Central Bank Losses and Public Debt: Constraints on Inflation Control
What happens when fighting inflation puts central-bank and government finances under strain? Historical evidence from Sweden links central-bank losses to higher inflation under fiat money. A complementary model shows how high public debt can constrain monetary tightening, even when government debt remains fully backed by future primary surpluses.
Measuring Global Tensions Using AI
Two papers draw on US and European newspapers to refine geopolitical risk measurement, distinguish economic tensions from armed conflict, and explore their consequences for markets, trade and inflation.
The AI Infrastructure Boom: Productive Investment or Financial Fragility?
Two new papers examine the scale and financing of AI infrastructure and how winner-take-most competition, leverage, and interconnected funding could turn a productivity boom into a destabilizing correction.
Measuring Expectations in Real Time: The Value and Limits of Kalshi Markets
Kalshi contracts offer a new market-based methodology for constructing continuously updated probability distributions for inflation, unemployment, economic growth and monetary-policy decisions. While these forecasts can perform as well as and sometimes better than traditional surveys and financial indicators, there is evidence of systematic pricing biases.
How Firms’ Cost Expectations Shape Prices
Two new studies examine how firms forecast their costs and translate those expectations into prices, revealing an important link between business beliefs and inflation.
Communicating Uncertainty: Fan Charts, Confidence, and Credibility
Two recent papers explore how central banks can communicate uncertainty without weakening credibility. They show that fan charts can protect expectations after forecast errors, while central banks should communicate more precisely when they are confident in their forecasts or when the public is skeptical of their forecasting ability.
Global Growth Holds, But Risks Are Building
AI investment and economic adaptation are supporting global resilience, even as energy shocks, fiscal pressures, geopolitical tensions and the risk of a technology-driven market correction cloud the outlook.
When Markets Drift from the Real Economy
New research examines why dividends and stock prices may temporarily depart from consumption fundamentals and what those departures reveal about future returns. Both papers revisit the weak empirical connection between consumption and financial markets by shifting attention from short-run correlations to long-run relationships.
Macroeconomic Risk: From Scenario Synthesis to Distributional Transmission
Two new papers offer complementary approaches to policy under uncertainty: the first integrates narrative scenarios with predictive distributions to assess whether a scenario set adequately captures the balance of risks; the second traces how identified shocks propagate through different economic states, endogenously reshaping scenario probabilities, tail risks, and the full distribution of outcomes.
Bank Heterogeneity and the Transmission of Monetary Tightening
New research shows how fixed-rate loan portfolios and unrealized securities losses can erode banks’ financial resilience, amplifying monetary-policy transmission particularly among institutions with limited capital and liquidity buffers.