroeconomy --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Public Administration --- Public Sector Accounting and Audits --- Price Level --- Deflation --- Banking --- Monetary economics --- Finance --- Financial reporting, financial statements --- Macroeconomics --- Financial statements --- Monetary aggregates --- Money --- Financial institutions --- Public financial management (PFM) --- Prices --- Banks and banking --- Credit --- Finance, Public --- United States

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The negative and stable relationship between an economy’s aggregate demand conditions and overall unemployment is well-documented. We show that there is a large degree of heterogeneity in the cyclical sensitivities of unemployment across worker and economy groups. First, unemployment is more than twice as sensitive to aggregate demand in advanced as in emerging market and developing economies. Second, youth’s unemployment is twice as sensitive as that of adults’. Third, women’s unemployment is significantly less sensitive to demand than men’s in advanced economies. These findings point to the highly unequal impacts of the business cycle across worker and economy groups.

United States --- Macroeconomics --- Economics: General --- Labor --- Women''s Studies' --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Informal Economy --- Underground Econom --- Demand and Supply of Labor: General --- Labor Force and Employment, Size, and Structure --- Particular Labor Markets: General --- Unemployment: Models, Duration, Incidence, and Job Search --- Labor Standards: Labor Force Composition --- Economics of Gender --- Non-labor Discrimination --- Economic & financial crises & disasters --- Economics of specific sectors --- Labour --- income economics --- Gender studies --- women & girls --- Labor force participation --- Cyclical unemployment --- Women --- Gender --- Currency crises --- Informal sector --- Economics --- Labor market --- Economic theory --- Income economics --- Women & girls --- Women's Studies

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Has the unprecedented financial globalization of recent years changed the behavior of capital flows across countries? Using a newly constructed database of gross and net capital flows since 1980 for a sample of nearly 150 countries, this paper finds that private capital flows are typically volatile for all countries, advanced or emerging, across all points in time. This holds true across most types of flows, including bank, portfolio debt, and equity flows. Advanced economies enjoy a greater substitutability between types of inflows, and complementarity between gross inflows and outflows, than do emerging markets, which reduces the volatility of their total net inflows despite higher volatility of the components. Capital flows also exhibit low persistence, across all economies and across most types of flows. Inflows tend to rise temporarily when global financing conditions are relatively easy. These findings suggest that fickle capital flows are an unavoidable fact of life to which policymakers across all countries need to continue to manage and adapt.

Capital movements. --- International finance. --- International monetary system --- International money --- Finance --- International economic relations --- Capital flight --- Capital flows --- Capital inflow --- Capital outflow --- Flight of capital --- Flow of capital --- Movements of capital --- Balance of payments --- Foreign exchange --- International finance --- Exports and Imports --- Finance: General --- International Investment --- Long-term Capital Movements --- Current Account Adjustment --- Short-term Capital Movements --- Economic Development: Financial Markets --- Saving and Capital Investment --- Corporate Finance and Governance --- General Financial Markets: General (includes Measurement and Data) --- International economics --- Emerging and frontier financial markets --- Foreign direct investment --- Private capital flows --- Capital inflows --- Financial markets --- Capital movements --- Financial services industry --- Investments, Foreign --- United States