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Browsing PERC Publications by Issue Date, starting with "2022"
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Item Market Risk and Retirement Plans(Private Enterprise Research Center, Texas A&M University, 2022-01-13) Jansen, Dennis W.; Rettenmaier, Andrew J.At retirement, the goal of most workers is to be able to pay their anticipated living expenses using their employer-sponsored retirement plan, savings, and Social Security. Today, most workers’ employer-sponsored retirement plans are defined contribution, or 401k, plans, yet some workers are still enrolled in defined benefit plans, otherwise known as pensions. In this issue of PERCspectives on Policy, Dennis Jansen and Andrew Rettenmaier discuss how both types of plans are subject to market risk by simulating the investment outcomes for each plan under similar constraints. The authors illustrate that the pension plan delivers a defined benefit to its participants that exceeds the benefit produced by a defined contribution plan in 60% the simulated outcomes, but the pension plan itself falls short in 46% of the outcomes and also has the distinct disadvantage of non-portability.Item Economic Indicators of the College Station-Bryan MSA, January 2022(Private Enterprise Research Center, Texas A&M University, 2022-01-24) Bullock, Ashley; Jansen, Dennis W.; Navarro, Carlos I.; Rettenmaier, Andrew J.The Business-Cycle Index increased by 0.8% from October to November 2021. The local unemployment rate decreased to 3.9% in November from 4.0% in October. Local nonfarm employment increased slightly by 0.4% in November and was 3.2% lower than its pre- pandemic high in February 2020. Local real taxable sales increased 2.3% from October to November 2021 and were 18.1% higher than the same month in 2020. Real Gross Domestic Product (GDP) in the College Station-Bryan MSA shrank 1.4% in 2020 due to the pandemic recession, but it has doubled in size since 2001.Item Interview with Sarah Zubairy(Private Enterprise Research Center, Texas A&M University, 2022-02-08) Bullock, AshleyIn the Winter 2022 issue of PERCspectives on Research, Sarah Zubary, PERC's Shirley A. Lynch Fellow, shares her experiences working at the Bank of Canada, being selected as a prestigious Chancellor’s Enhancing Development and Generating Excellence in Scholarship Fellow, and her research on household indebtedness and pensions in OECD countries.Item Household Debt and the Effect of Fiscal Policy(Private Enterprise Research Center, Texas A&M University, 2022-02-08) Zubairy, Sarah; Alpanda, Sami; Song, HyunjiSince the Great Recession, policymakers have increasingly relied on fiscal policy to stabilize and stimulate the economy. This Winter 2022 issue of PERCspectives on Research summarizes a paper by PERC’s Shirley A. Lynch Fellow Sarah Zubairy, along with co-authors Sami Alpanda and Hyunji Song, that investigates how the effects of government spending policy shocks depend on the balance sheet position of households by examining spending by householdsthat rent, hold a mortgage, or own their homes.Item Economic Indicators of the College Station-Bryan MSA, February 2022(Private Enterprise Research Center, Texas A&M University, 2022-02-21) Bullock, Ashley; Jansen, Dennis W.; Navarro, Carlos I.; Rettenmaier, Andrew J.The Business-Cycle Index increased by 0.8% from November to December 2021. The local unemployment rate decreased to 3.8% in December from 3.9% in November. Local nonfarm employment increased by 0.6% in December and was 2.5% lower than its pre- pandemic high in February 2020. Local real taxable sales slightly decreased 0.6% from November to December 2021 but were 14.7% higher than the same month in 2020. Nationally, the total number of air travelers in 2021 rebounded to 69% of the 2019 count, with November and December rising to 84% of the same months in 2019.Item Economic Indicators of the College Station-Bryan MSA, March 2022(Private Enterprise Research Center, Texas A&M University, 2022-03-28) Bullock, Ashley; Jansen, Dennis W.; Navarro, Carlos I.; Rettenmaier, Andrew J.The Business-Cycle increased 0.8% from December 2021 to January 2022. The local unemployment rate decreased to 3.7% in January 2022 from 3.8% in December 2021. Local nonfarm employment was revised upwards with the March release, increasing by 0.4% in January and was 1.33% higher than its pre-pandemic high in February 2020. Local real taxable sales decreased 1.2% from December 2021 to January 2022 but were 6.1% higher than the same month in 2021. Oil and gas price increases have resulted in rising state oil and gas production tax revenues. Locally and nationally, the numbers of air travelers in February 2022 were about 80% of the February 2020 counts.Item Alamos Alliance XXIX Executive Summary(Private Enterprise Research Center, Texas A&M University, 2022-04-07) Navarro, Carlos I.In this summary of the 29th edition of Alamos Alliance, participants and panelists addressed the issue of isolationist policies in response to the economic conditions caused by the Covid-19 pandemic, high inflation, and Russia’s invasion of Ukraine. The main topics of discussion include the return of ‘stagflation’ and the perils of fiscal mismanagement; the supply chain ‘mess,’ near-shoring and the future of open trade; and lost opportunities and radical uncertainty in Latin America. Speakers included Hernando de Soto (keynote), as well as Manuel Hinds, author of In Defense of Liberal Democracy, with a follow-up discussion led by Luis Rubio, Chairman of the Board of CIDAC-México Evalúa.Item College Station-Bryan Economy Presentation, Updated 4/7/2022(Private Enterprise Research Center, Texas A&M University, 2022-04-11) Jansen, Dennis W.; Rettenmaier, Andrew J.The presentation includes information on: The January 2022 Business-Cycle Index and Business-Cycle for College Station-Bryan; College Station-Bryan unemployment rates dropped to 3.7% in February 2022 and was tied for the fourth-lowest rate among other Texas MSAs; Nonfarm employment data from the past fifteen years is reported for the College Station-Bryan MSA and was recently revised 3.6% higher than the previous December 2021 count; Texas state oil and gas production taxes are shown from September 2019 to March 2022; The volatility in both natural gas and oil production in Texas is shown from the beginning of 2019 through March 2022; A comparison of indexed nonfarm employment prior to and after the Bureau of Labor Statistics data revision for the U.S., Texas and select Texas MSAs from prior to the pandemic through February 2022; A comparison of employment by industry prior to and after the data revision from prior to the pandemic through February 2022; Inflation rates since 2010, including the Consumer Price Index, and Personal Consumption Expenditures Price Index, as well as inflation expectations; Wages, real (inflation-adjusted) wages, and prices prior to the pandemic through February 2022.Item The Fed’s Slow Realization of the Inflation Problem(Private Enterprise Research Center, Texas A&M University, 2022-04-12) Jansen, Dennis W.; Rettenmaier, Andrew J.For the 30 years prior to the peak of the previous business cycle in February 2020, monthly inflation rates based on the consumer price index averaged 2.4% while the personal consumption expenditures price index averaged just 2% - very close to the Federal Reserve’s stated goal of 2% inflation. In recent months, inflation has soared to levels not seen in decades. Here, the authors show inflation rates since 1960 and discuss how the Federal Open Market Committee’s inflation projections since 2019 have continually been revised, as well as the actions taken (or lack of) by the Fed to curb rising inflation.Item Economic Indicators of the College Station-Bryan MSA, April 2022(Private Enterprise Research Center, Texas A&M University, 2022-04-25) Bullock, Ashley; Jansen, Dennis W.; Rettenmaier, Andrew J.; Sinha, Somali GhoshThe Business-Cycle increased 0.3% from January 2022 to February 2022. The local unemployment rate for February remained the same as in January at 3.7%. Local nonfarm employment in February decreased slightly from January by 0.08%, and was 1.39% higher than its pre- pandemic high in February 2020. Local real taxable sales decreased 0.5% from January to February 2022, but this measure was 4.72% higher than the same month in 2020. Local employment in Leisure and Hospitality, previously estimated to be down by 20%, was substantially revised upwards, and is now estimated to be 97.7% of its pre-pandemic level.Item Liqun Liu Interview(Private Enterprise Research Center, Texas A&M University, 2022-05-10) Bullock, AshleyIn the Spring 2022 issue of PERCspectives on Research, Research Scientist Liqun Liu shares his educational and career highlights from Texas A&M University and the Private Enterprise Research Center, as well as his research in public policy analysis, cost-benefit analysis and decision making.Item Portfolio Choice in the Model of Expected Utility With a Safety-First Component(Private Enterprise Research Center, Texas A&M University, 2022-05-10) Jansen, Dennis W.; Liu, LiqunWhereas the majority of economists interpret risk as dispersion or variation in an outcome variable, many everyday decision makers tend to associate risk with the outcome failing to meet a certain “safety� level. Here, the spring 2022 issue of PERCspectives on Research summarizes the model used and how it takes into account a decision maker’s concern about the final wealth distribution per se is captured by the expected utility of the final wealth, and his concern about meeting a safety wealth level is captured by the probability of final wealth exceeding the safety level. The model finds that a positive expected excess return remains sufficient for investing a positive amount in the risky asset except in the special situation where the safety wealth level coincides with the wealth obtained when the entire initial wealth is invested in the riskless asset.Item Evaluating Forecast Performance with State Dependence(Private Enterprise Research Center, Texas A&M University, 2022-05-16) Sekhposyan, Tatevik; Odendah, Florensl; Rossi, BarbaraIn forecasting models, usually no single model emerges as the best overall, as forecasting performance is prone to instabilities because the economic mechanisms providing the data work better on one model during some periods than others (state-dependent). Here, the authors propose a new forecast evaluation methodology to assess models’ absolute and relative forecasting performance when the model is a state-dependent function of economic variables. Results show that these tests uncover “pockets of predictability� in U.S. equity premia and forecasts significantly better than the benchmark forecast when real GDP growth is low. These tests can be applied to relative forecast comparisons, forecast encompassing, efficiency, and, more generally, moment-based tests of forecast evaluation.Item Markov Switching Rationality(Private Enterprise Research Center, Texas A&M University, 2022-05-23) Sekhposyan, Tatevik; Odendah, Florensl; Rossi, BarbaraThe authors propose novel tests for the detection of Markov switching deviations from forecast rationality. Existing forecast rationality tests either focus on constant deviations from forecast rationality over the full sample or are constructed to detect smooth deviations based on non-parametric techniques. In contrast, these proposed tests are parametric and have an advantage in detecting abrupt departures from unbiasedness and efficiency, which are demonstrated with Monte Carlo simulations. Using the proposed tests, the authors investigate whether Blue Chip Financial Forecasts for the Federal Funds Rate are unbiased. These tests find evidence of a state-dependent bias: forecasters tend to systematically overpredict interest rates during periods of monetary easing, while the forecasts are unbiased otherwise. It was found that similar state-dependent bias is also present in market-based forecasts of interest rates, but not in the forecasts of real GDP growth and GDP deflator-based inflation. Results emphasize the special role played by monetary policy in shaping survey interest rate expectations above and beyond macroeconomic fundamentals.Item Economic Indicators of the College Station-Bryan MSA, May 2022(Private Enterprise Research Center, Texas A&M University, 2022-05-31) Bullock, Ashley; Jansen, Dennis W.; Rettenmaier, Andrew J.; Sinha, Somali GhoshThe Business-Cycle increased 1.2% from February 2022 to March 2022. The local unemployment rate decreased to 3.4% in March 2022 from 3.6% in February 2022. Local nonfarm employment in March increased by 0.3% from February and was 1.71% higher than its pre-pandemic high in February 2020. Local real taxable sales decreased 0.3% from February 2022 to March 2022, but were 0.6% higher than the same month in 2021. Fiscal year 2022 inflation adjusted Texas tax revenues through April are 20.8% higher than the same period in fiscal year 2021.Item The Pandemic Federal Reserve: The First Two Years(Private Enterprise Research Center, Texas A&M University, 2022-06-07) Saving, Thomas R.Due to the Covid-19 pandemic, developed world governments engaged in unprecedented spending. Federal Reserve securities holdings were an astounding 36.5% of the nation’s Gross Domestic Product after two pandemic years. These tremendous increases in Federal Reserve holdings resulted in bank reserves that exceeded $4 trillion at their peak and even after some reductions still stood at $3.9 trillion after two years of the pandemic. During the Great Recession, bank excess reserves reached $2.6 trillion but inflation remained below 2% through paying interest on bank reserves. But now we have a bank reserve problem that is 25% larger and the question is: can the Federal Reserve set an IOR high enough to stave off an inflationary increase in the money stock? In policy study 2201, Thomas Saving examines how Federal Reserve assets and liabilities have changed during the pandemic; fluctuations in the M2 money supply; as well as the relationship between short rate Treasuries and the IOR.Item Economic Indicators of the College Station-Bryan MSA, June 2022(Private Enterprise Research Center, Texas A&M University, 2022-06-20) Bullock, Ashley; Jansen, Dennis W.; Rettenmaier, Andrew J.; Sinha, Somali GhoshThe Business-Cycle Index increased 1.1% from March 2022 to April 2022. The local unemployment rate decreased to 3.3% in April 2022 from 3.4% in March 2022. Local nonfarm employment in April increased by 0.5% from March and was 2.3% higher than its pre- pandemic high in February 2020. Local real taxable sales increased by 3.8% from March 2022 to April 2022 and were 6.4% higher than the same month in 2021. Real total quarterly wages in the fourth quarter of 2021 increased 8.9% from the previous quarter. State Government employment in College Station-Bryan has averaged around 26% of total employment in recent years.Item Does the Elderly's Private Pension Ownership Intensify Aggregate Equity Demand? Empirical Evidence in the U.S.(Private Enterprise Research Center, Texas A&M University, 2022-07-05) Jansen, Dennis W.; Kim, Sei-Wan; Kim, Young-Min; Lu, YanxinIn this paper, the authors investigate how the old generation income structure affects aggregate equity purchases, using Flows of Funds Accounts and Survey of Consumer Finances. Results suggest that the risk aversion that increases with age could be modified to incorporate the old’s pension ownership. In particular, private pension income to elder households are related to increased aggregate equity purchases, even considering other pension and all other income. In this sense, private pensions are a ‘stepping-stone’ to increased equity investment in U.S. households.Item Can Electricity Demand Help Us Monitor the Economy?(Private Enterprise Research Center, Texas A&M University, 2022-07-12) Sekhposyan, Tatevik; Kouchekinia, NoahThe recent pandemic has emphasized the importance of high-frequency economic variables. Electricity consumption, particularly important as a production input, is one such variable. However, electricity consumption typically exhibits marked seasonal fluctuations, which mask the fluctuations that are interesting from a business cycle perspective. In policy study 2202, PERC Professor Tatevik Sekhposyan and coauthor Noah Kouchekinia show that after capturing the seasonal effects associated with weather and calendar events, electricity consumption can provide a rapid reflection of the state of the economy. This may be particularly valuable for measuring regional economic activity, where official statistics are slower to arrive.Item Economic Indicators of the College Station-Bryan MSA, July 2022(Private Enterprise Research Center, Texas A&M University, 2022-07-21) Bullock, Ashley; Jansen, Dennis W.; Rettenmaier, Andrew J.; Sinha, Somali GhoshThe Business-Cycle Index increased 0.2% from April 2022 to May 2022. The local unemployment rate remained unchanged at 3.3% in May 2022. Local nonfarm employment in May decreased by 0.3% from April but was 1.87% higher than its pre-pandemic high in February 2020. Local real (inflation-adjusted) taxable sales increased by 0.3% from April 2022 to May 2022 and were 7.2% higher than the same month in 2021. Local housing prices have risen substantially since the beginning of 2021, similar to the statewide pace.