Edward S. Knotek II |

Vice President


Edward S. Knotek II, Vice President

Edward S. Knotek II is a vice president at the Federal Reserve Bank of Cleveland, where he leads the development of the Bank’s forecasting models. Dr. Knotek’s research interests focus on macroeconomics and monetary economics. In addition to forecasting, he has conducted research on firms’ price-setting behavior, inflation dynamics, unemployment movements over the business cycle, consumers’ responses to uncertainty, and consumer debt dynamics.

Dr. Knotek joined the Bank in 2012 from the Federal Reserve Bank of Kansas City, where he held the position of vice president and economist.  He began his career as an economist at the Kansas City Fed in 2005. 

Dr. Knotek received a B.A. in mathematics-economics and Spanish from Denison University.  He received his M.A. and Ph.D. in economics from the University of Michigan.

  • Fed Publications
  • Other Publications
Title Date Publication Author(s) Type

 

2014-14 ; Saeed Zaman; Economic Commentary
Abstract: We take a closer look at the connections between wages, prices, and economic activity. We find that causal relationships between wages and prices are difficult to identify, and the ability of wages to help predict future inflation is limited. Wages appear to be useful in assessing the current state of labor markets, but they are not necessarily sufficient for thinking about where the economy and inflation are going.

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2014-10 ; Saeed Zaman; Economic Commentary
Abstract: Using a statistical model, we find that three factors explain most of the decline in residential investment at the end of 2013 and the beginning of 2014: the increase in mortgage rates since early 2013, the unusually cold winter, and a modest tightening of lending standards in the residential mortgage market. Future prospects for residential investment depend heavily on mortgage rates. A return to normal weather and easing lending standards would boost activity, but even moderate increases in mortgage rates through the end of next year could restrain residential investment going forward.

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May, 2014 Federal Reserve Bank of Cleveland, working paper no. 14-03 ; Saeed Zaman; Working Papers
Abstract: Forecasting future inflation and nowcasting contemporaneous inflation are difficult. We propose a new and parsimonious model for nowcasting headline and core inflation in the U.S. price index for personal consumption expenditures (PCE) and the consumer price index (CPI). The model relies on relatively few variables and is tested using real-time data. The model's nowcasting accuracy improves as information accumulates over the course of a month or quarter, and it easily outperforms a variety of statistical benchmarks. In head-to-head comparisons, the model's nowcasts of CPI inflation outperform those from the Blue Chip consensus, with especially significant outperformance as the quarter goes on. The model's nowcasts for CPI and PCE inflation also significantly outperform those from the Survey of Professional Forecasters, with similar nowcasting accuracy for core inflation measures. Across all four inflation measures, the model's nowcasting accuracy is generally comparable to that of the Federal Reserve's Greenbook.

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March, 2014 Federal Reserve Bank of Cleveland, working paper no. 14-01 ; John Carter Braxton; Working Papers
Abstract: Consumer debt played a central role in creating the U.S. housing bubble, the ensuing housing downturn, and the Great Recession, and it has been blamed as a factor in the weak subsequent recovery as well. This paper uses micro-level data to decompose consumer debt dynamics by separating the actions of consumer debt increasers and decreasers, and then further decomposing movements into percentage and size margins among the increasers and decreasers. We view such a decomposition as informative for macroeconomic models featuring a central role for consumer debt. Using this framework, we show that variations in borrowing activity among the increasers explain four times as much of the total variation in consumer debt as variations among the decreasers who are shedding debt, whether through paydowns or defaults. We also provide micro-level evidence of a sharp decline in the percentage of increasers during the financial crisis that is qualitatively consistent with a binding zero lower bound on nominal interest rates, and evidence of a cycle in the average size of debt changes among the increasers that is related to rising collateral values pre-crisis coupled with additional financial frictions after the crisis.

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December, 2013 ; Saeed Zaman; Economic Commentary
Abstract: The Federal Open Market Committee has been providing guidance to help markets anticipate when it will begin raising the federal funds rate target. The most recent guidance suggests that the target will not change at least until after an unemployment or inflation threshold is breached. We use a forecasting model to estimate when these thresholds are likely to be breached. We also consider how an inflation floor would affect the timing of liftoff.

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December, 2012 Federal Reserve Bank of Kansas City Economic Review, fourth quarter, 97(4): 31?54. ; John Carter Braxton; Other FRB Publications

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May, 2011 Federal Reserve Bank of Kansas City Economic Review, second quarter, 96(2): 5-34. ; Economic Review

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September, 2009 Federal Reserve Bank of Kansas City Economic Review, third quarter, 94(3): 5-33. ; Stephen J Terry; Economic Review

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November, 2007 Federal Reserve Bank of Kansas City Economic Review, fourth quarter, 92(4): 73-103. ; Economic Review

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Title Date Publication Author(s) Type

 

January, 2011 Review of Economics and Statistics 93(3): 1076-86. ; Journal Article

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January, 2011 Economics Letters 110(1): 4-6. ; Stephen J Terry; Journal Article

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January, 2010 Journal of Money, Credit, and Banking 42(8): 1543-64. ; Journal Article

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January, 2008 Journal of Monetary Economics 55(7): 1303-16. ; Journal Article

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Stagflation

 

June, 2004 The Social Science Encyclopedia, 3rd ed., New York: Routledge. ; Robert B Barsky; Article in Book

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