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Economic Activity by Race

Author

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  • Fatima Mboup

Abstract

We observe empirical differences between races across various macroeconomic variables for the White, Black, Asian, and Hispanic populations in the U.S. For instance, the Black unemployment rate in the U.S. is more often than not double the White unemployment rate. In this paper, I treat nine macroeconomic variables as noisy indicators of economic activity and estimate an index that measures the economic activity of racial demographic groups in the U.S., called Economic Activity by Race (EAR). The noise of the indicators motivates the use of Kalman filter estimation to extract a common component from the noisy indicator variables. My index suggests that there are empirical differences between Black and White economic activity in the U.S., supporting the disparities found between races in racial stratification literature. Further, my results suggest that a structural shock to White economic activity is more persistent than a structural shock to Black, Asian, or Hispanic economic activity due to more heterogeneous sensitivity to various measures of economic well-being.

Suggested Citation

  • Fatima Mboup, 2023. "Economic Activity by Race," Working Papers 23-16, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpwp:96539
    DOI: 10.21799/frbp.wp.2023.16
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    References listed on IDEAS

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    More about this item

    Keywords

    racial stratification; economic activity; racial disparities; unemployment rate; macroeconomic forecasting; macroeconomic data; Kalman filter;
    All these keywords.

    JEL classification:

    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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