Dr. Steven Cassou | Working Papers
- "Government Capital and Production: Industry Level Estimates." with Vladimir Bejan.
- "Optimal monetary policy: Does considering real-time data change things?" with C. Patrick Scott and Jesús Vázquez.
Abstract: This paper estimates sectoral level production functions using U.S. data for nine industry groups. It is shown that the public capital elasticity differs across industries. This implies that not all industries are equally impacted by public capital spending and that using a single generic production function with constant returns to scale to represent all industries is not appropriate.
Abstract: Yes, it does. This paper extends a variant of the asymmetric preference model suggested by Ruge-Murcia (2003a) to investigate the use of real-time data available to policy makers when making their decisions and revised data which more accurately measure economic performance (Croushore, 2011). In our extended model, the central banker targets a weighted average of revised and real-time inflation together with a weighted average of revised and real-time output. Moreover, we allow for an asymmetric central bank response to real-time data depending on whether the economy is doing good or not. Our model identifies several new potential sources of inflation bias due to data revisions. Our empirical results suggest that the Federal Reserve focuses on targeting revised inflation during good economic times, but it weighs heavily real-time inflation during bad economic times. Moreover, the inflation bias due to data revisions is comparable in magnitude to the bias from asymmetric monetary planner preferences with the bias being somewhat larger during poor economic times.