Their paper discovers that in any bout of inflation, a central bank that has a greater history of fighting inflation also has the ability to deviate further from strict Taylor Rule guidelines, without achieving worse inflation outcomes.

Jackson Hole speaker Emi Nakamura talks credibility, tariffs and independence

"It's easy to forget how remarkable it was that the Fed was able to look through 7% to 8% inflation while maintaining almost completely anchored long-term inflation expectations. This requires (an) extremely strong reputation," Nakamura said, something that hinges "on institutions like central bank independence and a strong track record, and those are things that take a long time to build up and perhaps not very long to destroy."

Trump’s crusade against the Federal Reserve will be self-defeating

Joint AEA-AFA Luncheon Talk by Emi Nakamura, at ASSA meetings in San Francisco, January 2025

“I think we should be humble,” said Steinsson. “It may well be that people hate inflation for some reason that is good and valid. It’s very plausible that we as a field haven’t really had a lot of success in modeling and articulating these costs.”

I try to work in areas where I feel like there’s a significant gap between what’s happening within the economics profession and what’s happening in the world.

Peter J. Walker profiles Berkeley’s Emi Nakamura, who delves into details to answer big questions

Central bank has used communications ahead of its policy meetings this year to influence borrowing costs

As prices soar, some critics are raising doubts about the official inflation figures. But many economists say the figures are an accurate snapshot of rising prices.

The longer inflation stays high, the likelier this is. At a certain point the excuses for inflation’s persistence will wear thin—even if they are valid. The public will simply lose confidence in the Fed.

A 1983 change reduced volatility but probably didn't lower the average inflation rate.

Economists and the public have very different views on the question

Americans used to move a lot; now they don’t. It could be causing a social crisis.

While being forced to stay somewhere is almost entirely negative, being forced to move can actually benefit those who relocate.

If you ask any macroeconomist to tell you who the stars of their profession are right now, Emi Nakamura’s name will surely be at or near the top of the list. In 2019, Nakamura won the John Bates Clark medal, one of econ’s two most prestigious awards — and one that very rarely goes to a macroeconomist. Originally from Canada, and now working at the University of California, Berkeley, she continues to amass top-journal publications at a fairly stupendous rate.

The theory that expectations are a key driver of price increases will be tested in 2022.

“One thing we certainly learned from history is that once you adjust people’s expectations, they can become quite entrenched, and so it’s difficult to adjust back in the opposite direction,” says Emi Nakamura, an economics professor at the University of California at Berkeley.

U.S. Inflation: Outlook and Policy Response (E3)

Panel Session

Friday, Jan. 7, 2022 3:45 PM - 5:45 PM (EST)

Hosted By: American Economic Association

Moderator: Joshua K. Hausman, University of Michigan

Panelist(s):

Jason Furman, Harvard University

Joseph E. Gagnon, Peterson Institute for International Economics

Jon Steinsson, University of California-Berkeley

Inflation over the past 12 months has been 6.9% as measured by the CPI. This is the highest headline inflation reading since the early 1980s. Stripping out food and energy yields a core CPI inflation rate of 5.0%, which is the highest reading of that measure since 1991. Over the same time period, unemployment has fallen from 6.7% to 4.2%. Although higher than its value pre-Covid (3.5%), this is among the lowest levels of unemployment the U.S. economy has ever experienced.

So, what should the Fed do about this?

In “The Gift of Moving: Intergenerational Consequences of a Mobility Shock,” Emi Nakamura, Josef Sigurdsson, and Jon Steinsson investigate the long-term benefits of moving to a different region.

For a long time, economists have argued that free trade among countries encourages the movement of resources from regions where they are valued less to regions where they are valued more. For example, if apples are selling at a higher price in the U.S. than in Europe, entrepreneurs sensing an opportunity to make profits would buy apples in Europe and sell them in the U.S. This logic of arbitrage applies not just in the case of ordinary goods but also in the case of labour. People who live in low-wage countries tend to move to countries with higher wages. But such migration does not happen instantaneously. Various frictions can discourage people from moving to a different region even when the geographical differences in wages are much larger than moving costs. These frictions may be due to cultural differences, personal anxieties, barriers to free immigration etc. So, in essence, there is significant scope for the misallocation of labour among various regions in the world.

Clark medalist Emi Nakamura says this unusual feature of the Covid downturn could make a big difference when restrictions on spending go away.

Emi Nakamura, an economics professor at the University of California at Berkeley, was awarded the John Bates Clark Medal last year. The American Economic Association gives the medal annually to the “American economist under the age of 40 who is judged to have made the most significant contribution to economic thought and knowledge.” Nakamura’s work focuses on macroeconomic policy and business cycles, deploying novel datasets and empirical techniques to reexamine long-standing assumptions that have undergirded mainstream economic models for decades. Nakamura spoke with Bloomberg Markets in late August about how this perspective has become increasingly relevant as the pandemic has forced policymakers to throw out their old playbooks.