Research

This paper studies how U.S. households adjust their expectations after Federal Reserve announcements from 2013 to 2021. Using microdata from the Survey of Consumer Expectations, we find short-term revisions in inflation, interest rate, and home price forecasts. Inaction by the Fed signals dovishness and lowers expectations for future rate hikes. Tightening, by contrast, dampens home price growth. Other domains, like income and spending, show little movement. Information frictions play a central role: effects weaken at longer horizons and adjust slowly over time. The results highlight the limits of monetary policy communication when attention and interpretation vary.

This paper examines the relationship between errors in credit spread expectations and key macroeconomic indicators over the period 1948 to 2022. By employing textual analysis on Wall Street Journal title pages, I construct a historical proxy for credit market sentiment, extending the data on credit spread expectations back to 1919. The Survey of Professional Forecasters provides the training data for this model. The analysis reveals that increases in credit spread expectation errors, interpreted as signals of heightened market optimism, are robust predictors of subsequent declines in economic activity. Most saliently, a one-standard deviation increase in forecast errors is associated with a 1.47 percentage point decline in GDP growth, highlighting the significant role of credit market sentiment in driving macroeconomic cycles.

This technical document addresses a significant shift in how the IRS plans to handle tax adjustments for international companies that transfer valuable assets like patents and trademarks between their own entities as of 2025. For decades, a rule allowing the IRS to revisit these transfers and adjust taxes based on later profits—known as periodic adjustments—has rarely been used. However, a new IRS memo from January 2025 signals a more aggressive stance, suggesting these adjustments will now be considered almost automatically correct. The note explains why this new interpretation is problematic and could lead to increased tax liabilities and disputes for businesses. It also outlines key strategies companies can use to prepare, such as securing an Advance Pricing Agreement (APA) with the IRS or implementing contractual "true-up" mechanisms to manage potential future tax demands.

The section 482 regulations authorize the Internal Revenue Service (“IRS”) to use ex post profitability data to make so-called “periodic adjustments” to the consideration paid for intercompany transfers and licenses of intangibles. To date, it appears the IRS has seldom, if ever, used this authority in practice, and prior IRS guidance endorsed a limited role for periodic adjustments. A Chief Counsel memorandum released on January 17, 2025, AM 2025-001, articulates a more robust interpretation of periodic adjustments and suggests that they may be becoming an IRS enforcement focus. Given this renewed focus, taxpayers should consider their potential exposure to periodic adjustments and how it could be reduced. This article discusses the IRS's embrace of ex post profitability data as a basis for periodic adjustments, emphasizing the need for taxpayers to carefully consider strategies like advance pricing agreements and true-up mechanisms to mitigate potential risks.

How do Federal Reserve interest rate decisions affect marketing budgets? Using quarterly U.S. data on advertising and public relations services revenue (NAICS 5418) from 2004 to 2025, I apply local projections (Jorda, 2005) to trace the dynamic effects of monetary policy shocks—identified as Taylor-rule residuals that purge the systematic policy response (Taylor, 1993)—on the advertising sector. Three findings emerge. First, a one-standard-deviation contractionary monetary policy shock reduces advertising revenue growth within two quarters, with effects persisting through the two- year horizon. Second, sequential mediation evidence shows that the shock first depresses firm expectations (OECD Business Confidence Index), which in turn predict lower advertising revenue—consistent with an expectations-mediated transmission channel. Third, a typical 200 basis point tightening cycle (eight quarterly hikes of 25 bps) produces a cumulative peak decline in advertising revenue growth, a magnitude with direct implications for marketing budget planning. The results are robust to alternative shock identifications, including simple FFR changes and Romer-style residuals. Monthly advertising employment data confirm the quarterly results. These findings establish that marketing budgets systematically respond to monetary policy shocks, offering marketing managers a forward-looking signal for budget planning and contributing to the marketing-macroeconomics interface (Dekimpe and Deleersnyder, 2023).

This paper employs Latent Dirichlet Analysis for Survey Data (LDA-S) to identify and classify households into distinct belief types based on their responses in the Survey of Consumer Expectations (SCE). I uncover three belief types—inconsistent/uncertain, pessimistic, and optimistic—characterized by unique patterns of expectations about macroeconomic and personal financial conditions. By incorporating these belief types into a model predicting inflation expectations, I demonstrate a significant improvement in the model's explanatory power. The findings of this study have important implications for central bank communication strategies. As different belief types are shown to have a statistically significant impact on respondents' 12-month inflation expectations, it becomes crucial for central banks to consider the type of information households are consuming and tailor their communication accordingly. Moreover, this research highlights the potential of using latent class analysis techniques to extract valuable information from survey data, which can be applied in various economic contexts.

Corporate altruism is simultaneously a moral claim and a strategic instrument. This paper develops a synthesis that treats corporate altruism as an institutional form of other-regarding behavior produced at the intersection of (i) nineteenth-century efforts to secularize moral obligation, (ii) modern economic models that incorporate other-regarding preferences and reputational payoffs into utility maximization, and (iii) psychological accounts of higher needs and purpose that organizations have learned to supply and monetize. We argue that the modern corporation increasingly performs functions historically associated with religious institutions, including ritual, identity formation, and moral legitimation. Economically, corporate altruism is interpretable as a joint product of profit, reputational “warm glow,” and contributions to social stability that protect long-run cash flows. We conclude by clarifying the “selfish selflessness” paradox and explaining what economic modeling can and cannot establish about motive and moral authenticity.