Roundup: Inflation, Financial Markets and COVID-19 Disparities

In the event you missed it, today we are highlighting some research recently produced by the St. Louis Fed. The following articles were published in the Review and Economic Synopses.

Review

Financial Market Reactions to the Russian Invasion of Ukraine

This article analyzes financial market reactions to the Russia-Ukraine war with a focus on the conflict’s opening weeks. The author found that exposure to commodity trade and trade with Russia and Ukraine determined market perceptions of the riskiness of equity and foreign exchange assets. In addition, credit default swap prices on sovereign debt and breakeven inflation rates indicate that markets saw the war as a measurable fiscal risk.

Credit Expansion and Markups

This article examines the effects of credit expansion on the aggregate markup and markup dispersion in the U.S. The authors found the aggregate markup and markup dispersion increase in response to both a firm debt shock and a household debt shock and showed that household credit expansion also plays a role in firm markups.

Disparities in COVID-19’s Impact on Employment and Household Consumption

This article investigates the socio-demographic differences in household responses to the COVID-19 pandemic regarding employment and consumption. The authors found pervasive racial, income and educational differences when focusing on household food insecurity and individuals’ reliance on social insurance programs and other government assistance during the pandemic.

1960s Interstate Highways and Homeowner Wealth Distribution

This article studies house-level real estate wealth distribution changes near a major interstate highway, comparing values before the announcement of the highway’s construction (1940) with those during and shortly after the construction period (1961-74). The authors found that properties at least a half-mile away from the highway experienced statistically significant appreciation (on average). In addition, they also found racial disparities in house price appreciation.

The Inflation Series from Economic Synopses

Inflation, Part 1: What Is it, Exactly?

Inflation measures the rate of change of a price index over time.

Inflation, Part 2: How Do We Construct and Choose an Index?

Both the CPI and the PCE price indexes measure the prices of consumer goods and services—but they differ in important ways.

Inflation, Part 3: What Is the Fed’s Current Goal? Has the Fed Met Its Inflation Mandate?

Despite recent inflationary pressures, the Fed has historically done a good job maintaining inflation close to 2%.