Research

This technical note 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.

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 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.