Financial institutions

FEDS Paper: Decomposing Recent Employment Gains Among Disabled Workers

10/15/2025 Federal Reserve Central banks

Hsinyu (Samuel) Tseng, Douglas A. WebberWe use the longitudinal component of the Current Population Survey to compare transition rates into and out of disability and employment prior to and after the onset of the pandemic. We find that one-third of the increased employment rate among disabled people is due to the excess incidence of disability seen following the pandemic, while the other two-thirds is attributable to higher participation among people whose disabilities were unrelated to the pandemic.

Decomposing US economic fluctuations: a trend-cycle approach

10/14/2025 European Central Bank Central banks

This paper proposes a unified framework to study the permanent and transitory origins of US economic fluctuations. The model provides a reasonable account of the evolution of the economy in the post-war period and of the recent inflation episode. Overall, it constitutes a comprehensive framework to offer policy guidance and a flexible empirical counterpart to more heavily-parametrized structural models.

Decomposing US economic fluctuations: a trend-cycle approach

10/14/2025 European Central Bank Central banks

This paper proposes a unified framework to study the permanent and transitory origins of US economic fluctuations. The model provides a reasonable account of the evolution of the economy in the post-war period and of the recent inflation episode. Overall, it constitutes a comprehensive framework to offer policy guidance and a flexible empirical counterpart to more heavily-parametrized structural models.

Inflation and monetary policy in medium-sized New Keynesian DSGE models

10/13/2025 European Central Bank Central banks

This chapter of the Research Handbook of Inflation (2025) reviews the evolution and current relevance of medium-scale New Keynesian Dynamic Stochastic General Equilibrium (DSGE) models, which serve as part of the core analytical framework in central banks and academic macroeconomics. The chapter assesses their capacity to analyse inflation dynamics, monetary transmission mechanisms, and policy interventions.

Inflation and monetary policy in medium-sized New Keynesian DSGE models

10/13/2025 European Central Bank Central banks

This chapter of the Research Handbook of Inflation (2025) reviews the evolution and current relevance of medium-scale New Keynesian Dynamic Stochastic General Equilibrium (DSGE) models, which serve as part of the core analytical framework in central banks and academic macroeconomics. The chapter assesses their capacity to analyse inflation dynamics, monetary transmission mechanisms, and policy interventions.

Fiscal drag in theory and in practice: a European perspective

10/09/2025 European Central Bank Central banks

This paper presents a comprehensive characterization of “fiscal drag”—the increase in tax revenue that occurs when nominal tax bases grow but nominal parameters of progressive tax legislation are not updated accordingly—across 21 European countries using a microsimulationapproach. First, we estimate tax-to-base elasticities, showing that the progressivity built in each country’s personal income tax system induces elasticities around 1.7–2 for many countries, indicating a potential for large fiscal drag effects.

Fiscal drag in theory and in practice: a European perspective

10/09/2025 European Central Bank Central banks

This paper presents a comprehensive characterization of “fiscal drag”—the increase in tax revenue that occurs when nominal tax bases grow but nominal parameters of progressive tax legislation are not updated accordingly—across 21 European countries using a microsimulationapproach. First, we estimate tax-to-base elasticities, showing that the progressivity built in each country’s personal income tax system induces elasticities around 1.7–2 for many countries, indicating a potential for large fiscal drag effects.

Capital requirements: a pillar or a burden for bank competitiveness?

10/09/2025 European Central Bank Central banks

This paper examines the relationship between capital requirements, capital ratios and bank competitiveness – measured as profit efficiency. Using data envelopment analysis techniques, profit efficiency scores were estimated for a sample of listed significant institutions directly supervised by the European Central Bank. In calculating the scores, use was made of rich supervisory data on bank-specific characteristics and capital requirements, in addition to macroeconomic variables.

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