Webinar: Central Banks and the End of Stability (September 18, 12:00 – 1:00 PM)
Webinar with Spyros Andreopoulos
Spyros Andreopoulos is a macroeconomist who has worked for the European Central Bank, Morgan Stanley, and BNP Paribas. Among other things, he runs the blog Thin Ice Macroeconomics.
- Time: September 18, 12:00 – 1:00 PM, Central European Summer Time
- Online via Zoom, meeting link will be sent
- Presentation and discussion primarily in German
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In the United States, there are now initial signs that tariffs affect inflation. Core inflation moved slightly up and was at 3.1 % in July (compared to July 2024). Services inflation is mainly elevated. In addition, producer prices showed a worrying increase in July. At the same time, the labor market looks worse than previously thought. In July, only 72,000 new jobs were created. But the really bad news is that the job numbers for May and June were dramatically revised down. The revised numbers tell us that there were only 19,000 new jobs in May and 14,000 new jobs in June.The US labor market does not look good. However, it is somewhat less concerning than one might initially think. US population growth is slowing. This has potentially important implications for the interpretation of economic variables. In the past weeks, I have frequently mentioned this issue. I am glad to see that Jed Kolko provides a careful analysis that may also help analyze future labor market data.“Kolko estimates that the breakeven rate of monthly payroll growth in the jobs report needed to keep up with the labor force has fallen from 166,000 jobs in early 2024 to 86,000 jobs in June 2025. Accordingly, policymakers need to lower their targets and forecasts for key economic data and put more weight on per capita and other population-invariant measures. Adjusting expectations in light of slower population growth is essential for setting monetary policy, determining whether the United States is in recession, and other data-driven decisions and interpretations.“
„As US population growth slows, we need to reset expectations for economic data“ by Jed Kolko. The economic situation is complicated for the Federal Reserve. The economy looks weaker, and inflation seems to be rising again.
In a recent poll on our LinkedIn page (obviously, the poll was non-representative), 41 % of respondents expected an interest rate cut of 50 bps. 36 % thought that there would only be a 25 bps cut. 17 % even expected interest rates to stay constant.
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Here is what our network liked (selection): Inflation attention, optimal tariffs with geopolitical alignment, and much more…
Great to see an updated version of this super interesting paper!
„The Inflation Attention Threshold and Inflation Surges (Revised)“ by Oliver Pfäuti.
„I quantify when and how much attention to inflation changes and derive the macroeconomic implications of these attention changes. I estimate an attention threshold at an inflation rate of 4%, that attention doubles when inflation exceeds this threshold, and that supply shocks have stronger and more persistent effects on inflation in times of high attention. Developing a model featuring the attention threshold, I show that the observed attention changes offer a joint explanation for the recent inflation surge, its interplay with inflation expectations, and the long last mile of disinflation.“By the way, Oliver is an alumnus of the Master’s program in International and Monetary Economics.
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Thought-provoking and highly relevant!
„Optimal Tariffs with Geopolitical Alignment“ by John S. Becko, Gene M. Grossman, and Elhanan Helpman.
„We examine the optimal design of tariffs in a world where large countries care not only about economic welfare but also about the political allegiance of smaller states. We consider both a unipolar setting, where a single hegemon uses preferential trade agreements to attract partners, and a bipolar world, where two great powers compete for influence. In both scenarios, we derive optimal tariffs that balance terms-of-trade considerations with strategic incentives to encourage political alignment. …A calibration exercise using U.N. voting patterns, an estimate of the cost of buying votes in the U.N., and military spending suggests that geopolitical motives can significantly amplify protectionist pressures and that the emergence of a second great power can contribute to a retreat from globalization.“
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Very valuable!“Macroeconomic impact of tariffs and policy uncertainty“ by Emanuel Kohlscheen, Phurichai Rungcharoenkitkul, Dora Xia, and Fabrizio Zampolli.
„The global economy has until recently shown remarkable resilience in the face of tariff hikes and policy uncertainty. …However, higher tariffs could eventually weigh on global growth. Even though some countries have reached bilateral trade deals, average US tariffs are likely to settle at levels unprecedented in the modern era. …The increased trade costs are starting to affect corporate earnings in some manufacturing sectors. Recent US economic data – such as weaker private spending, persistent inflation and softening labour market performance – indicate emerging economic weakness. Subdued consumer confidence across advanced (AEs) and emerging market economies (EMEs), coupled with weak investment due to lingering uncertainty, could further weigh on domestic demand going forward.“
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Super interesting!“Turning Points in Inflation: A Structural Breaks Approach with Micro Data“ by Alberto Cavallo and Gaston Garcia Zavaleta.
„We introduce a novel methodology for detecting inflation turning points that combines high-frequency, disaggregated price data with standard structural break techniques to provide policymakers with more timely and precise signals of inflation dynamics. …For the U.S., we find evidence of a turning point in February 2025, with significant sectoral inflation accelerations despite stable aggregate inflation measures. These applications demonstrate the utility of our approach for enhancing real-time inflation monitoring and policy decision-making.“
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