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The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
Uncertainty is associated with reduced investment and lower productivity, with particularly large effects at highly productive firms most exposed to EU trade. While the outcome of Brexit negotiations is still unclear, the three-year lead-up to the scheduled withdrawal of Britain from the European Union has already damaged the United Kingdom’s economy through increased uncertainty. This has reduced investment by British firms by about 11 percent, and lowered...

Reseach Summaries

Without deployment of forward guidance and asset purchases by the Federal Reserve, recovery from the Great Recession would have been slower. After the Federal Reserve effectively slashed interest rates to zero in response to the Great Recession, some doubted that there was much else it could do to accelerate the pace of recovery. The Fed pursued a range of unconventional monetary policy tools when faced with the “zero lower bound” (ZLB) on nominal short-term...
The challenges of the workweek make it difficult for parents to make effective use of tips sent by text on weekdays. “Point out the first letter in your child’s name in magazines, on signs and at the store. Have your child try. Make it a game. Who can find the most?” That tip is an example of parenting advice offered by an educational program that sends text messages to parents of preschoolers. The program has proven effective at boosting children’s literacy...
  Americans who came of driving age during the rapid gas price increases and long waiting lines of 1980–81 were driving less than older and younger peers two decades later. Individuals who were in their mid-30s at the time of the 2000 US decennial census are less likely to drive to work and more likely to commute by mass transit than their peers in younger and older age groups. One explanation is that this cohort came of driving age between 1980 and...
  Minority borrowers pay, on average, 7.9 basis points more for first-purchase home mortgages. The gap is larger when they use face-to-face lenders rather than algorithm-based lenders. In 2017, $2.25 trillion of the $13 trillion of outstanding household debt in the United States was associated with minority households. The bulk of this borrowing, $1.65 trillion, was mortgages. Previous research has shown that minority households, on average, pay more...
Older households are wealthier than younger ones, and their consumption spending is more sensitive to policy-induced changes in asset values. Does monetary policy have the same effect on the consumption spending of households at various points in the lifecycle? Kimberly A. Berg, Chadwick C. Curtis, Steven Lugauer, and Nelson C. Mark explore this question in Demographics and Monetary Policy Shocks (NBER Working Paper 25970). They conclude that instruments of...

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