Student Research Cracks Down on Central Bank Policy Bias

Gianfranco Portuondo

Gianfranco Portuondo completed summer research with Professor Erin George, studying the effects of monetary policy on job flows.

Gianfranco Portuondo

Graduation Year


Some students are getting a jump on their future this summer as participants in Hood’s Summer Research Institute. The SRI is a competitive program which allows selected students to work one-on-one with a faculty adviser on a research project. Students are provided free housing and a stipend while they conduct research in the laboratory or in the field for eight weeks. Pictured: Gianfranco Portuondo '18 and Erin George, Ph.D., Assistant Professor of Economics.

By Gianfranco Portuondo '18

This summer Dr. George and I are studying the effects of monetary policy on job flows. Monetary policy is the tool that the central bank (the Federal Reserve) uses to maintain a stable economy. The central bank’s main monetary policy tool is changing the interest rate. The interest rate affects investment which in turn affects the number of jobs in an economy. The Federal Reserve has a dual mandate of maintaining stable employment and maintaining price stability.

The purpose of this research is to analyze the effect of monetary policy on job flows differs in different ethnic and racial groups. Job flows measure the number of jobs available in an economy. Rather than evaluating the employment growth rate, as is typically done, job flows show whether the unemployment rate changes because of changes in the number of jobs created or in the number of jobs destroyed. Thus, I calculated job creation, job destruction, and net employment growth rates for every industry in the U.S. I spent the first part of the summer gathering the data and organizing it for analysis. Initial analyses of the data suggest that there are significant differences in the job flow rates by ethnicity and race, with minorities experiencing more frequent churning in the labor market than whites.

With this data, I am now running regressions to measure the effect of monetary policy on job flows. Regression analyses also help us to test to see if these job flow differences remain significant after controlling for other factors that might also impact job flow rates. In particular, I am analyzing whether this relationship varied by ethnicity (Hispanic and non-Hispanic) and by race (White, African American, and Asian). This analysis will help determine whether current central bank policy has an ethnicity or a race bias.

The goal of this research is to examine the results and analyze the policy implications of these results. If we find significant results, then maybe it will lead to changes in central bank policy that will affect everyone more equally and without significant bias.