Here are migration rates for the working age population (via @claudeai ). That technology workers would be so different in levels is a bit suspicious.

Which of the US or EU do economic agents choose to locate in? Their choice reveals how they weigh all the factors that matter. The relevant agent for productivity and economic growth are firms. So, the migration rates of startups reveals the economy where you want to be to grow and succeed:

Is the Phillips curve useful to make sense of inflation? A.W.H. Phillips first postulated a negative empirical correlation between inflation and the level of economic activity. Looking at inflation in 2021-24---up and down---versus measures of unemployment---roughly unchanged---shows little correlation. Has the Phillips curve failed, yet again? No, it did not. Friedman and Phelps, almost 50 years ago, clarified that this correlation should only hold keeping expected inflation fixed. Almost every account of how firms choose prices or bargain wages with their workers predicts that expectations would show up in a Philips curve. Moreover, those models of behavior further add that increases in marginal costs (supply shocks) would further shift out this relation. The empirical Phillips curve has for many decades meant a negative relation between inflation and real activity, controlling for expected inflation and supply shocks. The left figure below shows on the vertical axis inflation, after controlling for expected inflation---mean and disagreement from a household survey---and for supply shocks---gas prices and global supply pressures. The horizontal axis shows a measure of slack in the labor market---the log of the ratio of unemployment to job vacancies. The Phillips curve held nicely and steadily throughout. A criticism of that figure is that its is looking in the rear view mirror: the measure of supply shocks and the measure of slack were developed in the last few years and the data has been revised. The right figure does instead an out-of sample exercise. Estimate a regression of inflation on (i) expected inflation, (ii) the difference between the unemployment rate and the CBO estimate of its non-cyclical component, and (iii) the PCE energy price index. Do it on data pre-pandemic: 1984Q1-2020Q1. Using that estimated equation, predict inflation in real time from then onwards using the data releases available at the time of the forecast. The Phillips curve was a pretty good predictor of inflation throughout. The Phillips curve was stable during the inflation surge, and it predicted well the movements in inflation, with expectations playing a key role in those predictions. Notes: it is important to include the right measure of expectations to understand inflation-activity dynamics at a business-cycle frequency: the short-horizon expectations of households and firms. (For instance, the long-horizon expectations from professionals, or the expectations from models in policy institutions, as in my previous two posts, are the wrong measure.) Sources: (i) Section 3 in Reis "Why Did Inflation Rise and Fall in 2021-24? Channels and Evidence from Expectations" (ii) The simple exercise on the left figure is inspired on the analysis of Bernanke and Blanchard “What Caused the US Pandemic-Era Inflation?” (iii) The simple exercise on the right figure is inspired on @jadhazell "Comment" in the NBER macro annual 2025, which in turn built on Beaudry, Hou, and Portier "The Dominant Role of Expectations and Broad-Based Supply Shocks in Driving Inflation"

Are inflation expectations well anchored right now? With a new supply shock hitting the global economy, an important question is whether inflation expectations are well anchored. If they are, the shock may have only a quick and temporary impact on inflation. If they are not, there will be “second‑round effects,” as firms expecting higher prices raise their own price, and workers demand higher wages. Just as importantly, if the 2% target loses credibility, consumers and savers may start expecting persistently high inflation, making it far more painful to bring inflation down (think Volcker). Surveys of professional forecasters and market prices of swaps and indexed bonds show that long‑run expected inflation expectations have been roughly on target for several years. The anchor is back in place. But is the anchor as solid into the ground as before the inflation surge? No. Take the answer of a professional forecaster (say the chief economist in a bank) to a survey question: what do you expect average inflation to be over the next 10 years? Compare today’s answer to their answer three months ago in the same survey. If expectations are firmly anchored, this number should not have changed much. The answer should especially not react to whatever happened to inflation during these past three months. It should even more especially not react to how its value differed from what that person expected 3-month inflation would be back then. Long‑run revisions should be uncorrelated with recent inflation surprises for that person. The table below shows the estimates from regressions of long‑run forecast revisions on short‑term surprises (forecast errors) in two periods. The top row uses data from before the 2021 inflation surge; the bottom row uses 2022–25 data. For the US, the link between the two rises by a factor of 4.7. For the EA, it jumps from zero to significantly positive. The long-run inflation anchor is back in place. But it is not as solidly grounded today as it was before the pandemic. Note: a coefficient of 0.09 means that if the inflation in the past three months was 1pp higher, than expected inflation over the next 120 months rises on average by 0.09pp. Using statistical estimates of the persistence of inflation shocks, this is large. Source: Section 2 in Reis "Why Did Inflation Rise and Fall in 2021-24? Channels and Evidence from Expectations" and the references in it.

How much did public deficits contribute to the inflation surge of 2021-24? A popular argument notes that inflation rose in the US by almost as much as in other OECD countries. Yet, the US had a large fiscal stimulus in 2021 that most other countries did not. Therefore, the US fiscal stimulus did not contribute to the inflation surge. Is that right? No, it is not. To inspect this claim, you can use expectations data. By virtue of its mandate, the IMF is one of the best forecasters of fiscal variables and all economists pay attention to them. The IMF also forecasts inflation; during 2021-24, it was as right or as wrong as other institutions or surveys. Start from the IMF's forecasts in October of 2019 for the next 5 years of how much public debt would grow and what would be fiscal deficits, interest rates, inflation, and growth rates. Then look at the IMF April 2025 reports of those actual variables. Subtract one from the other and you have how much of the unexpected increase in public debt was due to unexpectedly high deficits, unexpectedly high interest rates, unexpectedly low growth rates and unexpectedly high inflation. The plot compares the unexpected high deficits with the unexpected high inflation terms for OECD countries, using the common units of their impact on the public debt. For countries that ran higher unexpected fiscal deficits, inflation was also unexpectedly higher. Some countries had their stimulus early, others only later. Somer larger, other smaller. Some had more, others less inflation. The accounts of the government let you consistently sum these differences over the 5 years to look beyond timings and to use consistent units. Thinking in terms of surprises and using expectations data allows you to compare countries with very different fiscal trajectories. More generally, in all models and theories of inflation, including fiscal account, expectations are crucial. Using expectations data to inspect them is very informative. Note: as with the initial claim, the plot is a correlation, not a causal statement. Sources: (i) Section 4 in Reis "Why Did Inflation Rise and Fall in 2021-24? Channels and Evidence from Expectations" (ii) This simple exercise is inspired on the analysis of Barro and Bianchi “Fiscal Influences on Inflation in OECD Countries, 2020-23.”

A few economists have been thinking about an event like this: its causes, consequences, and implications for the Fed's balance sheet. Disclosure: I'm one of them, and gave the @ecb lecture at the meetings of the @econometricsoc in Dec 2023 on the topic youtu.be/a5gCTWZTrHg

The @IMFNews October Outlook report for Europe had this stunning graph. Every single office in the @EU_Commission should have a print-out of this figure on the wall. Every working day should be spent on it. That is the best response to US trade policy. imf.org/en/Publications/REO/…

In 2017-23, whenever CNY-USD got close to parity one day, the next day CNH-CNY deviated strongly from parity. Using the former as an econometric instrument for the latter (to measure money demand shocks), the time-series F-statistic is 20.

Combining liquidity theory with monetary theory (proposition 3 in Bahaj-Reis) also says that pressure for the yuan to devalue should come with a rise in the interest rate at which banks lend to each other in CNH, relative to the rate in CNY.

Recently the offshore CNH has been trading systematically below the onshore CNY. Theory and experience say this is a sign for pressure for the yuan to depreciate further (propositions 1 and 2 in Bahaj-Reis). There's a measure of pressure on the yuan to devalue relative to the USD